Offering a retirement plan at your business shows you’re committed to helping your employees build funds for a comfortable and worry-free retirement. While that is an important first step, as a retirement plan sponsor, you’re obligated to go farther and act in employees’ best interests when making any decisions regarding the plan and its funds. Regardless of what happens with the federal fiduciary rule legally, you and any applicable plan administrators are required to act within investors’ best interests and document how the investment actions you take serve those interests properly.
While acting in your employees’ best interest is the right thing to do regardless, you could find yourself in legal trouble if you don’t. If employees have reason to think your company’s retirement plan is squandering money, taking excessive fees, or investing in funds that do not serve their interests, they can take legal action. You and your company could be held liable and accountable if the court agrees with the employees, and penalties can be steep. Just ask executives at Boeing, who paid a $57 million settlement when courts found the retirement plan was offering inappropriate, risky investments and charging exorbitant fees to employee investors.
To minimize the chance of your retirement fund facing complaints and legal actions for fiduciary breach, here are some tips for ensuring any actions you take are understood as furthering employees’ interests.
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