An excessive fee suit against a retirement plan holding $9 million in assets for 114 participants is being seen as the dawning of a new era in retirement plan fiduciary breach lawsuits. The suit, Damberg et al v. LaMettry’s Collision Inc., et al included allegations that the fees charged for the plan’s investments, record keeping, and administration were excessive. The remarkable thing here is not the allegations themselves; it is that the allegations are coming against a relatively small retirement plan.
Excessive fee fiduciary breach suits generally have targeted giant corporations with billions of dollars at issue. Here, the plan had just $9.2 million in assets and 114 participants. Most retirement plan operators and fiduciaries operate in this space of small and midsize retirement plans and if participants are going to start going after those plans to a greater degree plan fiduciaries are going to have to protect themselves.
Plan fiduciaries are personally liable for these breaches of fiduciary duty such as excessive fees. If they are sued, they could lose all of their personal assets. However, they can protect themselves and their business from actual or alleged breaches of fiduciary duty with fiduciary liability insurance.
How can you make sure you’re personally protected from a fiduciary breach? Fiduciary liability insurance!
Where the ERISA fidelity bond is set in place to protect the participants of the plan it, however, does not protect YOU as the fiduciary.
Colonial Surety Company is a Treasury Listed surety company providing ERISA fidelity bonds packaged with fiduciary liability insurance that includes a cyber liability insurance endorsement at no extra cost. Colonial is one of the leading providers of ERISA related products, offering bonds approved by the Department of Labor. We make it easy to obtain your bond instantly as well as allowing you to purchase retroactive insurance for the years the plan was not previously covered.
Under ERISA, fiduciaries may be held personally liable for a breach of their responsibilities in the administration or handling of employee benefit plans. Under ERISA 410, the plan cannot relieve you of this responsibility with indemnification language, however, it specifically permits persons with personal liability to purchase fiduciary liability insurance. Covering yourself with fiduciary liability insurance gives you a piece of mind that you are protected. Learn how to bundle your ERISA bond and fiduciary liability insurance for a discounted rate.