Employee Benefits & Executive Compensation Blog

The View from Proskauer on Developments in the World of Employee Benefits, Executive Compensation & ERISA Litigation

Category Archives: Defined Contribution Plan Litigation

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A Good 403(b) or a Bad 403(b)? A Question IRS Auditors Look to Answer

In each case, the answer depends on whether the document and operation are in compliance with the many technical requirements for section 403(b) plans. IRS officials have recently indicated that the IRS expects to launch audit initiatives this summer targeting section 403(b) plan compliance, so now is a good time for employers with section 403(b) … Continue Reading

[Podcast]: Key Considerations for ERISA Plan Fiduciaries When Delegating Investment Authority

In this episode of The Proskauer Benefits Brief, partner Ira Bogner and senior counsel Adam Scoll discuss the key considerations for ERISA plan fiduciaries when delegating investment authority over plan assets.  We will break down some of the material ERISA issues that may apply when an ERISA plan hires a separate account investment manager or invests in a private investment … Continue Reading

Record-Keeper Defeats Second Round of Robo-Adviser Fee Litigation

As we reported here, record-keepers for large 401(k) plans have thus far been successful in defending ERISA fiduciary-breach litigation over investment advice powered by Financial Engines.  These lawsuits generally claim that fees collected by record-keepers for investment advice were unreasonably high because the fees exceeded the amount actually paid to Financial Engines.  Plaintiffs in Chendes v. … Continue Reading

First Round of Robo-Advisor Fee Litigation Goes to Record-Keepers

Since 2016, record keepers for large 401(k) plans have been defending litigation over investment advice provided by the Financial Engines investment advice algorithm.  (This kind of arrangement is commonly referred to as “robo-advice.”) The lawsuits claim, in essence, that fees collected by record keepers for investment advice were unreasonably high, because the fees exceeded the … Continue Reading

Plaintiffs Lack Standing to Bring ERISA Fee Litigation Case

A federal district court in Georgia dismissed claims by participants in Delta Air Lines, Inc.’s 401(k) plan who alleged that Delta breached its ERISA fiduciary duties by allowing the plan to invest in funds that allegedly charged excessive fees and unperformed against comparable funds. Consistent with rulings in other jurisdictions, the court held that plaintiffs … Continue Reading

District Court Dismisses Allegations That Stable Value Fund is Too Conservative

A district court in Rhode Island dismissed claims by participants in the CVS Employee Stock Ownership Plan that plan fiduciaries imprudently invested plan assets in the plan’s stable value fund. Plaintiffs argued that the stable value fund had an excessive concentration of investments with ultra-short durations and excessive liquidity, both of which caused the fund … Continue Reading

District Court Dismisses 401(k) Plan Investment Claims Against Chevron Fiduciaries

A federal district court in California granted defendants’ motion to dismiss claims asserted by Chevron 401(k) plan participants that the plan fiduciaries breached their ERISA fiduciary duties by selecting underperforming investment options and permitting the plan to pay excessive fees. As a preliminary matter, the court dismissed plaintiffs’ duty of loyalty claims because they failed … Continue Reading

Fidelity Prevails In ERISA Float Litigation

The First Circuit joined the Eighth Circuit in finding that Fidelity’s practice of earning overnight “float” interest on the cash paid out to 401(k) participants redeeming shares in mutual funds did not violate ERISA’s duty of loyalty or prohibition on self-dealing.  In so holding, the Court observed that under the terms of the trust agreements … Continue Reading

No Fiduciary Status For 401(k) Plan Service Provider

John Hancock Life Insurance Company is the most recent 401(k) plan service provider to prevail in a case by the plaintiffs’ bar asserting ERISA fiduciary breach claims based on allegations that it charged excessive 401(k) plan fees and received excessive revenue sharing payments.  Santomenno v. John Hancock Life Ins. Co., No. 2:10-cv-01655 (WJM), 2013 WL … Continue Reading

Ninth Circuit Rules on Breach of Fiduciary Duty Claim in Investment Options Case

In Tibble v. Edison Int’l, 10-cv-56406, 2013 WL 1174167 (9th Cir. Mar. 21, 2013), the Ninth Circuit Court of Appeals ruled that 401(k) plan fiduciaries breached their duty of prudence in selecting investment options for the plan and unreasonably relied on a consultant’s advice because they could not prove that either they– or the consultant … Continue Reading
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