In recent years, 401(k) plan sponsors, administrators and serviceproviders have become targets for ERISA class actions asserting breach of fiduciary duty claims based on the fees charged by the funds offered in the plan as investment options. Some of the so-called ERISA “excessive fees” cases challenge the use of revenue-sharing arrangements between the mutual fund providers and other service providers to the plans, and the potential circuit split that developed in 2009 on the issue of whether the Employee Retirement Income Security Act requires fiduciaries to disclose revenue-sharing arrangements to plan participants has been discussed previously.1

Some recent excessive fee cases have focused on whether a fiduciary’s decision to offer retail mutual funds as investment options in a 401(k) plan, when investment options with supposedly lower expenses may be available to the plan, such as institutional share classes, collective trusts, and commingled pools, constitutes a breach of ERISA’s fiduciary duty requirements. On Sept. 6, 2011, the U.S. Court of Appeals for the Seventh Circuit in Loomis v. Exelon, —F.3d—, 2011 WL 3890453 (7th Cir. Sept. 6, 2011), held that neither the decision to offer retail mutual funds as investment options in a 401(k) plan, nor the decision to require plan participants, rather than the plan, to bear the costs of those retail funds, constitutes a breach of fiduciary duty.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]