Best Practices for 401(k) Plan Sponsors and Fiduciaries

Revealing the Impact of Recent ERISA Litigation

Sheldon M. Geller, JD, CPA, AIF

The Sarbanes-Oxley Act of 2002 (SOX) requires public companies to certify to the establishment and adequacy of disclosure controls related to 401(k) plans; this has heightened fiduciary concerns for 401(k) plan sponsors, such as chief financial officers (CFO), chief executive officers (CEO), and other responsible plan fiduciaries (SOX, 29 USC section 1109). SOX also applies to private companies, with respect to an officer's representation of a retirement plan to the plan's auditors because it adds new white collar criminal penalty provisions that impose sanctions on plan sponsors and plan fiduciaries for willful violations of the Employee Retirement Income Security Act of 1974 (ERISA), including a false representation that a 401(k) plan is operated in accordance with plan document terms, qualification requirements, and applicable law. (See GT Alert, Greenberg Traurig LLP, “Today's Retirement Plan Environment Leaves Much for Concern,” by Jeffrey D. Mamorsky, February 2004.)