RPA | Understanding the Increased Liability for 401(k) Retirement Plan Committees

Sheldon M. Geller, JD, CPA, AIF

Excessive fee litigation and class action settlements increased significantly in 2014 and 2015. These decisions and negotiations will encourage more claims against retirement plan committees that select investment funds without proper due diligence, unjustifiably relying on consultants and failing to monitor and remove imprudent fund selections. For these reasons, 401(k) committees should take prudent measures to avoid wrongdoing and comply with regulations regarding fund selection and payment of expenses and fees. In some cases, appointing an advisor to make these decisions may be the best step, but even this places certain responsibilities on the committee.