401k Litigation

We represent Defined Contribution Plan participants in 401k litigation to recover amounts lost by fiduciary breaches.


ERISA imposes critical duties on plan fiduciaries:

First, to prudently select investment alternatives offered as plan options, taking care to avoid confusion and obfuscation;

Second, to regularly monitor the offered investments and remove under-performing investments–particularly in a volatile market where conditions change rapidly;

Third, to provide sufficient information regarding investment alternatives to allow an individual managing his or her account to make informed decisions concerning account management; and

Fourth, upon request, to provide a statement of value of a share or unit of each designated investment alternative as well as the date of the valuation.



The US Supreme Court has clarified in a recent case (Hughes v. Northwestern University) that a plan fiduciary has a duty to monitor all investment options offered to a self-directed plan, and to remove under-performing assets.  This duty is particularly critical in a volatile market.

Any breach of the duty to monitor and remove under-performing assets is the primary target for 401k litigation.



The biggest risks to any pension plan investment are the alternative investments. Through a Collective Investment Trust, many plans invest in hedge funds, private equity funds, structured notes, asset backed securities and the like.

These alternative assets might show a high “book value,” but they typically lack liquidity, and fair market value is nearly impossible to assess accurately.  This can become a real problem when you need to withdraw money from your individual plan for business or personal reasons.

Alternative assets are a primary target for 401k litigation.


On request of a participant or beneficiary (or legal counsel) a plan administrator must provide a statement of value for each designated investment alternative. The statement of value must be provided in the context of the fair value hierarchy, with the objective of providing the actual fair market value of an investment asset.

Many plan administrators attempt to value assets at “net asset value” rather than fair market value.  This is a fiduciary failure of duty in nearly every case, if the fair value hierarchy is ignored and NAV is used to obfuscate fair value.




What is the Duty to Monitor and Remove Under-performing Investment Options?

A Plan Fiduciary has a duty under ERISA to regularly monitor the investment options offered by the Plan, and to remove those that are under performing.

Does the Fiduciary of a Defined Contribution Plan have a Duty to Evaluate and Explain Plan Assets?

The Plan Fiduciary must file in each annual report a statement of the assets and liabilities of the plan aggregated by categories and valued at their “current value.”

Is There a Reporting Exception for Assets in a Collective Trust?

Yes. If some or all of the assets of a plan or plans are held in a common or collective trust maintained by a bank
or an insurance carrier  the report shall include the most recent annual statement of assets and liabilities of such common or collective trust. This does not give a view as to the individual assets in the trust, only the aggregate “current value” of the assets.

How Are the Assets in a Collective Trust Valued?

The “current value” of assets in a Collective Investment Trust are nearly always reported at net asset value, rather than at fair market value. This distinction can make a very important difference in understanding the actual value of your plan assets vs. the reported value. See here for discussion of this valuation issue.



How Often Must a Pension Benefit Statement be Reported to Individual Account Holders?

The administrator of an individual account plan must furnish a pension benefit statement—

(i) at least once each calendar quarter to a participant or beneficiary who has a self-directed plan; or

(ii) at least once each calendar year to a participant or beneficiary who not have the right to direct the investment of assets in that account.

What Information Must be Disclosed to Individual Account Holders, and How?

Under an individual account plan, any pension benefit statement must include:

— the value of each investment to which assets in the individual account have been allocated

— an explanation of any limitations or restrictions on any right of the participant to direct an investment (such as limitations on withdrawals)

— the information provided must be written in a manner calculated to be understood by the average plan participant.

Have Questions about your Pension or Benefits Plan?