Given the continuing wave of ERISA litigation, this article has become a mainstay of The Speed Reader. A sample of recent cases is provided below.
The most common type of ERISA case for approximately the past sixteen years has involved retirement plan participants’ allegations that plan fiduciaries caused participants to pay excessive recordkeeping and investment fees and included one or more poorly-performing investment options in the plan. Recent cases in this category include the following:
Another type of recent ERISA case is as follows:
Walsh v. Gibson (settlement agreement approved on January 20, 2022 by U.S. District Court for the Eastern District of Michigan): This case involves 401(k) plan fiduciaries’ failure to remit participants’ contributions to the plan. Under the settlement agreement, an independent fiduciary will reallocate $50,764 from the defendants’ plan accounts for the unremitted funds (plus lost investment earnings). Those amounts will be reallocated to plan accounts of the other participants, to ensure that they receive all amounts they are owed as a result of the fiduciary breach. Also, the independent fiduciary will reallocate an amount from the defendants’ plan accounts to cover plan expenses. The agreement also bars the defendants from serving as fiduciaries of any ERISA-covered plan in the future.
This case is a reminder that 401(k) and 403(b) plan sponsors should promptly remit participants’ contributions and loan repayments to their plans in a timely manner. Under DOL regulations, small plans (generally, those with fewer than one hundred participants), have up to seven business days from each payroll date to remit those contributions to the plan. For large plans, however, there is no specific timing rule. Rather, participants’ contributions and loan repayments must be remitted to the plan “as soon as they can reasonably be segregated from the general assets of the employer.” Plan sponsors of large plans should discuss this with their advisors if they are unsure about whether one or more payrolls’ contributions have been remitted to their plan in an untimely manner.