The “Defensive” 401(k) Plan

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No good deed goes unpunished. Those of us working with 401(k) plans are familiar with this sentiment. An employee benefit plan, as the name implies, is supposed to benefit employees. Yet benefit plans – particularly 401(k) plans – can be sources of aggravation for many. In addition to the threat of lawsuits, employers must also grapple with the difficulty of crafting lengthy, complex plans using language that is legally precise yet understandable to the average plan administrator. While ERISA litigation has proliferated in recent years, with the Supreme Court issuing four ERISA decisions in 2020 alone,1 the Court under the leadership of Chief Justice John Roberts has pointed plan sponsors toward a way to help control plan disputes. The Roberts Court’s ERISA jurisprudence has re-awakened the idea that one of ERISA’s key tenets is that a plan’s written terms matter. In other words, if plan sponsors want to reduce their exposure to litigation, one way to do so is by adding certain plan terms that mitigate risk. This column identifies some ways in which plan sponsors can amend plan language to manage and/or mitigate exposure to claims for benefits and other ERISA claims.

Originally published in Employee Relations Law Journal - Vol. 47, No. 3, Winter 2021 .

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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