What can plan sponsors (and advisors) learn from litigation?  As it turns out, a lot – even if you aren’t responsible for a billion-dollar plan.

There are, of course, things to be learned from litigation.  We’ve learned that the plaintiffs’ bar doesn’t (always) knowhow to calculate fees (they rely on Form 5500), doesn’t know how to calculate performance, and doesn’t appreciate important distinctions in target-date fund glidepaths.  Though some do, of course. 

But the lessons drawn from litigation can serve as a reminder that fiduciaries should never assume, and never take anything for granted. 

Particularly not only what the law allows, but what the plandocument permits.

In a special edition of the Nevin & Fred podcast (or, if you prefer, a special edition of Prime Capital’s The Reish Brief), Nevin (Adams) and Fred (Reish) cover a wide range of topics with plenty of lessons to learn. 

We’re talking about things like:

1. Annual Beneficiary Checkups: Treat beneficiary designations like milk in the fridge—check them at least annually (and after marriage/divorce), because tiny “paperwork sins” like using 33⅓% instead of whole numbers can void the change and send everyone to court.

2. Zombie Beneficiary Cleanup: Don’t let auto-enrollment create “beneficiary-less zombies” in your plan; track thepercentage of participants missing designations and run a recurring campaign to get them completed before a claim turns into a family feud.

3. Documented Prudence Wins: Win lawsuits the boring way: hold regular (often quarterly) committee meetings, usean IPS that guides without handcuffing you, hire qualified advisors, keep written reports, and document why you kept or replaced investments—because ERISA wants prudence, not psychic powers.

4. Defensible Glidepath Choices: Target-date funds can be sued for being too conservative when markets soar and too aggressive when markets tank, so pick a glidepath based onworkforce demographics/industry realities and communicate the “why” to participants like Intel did.

5. Forfeiture Compliance Trap: Forfeitures are the new litigation piñata: confirm your plan is using forfeitures exactlyas the document says today, and prepare for upcoming restatements that may force you to hardwire a specific forfeiture-use method instead of “we’ll decide later.”

That’s right – all that – and more!

Episode Resources:

Court Says Call Center Communication Didn't Change Beneficiary Designation.

Appellate Court Backs Beneficiary Designation

Beneficiary Disclosures Trigger Fiduciary Breach Suit, Appeal

Season 4 Episode 2 "Glidepaths and 'Guide' Paths” | Nevin & Fred % %

Season 5 Episode 7: Nevin & Fred – Has the Forfeiture Tide Turned? | Nevin & Fred % %