A “new” entrant to the forfeiture reallocation suit “suite”—and a decision in favor of fiduciary defendants. Nevin & Fred review the latest developments.

Yet another 401(k) forfeiture fiduciary breach suit has beenfiled—but there are some key differences:

• The plaintiffs are represented by the law firm of Schlichter Bogard, LLC.
• The plan involved was the largest targeted by this type of litigation to date (nearly $8 billion).
• The plan document language prohibited use of forfeitures to offset employer contributions before offsetting administrative expenses (at least according to the suit).

And then there is a case that has been through severalrounds of adjudication—and though winning, has had to keep going back to court. But HP finally prevailed, and though the actions regarding the application of forfeitures were seen as fiduciary decisions—well, there was a bit of a “new” twist in how the judge viewed them.

In this episode Nevin (Adams) & Fred (Reish) examine theissues and potential implications, as well as a quick review of some recent updates.

Episode Resources

Schlichter Targets Massive 401(k) Plan With Forfeiture Suit

401(k) Fiduciaries Fend Off Forfeiture Reallocation Suit

Some “new” News:

DOL Pushes Pause on 401(k) Fiduciary Rule Suits

Breaking News: White House Nominates Next EBSA AssistantSecretary

Supremes Hear ERISA Burden of Proof Case

Could plan fiduciaries violate their duty of loyalty to plan participants despite a prudent process? A recent federal judge says yes. Nevin (Adams) & Fred (Reish) discuss.

Participant-plaintiff (and pilot) Bryan P. Spence filed suit in the U.S. District Court for the Northern District of Texas in June 2023 against Defendants American Airlines, Inc., American Airlines Employee Benefits Committee, Fidelity Investments Institutional, and Financial Engines Advisors, LLC (he subsequently dropped the latter two).

The suit alleged that they “breached their fiduciary duties in violation of ERISA by investing millions of dollars of American Airlines employees’ retirement savings[i] with investment managers and investment funds that pursue leftist political agendas through environmental, social and governance (‘ESG’) strategies, proxy voting, and shareholder activism—activities which fail to satisfy these fiduciaries’ statutory duties to maximize financial benefits in the sole interest of the Plan participants.”

And now—following a four-day bench trial during which there was “testimony from multiple witnesses and examined numerous exhibits,” a review of the record in its entirety and where the Court “has observed the witnesses to assess their credibility and weigh their testimony”—that same Judge O’Connor has now determined what appears to be an unusual divergence.

So, what’s going on with this case, and what does/should it mean for retirement plan fiduciaries? Nevin (Adams) and Fred (Reish) discuss.

Episode Resources:

Judge Says American Airlines 401(k) Fiduciaries ‘Blinded’ by ESG Focus

With apologies to Charles Dickens, Nevin & Fred have done a special year-end tribute (of sorts) to the “ghosts” of retirement past, present – and future.

Several weeks back Brian Brashaw issued a challenge (of sorts) to the podcasters of the retirement industry. Specifically, he expressed an interest in that unique and special group doing a podcast “visited by three spirits: ghosts of 401k past, present and future.”

To date, we’ve seen interest, but no “takers” – but here’s the Nevin & Fred option.

Episode Resources

An ‘Unintended’ Consequence - https://www.napa-net.org/news/2024/11/talking-points-an-unintended-consequence/

4 Things You Need to Know About Default Funds https://www.napa-net.org/news/2019/2/4-things-you-need-know-about-default-funds/

How to SECURE 'Better' Retirements https://www.napa-net.org/news/2024/6/talking-points-how-secure-better-retirements/ Myth Understandings https://www.napa-net.org/news/2019/2/myth-understandings/