(These) Plan Review Meetings Matter!

Many plan fiduciaries go to great lengths to establish committees, develop investment policy statements (IPSs), implement consistent investment processes, hold meetings, and keep minutes. Without regard to whether that has happened, it’s natural for plan sponsors and fiduciaries to wonder from time to time: is this worth it? Do we need to do this? Are these meetings important?

The short answer is an emphatic “Yes!” The courts’ analyses from a couple of fairly recent 401(k) plan fee lawsuits provide tangible examples of what courts expect and reflect that courts look favorably upon thoughtful fiduciaries who meet those expectations.

In Nunez v. B. Braun, following a three-day bench trial, the court found in favor of the committee in response to allegations that it had breached its fiduciary responsibilities by using expensive investment options and failing to monitor or control recordkeeping expenses. In support of its conclusion, the court’s opinion included bullet-point lists of the: (1) 27 dates on which the committee had held meetings; (2) 12 meeting dates when the committee discussed performance; (3) 11 dates when it discussed revenue-sharing and share classes; and (4) five dates of recordkeeper benchmarking discussion.

Then, late last year in In re Quest Diagnostics, the court granted the fiduciaries’ motion for summary judgment in a case alleging they’d breached their duty of prudence in selecting and retaining investment options. The court found evidence of prudent processes through a combination of several factors, including: (1) the engagement of a fiduciary investment adviser; (2) the implementation of an IPS; (3) regular meetings; and (4) meeting minutes.

Many times, 401(k) plan lawsuits trigger fear and concern. These recent developments deliver the opposite message. There is a path to prudence. Your meetings and processes are a big part of that path.