13 May Fiduciary Liability in 401(k) offerings – a popular topic – what’s the big deal?
Several factors are driving the conversation recently around reducing or eliminating fiduciary liability from business 401(k) offerings. Most business owners (estimated to be at least 80%) have no idea that their 401(k) represents a significant exposure to this type of liability, and the other 20% may understand there is risk but may not know exactly what the risk is.
One factor for the interest in reducing or eliminating risk from fiduciary liability comes from recent litigation. Over the last few years, a number of law firms in the United States have made a living by gaining support through employees of larger companies who band together for class action lawsuits against their employers. The successes of these lawsuits are pushing some firms to try the same tactics with employees of small and medium size firms, thereby taking the phenomenon to a new level. Legal filings are expected to continue and gain steam over the next few years. If successful, small and medium firms will no longer operate under the assumption that they will never be sued for their fiduciary liability role in the implementation of their 401(k) plan.
Another factor for the interest in reducing or eliminating fiduciary liability risk is that business owners are beginning to slowly understand what the term “fiduciary liability” means. In the past, most business owners assumed that this level of liability was part of their overall corporate liability policies and therefore covered. Now they realize that, not only is this level of liability not covered by corporate liability policies, but is also a PERSONAL liability – not a corporate liability. That means that if there is a lawsuit, the business owners’ home, cars, boats, etc. are on the table as restitution if a fiduciary breach is discovered and proven.
There are solutions to the associated risk of fiduciary liability, and most center around outsourcing the responsibility of fiduciary liability to a third party such as TAG Resources, LLC. While most 401(k) providers do not offer this service as part of their product, TAG Resources bundles this service into their product offering and the cost is competitive.
TAG Resources also offers other levels of protection against liabilities like lawsuits regarding investment option selections DOL or IRS audits, performing the vast amount of paperwork required to manage a 401(k), and keeping plans in compliance.
If you want information on how to protect your business from fiduciary liability or other risks inherent in your 401(k), please contact:
TAG Resources, LLC
tagresources.com
866-315-1463
info@tagresources.com
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