Mellman, George S., and Geoffrey T. Sanzenbacher. “401(k) lawsuits”. Issue in Brief 18-8, Chestnut Hill, Mass.: Center for Retirement Research at Boston College, May 2018. http://hdl.handle.net/2345/bc-ir:108010.
Abstract
The brief's key findings are: (1) Employers with 401(k)s are required to administer their plans for the "sole benefit" of workers, a standard that has been the subject of substantial litigation. (2) Recent lawsuits have focused on excessive fees, although inappropriate investment options and self-dealing are other common reasons for suits. (3) Court rulings in these cases often hinge on whether plan fiduciaries follow a "prudent" decision-making process, rather than on specific outcomes. (4) Perhaps in part to avoid such litigation, 401(k) sponsors have begun to rely more on low-cost index funds and have taken steps to reduce fees. (5) At the same time, concerns about litigation could dissuade 401(k) sponsors from offering potentially useful innovations, such as lifetime income options
