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Defending Against Excessive Fee Cases: It’s All About Procedure It’s crucial for plan sponsors to have and follow a good investment policy statement and to carefully document the reasons for all their decisions. Reported by There has been a surge of excessive fee lawsuits filed against plan sponsors in recent years. But there are strategies retirement plan sponsors and their attorneys can take to defend themselves, Carol Buckmann, ERISA [Employee Retirement Income Security Act] attorney and founding partner of Cohen & Buckmann, tells PLANSPONSOR. “Even if a trial progresses, there are a lot of effective arguments that fiduciaries can make,” Buckmann says. “Most importantly, it is critical for them to show that they followed a prudent process in making their decision. Courts are not going to view their decisions with 20/20 hindsight. Rather, the courts want to see that based on the information that the fiduciaries had at the time they made their decision, ....
Plan sponsors need to establish who will be responsible for plan administration and plan and investment decisions. Carol Buckmann, co-founding partner at Cohen & Buckmann P.C., says committees aren’t legally required, but if plan sponsors appoint a committee as a “named fiduciary,” as defined in the Employee Retirement Income Security Act (ERISA), they will not only see it pay more careful attention to plan issues, but a company’s owner or board of directors will be relieved of most responsibilities for the plan. The owner’s or board of directors’ responsibility would be limited to prudently appointing committee members and monitoring their overall performance, she says. ....