Much speculation has been generated by recent lawsuits filed against nonprofit universities challenging the administration of their 403(b) retirement plans.
In the cases filed, plaintiff employees allege that the fiduciaries of their 403(b) plans breached their fiduciary duty under ERISA related to the administration of the plans' investments—specifically, the number of investment options offered to participants and the fees associated with those investment options.
These recently filed cases are an excellent reminder of ERISA's high standards and the diligence required to properly oversee the investment offerings in a 403(b) or 401(k) plan. Fiduciaries can take action to mitigate the risk of litigation and ensure they meet ERISA's high standards. For instance, fiduciaries may perform an audit of their plan's fiduciary practices and conduct fiduciary training for the individuals administering the plan. Plan fiduciaries should also review their plan's fee structure and engage in negotiations with vendors to reduce those expenses. In addition, plan fiduciaries should consider whether it would be prudent to hire an investment advisor to choose and develop the investment platform for the plan.