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Retirement Savings Policy by Michael P. Barry

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Chapter 23 Fiduciary litigation

Beginning in 2006, several complaints were filed against very large 401(k) plan sponsors alleging that plan fiduciaries had breached their ERISA duty of prudence “by providing investment options with excessive and unreasonable fees and costs.” (Quoting the Seventh Circuit’s decision in Hecker v. Deere.)

In the prototype 401(k) fee lawsuit, participants sued plan fiduciaries claiming that plan fees—either investment fees or recordkeeping fees or both—were too high, that plan fiduciaries knew it or should have known it, and that because they didn’t do anything about it, they breached their ERISA duty of prudence.

In the first round of litigation, some of these cases were settled; in those that went to judgment, defendant ...

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