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Why things just got a lot tougher for 401(k) plan sponsors

In its most recent report, the DOL reveals nearly four out of five fiduciary investigations result in fines or other corrective action.

By Chris Carosa | Updated on February 22, 2012

“It can’t happen to me” rings the oft-quoted lament of the denier. Today’s 401(k) plan sponsors flummox financial professionals everyday with their collective unwillingness to recognize the extent of their fiduciary liability. Even when ERISA attorneys present them with blunt reality (see “401(k) Plan Sponsors and the Risk of Fiduciary Liability”), we regularly see the simple mistakes of plan sponsors leading to DOL fines and court settlements.

The DOL reported in a 2011 fact sheet it collected more than $1 billion in fines in FY 2010. If that doesn’t scare the snot out of the typical 401(k) plan sponsor, the DOL revealed nearly four out of five of its investigations resulted in “monetary results for plans or other corrective action.” Those, as they say, are worse than Vegas odds. But that’s not the worst of it.

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