That may very well be the mindset of opportunistic ERISA attorneys that view these plans as easy targets. For years most 403(b) plans were out of reach as they operated outside of ERISA. However, recent regulatory changes have resulted in many 403(b) plans becoming ERISA plans.
These plans are not sick nor are they dumb, but some of them are perhaps naïve. They are unaware that their fiduciary responsibilities have changed and that opens the door to potential breaches of fiduciary duties. Unfortunately a defense based on “I didn’t know” isn’t going to hold up in court. As a result we are seeing an increase in litigation regarding these plans with over a dozen new lawsuits filed just this year.
However these lawsuits are focused almost entirely on fees or investments, neither of which independently determines if the plan is successful. It’s our belief at Unified Trust, that a plan should be deemed successful if the majority of its participants are on track to adequately replace their income at retirement. The problem, and the reason it’s not part of the conversation or lawsuits, is that most plans are unable to measure it.
This is how we are different. Not only do we measure success by running a before and after study for every plan on our UnifiedPlan® platform, but we make participant outcomes the foundation of everything we do.
You can read more in my recent whitepaper regarding litigation of 403(b) plans, ERISA 403(b) Lawsuits- Are Hospital Plans Sick and University Plans Dumb? If you would like any additional information on how to measure the one thing that truly matters, participant success, please don’t hesitate to contact me.