Increasingly over the past twenty years, defined contribution plans have become the retirement plan model of choice, in lieu of the classic defined benefit plans that predominated when the Employee Retirement Income Security Act (“ERISA”) was enacted in 1974. See the discussion of this trend in LaRue v. DeWolff, Boberg & Associates, 128 S.Ct. 1020, 1025 (2008).
Beginning in September 2006, plan participants have pursued more than a dozen lawsuits across the United States to assert claims against the fiduciaries of one of the most popular and widespread types of defined contribution plans – retirement plans established and maintained under section 401(k) of the Internal Revenue Code.
Generally, these cases allege that the fiduciaries of some very large 401(k) plans breached their duties by paying unreasonable fees to plan service providers and by failing to minimize costs associated with the investment of plan assets. The key issues and defenses arise under ERISA, and these cases are already producing significant decisions relating to class certification and the availability of a key statutory defense.
This article will summarize the background and highlight the most important developments in this current litigation.
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