A recently filed proposed class action lawsuit against Molson Coors’ 401(k) plan fiduciaries highlights the importance for 401(k) plan fiduciaries to carefully select and continually monitor all 401(k) plan investment options, including capital preservation options. The lawsuit alleges that plan fiduciaries breached their fiduciary duties of prudence and loyalty by selecting the Fidelity stable value fund offering and retaining it in the plan, even though it was significantly riskier and provided inferior returns than comparable funds. The lawsuit emphasizes that over $200 million was invested in the plan’s Fidelity stable value fund during each year at issue. Interestingly, this lawsuit focuses solely on the plan’s stable value fund investment option. At this early stage, the court has yet to rule on the lawsuit and it is unknown whether the lawsuit has merit.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Alex Smithhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngAlex Smith2025-09-25 09:51:422025-09-25 09:51:42Beer Never Broke My Heart … Recent 401(k) Lawsuit Challenges Stable Value Fund
A proposed class action lawsuit filed against Empower last month highlights the importance for 401(k) plan fiduciaries to carefully negotiate their services agreements with recordkeepers and other services providers. The lawsuit alleges that Empower took advantage of its position as the 401(k) plans’ recordkeeper by sharing participants’ confidential financial data with an affiliate. The Empower affiliate then allegedly used questionable sales tactics to target participants with large account balances to pressure them into rolling over their funds to an investment platform with high fees and underwhelming returns. At this early stage, the court has yet to rule on the lawsuit and it is unknown whether the lawsuit has merit. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Alex Smithhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngAlex Smith2025-09-03 09:25:332025-09-03 09:25:33Some Beach … Fiduciary Considerations As Recordkeeper Sued For Misusing 401(k) Participant Data
A recently filed lawsuit against Northwestern University and its health plan fiduciaries raises novel claims that could be problematic for employers that offer multiple medical benefit options, if the suit gains traction. The lawsuit alleges that the plan’s fiduciaries violated ERISA and breached their fiduciary duties by offering employees a medical plan option that provided insufficient value compared to an alternative option offered to employees. The plaintiffs allege that the “premium” plan option—which charges higher premiums in exchange for lower deductibles and cost sharing—is financially dominated by the “value” plan option because the lower cost sharing does not sufficiently outweigh the higher premium. This lawsuit is still in the early stages, and the court has yet to rule on whether the plaintiffs have plausibly stated a claim, let alone consider the merits of the allegations. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Alex Smithhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngAlex Smith2025-08-27 14:51:122025-08-27 14:51:12One Too Many … Employer Considerations Following New Lawsuit Challenging Employer Providing Health Plan Options
Last week the White House issued an executive order directing the Department of Labor (DOL) and Securities and Exchange Commission (SEC) to facilitate 401(k) participants’ access to alternative investments, including private equity, cryptocurrency, real estate, commodities, and infrastructure financing. This direction includes the DOL reexamining guidance regarding fiduciary duties with respect to asset allocation funds, clarifying the DOL’s position regarding alternative assets and including them in asset allocation funds, and proposing related regulations and guidance. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Alex Smithhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngAlex Smith2025-08-12 10:16:012025-08-12 10:16:01I Might Be In Oklahoma But I’m Not OK … Fiduciary Considerations Following Executive Order Allowing Private Equity in 401(k)s
The Department of Labor recently issued Compliance Assistance Release No. 2025-01 rescinding Compliance Assistance Release No. 2022-01 that directed 401(k) plan fiduciaries to exercise “extreme care” before adding cryptocurrency as a plan investment option. While the DOL’s recent guidance rescinds its 2022 guidance, it neither blesses cryptocurrency as an appropriate retirement plan investment option nor modifies ERISA’s fiduciary duties. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Alex Smithhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngAlex Smith2025-06-17 16:52:092025-06-17 16:52:09How Do You Like Me Now… Plan Fiduciary Considerations Following New DOL Crypto Guidance
The Departments of Labor, Treasury, and Health and Human Services (the “Departments”) recently announced a nonenforcement policy with respect to the 2024 Mental Health Parity and Addiction Equity Act (“MHPAEA”) regulations or otherwise pursue enforcement actions based on a failure to comply, at least temporarily. The Departments appear to have taken this approach to be consistent with a pending lawsuit challenging the 2024 regulations. The Departments indicated the nonenforcement policy will apply until 18 months after the litigation has concluded. The Departments also indicated they will be reexamining the MHPAEA enforcement program more broadly. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Alex Smithhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngAlex Smith2025-06-03 15:40:512025-06-03 15:40:51No Shoes, No Shirt, No Problems… But Nonenforcement Policy Doesn’t Make Mental Health Parity Compliance Optional
The Supreme Court recently issued a decision regarding the pleading standards for ERISA prohibited transactions claims in a case involving Cornell’s 403(b) plan to resolve a federal circuit court split. Under the Supreme Court’s decision, plaintiffs will only need to allege that the plan engaged in a prohibited transaction. The plaintiffs will not need to also allege the absence of a prohibited transaction exemption.
The Supreme Court’s decision could have far-reaching consequences because most transactions a retirement plan enters into with a service provider—such as a recordkeeper, investment advisor, or investment manager—constitute prohibited transactions with a party-in-interest (for which a prohibited transaction exemption typically applies). Plaintiffs may now be able to file lawsuits containing prohibited transaction claims capable of surviving motions to dismiss even though the allegations are meritless or frivolous. For example, the transaction subject to a claim may clearly fit within a prohibited transaction exemption, such as making reasonable arrangements for services for a reasonable price. This could be the case even if the plaintiff’s related ERISA breach of fiduciary duty claims that are part of the lawsuit are unable to survive a motion to dismiss. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Alex Smithhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngAlex Smith2025-05-05 12:51:442025-05-05 12:51:44Truck on Fire … Supreme Court Relaxes ERISA Pleading Standards
Beer Never Broke My Heart … Recent 401(k) Lawsuit Challenges Stable Value Fund
/in 401(k) Plans, Corporate Governance in Benefits, ERISA, Fees, Fiduciary Duties, Investments, Litigationby Alex Smith
A recently filed proposed class action lawsuit against Molson Coors’ 401(k) plan fiduciaries highlights the importance for 401(k) plan fiduciaries to carefully select and continually monitor all 401(k) plan investment options, including capital preservation options. The lawsuit alleges that plan fiduciaries breached their fiduciary duties of prudence and loyalty by selecting the Fidelity stable value fund offering and retaining it in the plan, even though it was significantly riskier and provided inferior returns than comparable funds. The lawsuit emphasizes that over $200 million was invested in the plan’s Fidelity stable value fund during each year at issue. Interestingly, this lawsuit focuses solely on the plan’s stable value fund investment option. At this early stage, the court has yet to rule on the lawsuit and it is unknown whether the lawsuit has merit.
Read more
Some Beach … Fiduciary Considerations As Recordkeeper Sued For Misusing 401(k) Participant Data
/in 401(k) Plans, Corporate Governance in Benefits, ERISA, Fees, Fiduciary Duties, Investments, Litigation, Retirement Plansby Alex Smith
A proposed class action lawsuit filed against Empower last month highlights the importance for 401(k) plan fiduciaries to carefully negotiate their services agreements with recordkeepers and other services providers. The lawsuit alleges that Empower took advantage of its position as the 401(k) plans’ recordkeeper by sharing participants’ confidential financial data with an affiliate. The Empower affiliate then allegedly used questionable sales tactics to target participants with large account balances to pressure them into rolling over their funds to an investment platform with high fees and underwhelming returns. At this early stage, the court has yet to rule on the lawsuit and it is unknown whether the lawsuit has merit. Read more
One Too Many … Employer Considerations Following New Lawsuit Challenging Employer Providing Health Plan Options
/in Cafeteria Plans, Corporate Governance in Benefits, ERISA, Fiduciary Duties, Health & Welfare Plans, Litigationby Alex Smith
A recently filed lawsuit against Northwestern University and its health plan fiduciaries raises novel claims that could be problematic for employers that offer multiple medical benefit options, if the suit gains traction. The lawsuit alleges that the plan’s fiduciaries violated ERISA and breached their fiduciary duties by offering employees a medical plan option that provided insufficient value compared to an alternative option offered to employees. The plaintiffs allege that the “premium” plan option—which charges higher premiums in exchange for lower deductibles and cost sharing—is financially dominated by the “value” plan option because the lower cost sharing does not sufficiently outweigh the higher premium. This lawsuit is still in the early stages, and the court has yet to rule on whether the plaintiffs have plausibly stated a claim, let alone consider the merits of the allegations. Read more
I Might Be In Oklahoma But I’m Not OK … Fiduciary Considerations Following Executive Order Allowing Private Equity in 401(k)s
/in 401(k) Plans, Corporate Governance in Benefits, DOL, ERISA, Fees, Fiduciary Duties, Investments, Litigation, Retirement Plansby Alex Smith
Last week the White House issued an executive order directing the Department of Labor (DOL) and Securities and Exchange Commission (SEC) to facilitate 401(k) participants’ access to alternative investments, including private equity, cryptocurrency, real estate, commodities, and infrastructure financing. This direction includes the DOL reexamining guidance regarding fiduciary duties with respect to asset allocation funds, clarifying the DOL’s position regarding alternative assets and including them in asset allocation funds, and proposing related regulations and guidance. Read more
How Do You Like Me Now… Plan Fiduciary Considerations Following New DOL Crypto Guidance
/in 401(k) Plans, Corporate Governance in Benefits, DOL, ERISA, Fiduciary Duties, Investments, IRS, Litigationby Alex Smith
The Department of Labor recently issued Compliance Assistance Release No. 2025-01 rescinding Compliance Assistance Release No. 2022-01 that directed 401(k) plan fiduciaries to exercise “extreme care” before adding cryptocurrency as a plan investment option. While the DOL’s recent guidance rescinds its 2022 guidance, it neither blesses cryptocurrency as an appropriate retirement plan investment option nor modifies ERISA’s fiduciary duties. Read more
No Shoes, No Shirt, No Problems… But Nonenforcement Policy Doesn’t Make Mental Health Parity Compliance Optional
/in Corporate Governance in Benefits, DOL, ERISA, Fiduciary Duties, Health & Welfare Plans, IRS, Litigationby Alex Smith
The Departments of Labor, Treasury, and Health and Human Services (the “Departments”) recently announced a nonenforcement policy with respect to the 2024 Mental Health Parity and Addiction Equity Act (“MHPAEA”) regulations or otherwise pursue enforcement actions based on a failure to comply, at least temporarily. The Departments appear to have taken this approach to be consistent with a pending lawsuit challenging the 2024 regulations. The Departments indicated the nonenforcement policy will apply until 18 months after the litigation has concluded. The Departments also indicated they will be reexamining the MHPAEA enforcement program more broadly. Read more
Truck on Fire … Supreme Court Relaxes ERISA Pleading Standards
/in 401(k) Plans, Corporate Governance in Benefits, DOL, ERISA, Fees, Fiduciary Duties, Investments, IRS, Litigation, Retirement Plansby Alex Smith
The Supreme Court recently issued a decision regarding the pleading standards for ERISA prohibited transactions claims in a case involving Cornell’s 403(b) plan to resolve a federal circuit court split. Under the Supreme Court’s decision, plaintiffs will only need to allege that the plan engaged in a prohibited transaction. The plaintiffs will not need to also allege the absence of a prohibited transaction exemption.
The Supreme Court’s decision could have far-reaching consequences because most transactions a retirement plan enters into with a service provider—such as a recordkeeper, investment advisor, or investment manager—constitute prohibited transactions with a party-in-interest (for which a prohibited transaction exemption typically applies). Plaintiffs may now be able to file lawsuits containing prohibited transaction claims capable of surviving motions to dismiss even though the allegations are meritless or frivolous. For example, the transaction subject to a claim may clearly fit within a prohibited transaction exemption, such as making reasonable arrangements for services for a reasonable price. This could be the case even if the plaintiff’s related ERISA breach of fiduciary duty claims that are part of the lawsuit are unable to survive a motion to dismiss. Read more