The Employee Retirement Income Security Act of 1974 (ERISA) requires plan fiduciaries to act prudently and loyally when making decisions about the plan. In Martin v. CareerBuilder, LLC, a federal district court held that the complaint's allegations about expensive recordkeeping costs and imprudent investment options failed to give rise to an inference that the defendants violated their ERISA obligations.
In Depth
In Martin, the plaintiff, a former CareerBuilder employee, sued 401(k) plan fiduciaries for allegedly permitting unreasonable recordkeeping fees and imprudent investment options. The complaint alleged that the plan paid recordkeeping fees of $136.39 to $222.43 per participant, which was more than an allegedly "reasonable fee" of $40 per participant. The plan also included "retail" share classes of investment options instead of "institutional" classes, and many funds allegedly were more expensive than supposedly identical, cheaper funds. Some funds were "actively" managed, allegedly so the plan could share more revenue with the record-keeper. The complaint alleged that 40% of the more expensive funds remained in the plan for five years before being removed.
Relying on three principal US Court of Appeals...
