While 2020 was a landmark year of class action ERISA litigation, Vestwell General Counsel Allison Brecher shares these practical steps that protect companies from common exposures
By Allison Brecher
2020 turned out to be another landmark year in a growing trend of ERISA class action litigation involving 401k plans.
These cases, which generally allege plan sponsors breached their fiduciary duty by charging participants excessive fees, also spilled over into 403(b) plans sponsored by prominent universities, resulting in significant settlements. These lawsuits can be costly to litigate and often last for several years, prompting many of them to settle. Large corporations paid out more than $6.2 billion in ERISA class-action settlements of these cases, and at least 15 corporations had total ERISA payouts of $100 million or more.
Though there is no vaccine against litigation, there are practical steps plan sponsors can take to protect themselves if they are sued.