Q: Our 401(k) plan is relatively small. Do we need to be concerned about fiduciary issues and lawsuits? It seems like there are bigger fish to fry!
A: If your plan does not hold much money in assets, you are correct that ERISA enforcement agencies have bigger fish to fry. However, that does not mean you won’t find yourself in the frying pan. All it may take is one participant complaint — or even none in the event of random chance — and you could find yourself subject to a plan review by the Department of Labor’s Employee Benefits Security Administration (EBSA). That’s when the fun begins. According to the EBSA fact sheet for 20182, the DOL recovered $1.1 billion from enforcement actions against plans last year. Another $443.2 million was recovered through information complaint resolutions. EBSA closed over 1,300 civil investigations, about two-thirds of which resulted in some kind of corrective action, such as monetary recovery. The agency closed 268 criminal cases in 2018 as well, including indictments against 142 individuals. Eighty-seven of those corporate officers, plan officials, and service providers were convicted or pled guilty. The takeaway here is that NOW is the time to make sure you are dotting the I’s and crossing the T’s when it comes to your plan. Talk to your plan attorney or advisor to measure how you’re handling your compliance matters and what you could do to improve.