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If you're annoyed at retirement plan results enough to want to sue someone, the fiduciaries of the plan will need to be faced in court. Fiduciaries include the officers of your company as well as the trustees and advisers they have appointed to operate the plan. But, before calling your attorney, let me give you some free legal advice:

I was once involved in a lawsuit that had a satisfactory ending for all parties, but the process was a little tedious. At one point, I came bounding into my attorney's office with what I thought was a great idea, and he said, "That's not a great idea. You don't understand. You're in the system now, and the system defies rational thinking."

To drive home his point, he added, "It's always dangerous when the client begins to think."

Today, in the world of 401(k) and other retirement plans, there is a continual drumbeat of legalese concerning something called "fiduciary liability" and the extent to which employee participants are protected adequately against rip-offs or even just disappointing investment results.

A broad definition of the term "fiduciary" under the law means anyone who actually makes or influences decisions regarding the retirement plan. Obviously, this means the selection of investments or the selection of the person or institution selecting the investments.

A Department of Labor regulation known as Section 404c spells out some steps that a plan sponsor (the employer) can take to reduce potential liability. This amounts to little more than a codification of common sense. The regulation says you should:

A) have at least three basic investment types,
B) offer the ability to change investment mix at least once per quarter,
C) have comprehensive and transparent information regarding risk levels and annual fees charged to the account.

Finally, employees must be informed in writing that the plan is to be operated in compliance with 404c and the fiduciaries of the plan must be identified. This gives lawyers a potential target because many 404c plans, once established, fail to follow the letter of their agreement.

Thanks to the law of unintended consequences, many 401(k) plans run afoul of 404c before the ink is dry. Retirement plan sales personnel across the country assume that they are fiduciaries because they are, in fact, presenting themselves as consultants and advisers to plan sponsors.

However, when drilling down into the language of ERISA, the 1974 law that established today's retirement plan environment, it is the "exclusive benefit" rule that trips up well-intentioned advisers. This says that fiduciaries must act in the sole interest of the plan's participants and beneficiaries.

Representatives of major 401(k) providers are obviously in conflict with that basic rule, so they specifically exempt themselves from fiduciary liability. A battle rages between industry and government today as to whether these advisers can offer specific investment suggestions to participants and still not be construed to be fiduciaries.

The financial services industry is loathe to have their sales reps setting the stage for a disgruntled participant who might want to tap into the deep pockets of, say, Fidelity after a sustained market slide. So, it's "Who's on first?" with nobody totally clear on what responsibilities lie beyond the company and its plan trustees.

The best antidote to this imbroglio is total fee transparency along with a revenue-neutral selection and presentation of investments to participants. In a perfect but impractical world, a 401(k) plan would be the most cost effective if the plan sponsor paid every dime of cost (including the mutual fund annual expense ratios, which most people ignore).

These costs are tax-deductible to the company and removing them from the plan would free up at least an extra percentage point per year of tax-deferred gain. For someone contributing an average of $10,000 per year and experiencing stock market averages during the past 20 years, this extra 1 percent compounded would have meant an additional $199,000 in assets.

That's just one person. Think of what it means to all employees combined. Any enlightened employee should turn to the employer and say, "Please reduce my taxable income by whatever my account balance in the plan costs so you can pay the bill and give my funds the greatest possible opportunity to gain in value." Xerox does this. Their annual charge to employees is 3/100ths of 1 percent per year. ($30 on $100,000.) Compare that with 2 percent or $2,000 on the same $100,000 in many plans today.

Virtually all lawsuits related to 401(k) plans since inception have had to do with undisclosed and excessive fees. None have been based on poor investment performance or lack of education. Since any lawsuit will cost at least $300,000 before it even gets to court, only the most abused participant will be inclined to "enter the system which defies rational thinking." Instead, they should badger company management for an improved, more cost-effective plan.

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