The recent article in CFO magazine highlights a potential mine field for employers. In mid 2011, I wrote about the subject, the reasonableness of plan fees and the fiduciary responsibility sponsors have for their prudent management. Shortly, the Department of Labor will require specific fee disclosures which may send shock waves to participants already depressed at lackluster returns.
Fiduciary Liability Insurance is one way to mitigate the financial consequences of risk, but not the truly meaningful one. By far, the most significant cost in many of these cases is the legal expense a plan sponsor incurs to defend an action. As the author notes “….the vast majority of executive fee cases have been adjudicated in favor of the plan fiduciaries.”
This is an ideal time to examine the selection process for plan providers and understand the respective fees. It is also an opportune time to examine the fiduciary liability coverage and limits the company purchased.
If you should like to discuss this in more detail, do not hesitate to contact me.
To read the full CFO Magazine article, "Lifting the Lid on 401(k) Fees", click [here].