Your Fiduciary Legacy

Abstract

Before the February 20th, 2008 LaRue decision by the United States Supreme Court, employee benefit plan participants who sued plan fiduciaries for investment losses faced near insurmountable legal hurdles. In LaRue the Court removed most of these hurdles, and may have opened floodgates releasing a tsunami of new 401(k) lawsuits! As fiduciaries of employee benefit plans governed by ERISA are personally liable for losses, this single decision represents the most significant expansion of potential liability faced by fiduciaries since ERISA became law in 1974.

Mark Twain famously said: It ain't what you don't know that gets you into trouble; it's what you know for sure that just ain't so! That piece of wisdom explains far better than I the fiduciary's basic quandary. Now add Voltaire's Le mieux est l'ennemi du bien which translated means The best is the enemy of the good and we see the insidious snare that has trapped most fiduciaries. That is, as fiduciaries begin to see the light and realize that much of what they have been told and thus have absolutely known, for sure, just ain't so, they too often strive, too fast, to fashion a solution with best positioned as the keystone. As the light dawns, they overreact. And in short order, simple ignorance gives way to a complex folly! This Paper sets forth a 6-Step Program intended to help a fiduciary meet his/her responsibilities.

Keywords: 401(k), retirement, ERISA, fiduciary

JEL Classification: C53, D31, D63, E21, G18, G23, G28, J26, K00