Fulfilling fiduciary duties, in prudence and loyalty, is a matter of methodologies, processes, and behaviors. The viability of the applied blueprint determines the breach and all else, like the chosen investment options and record-keepers, is an outcome.
Among other things, in the Class Action against George Washington University, the plaintiff claims that the defendant:
. Retained share classes with higher fees than other less expensive share classes (This is an outcome of a Breach of Fiduciary Duty of Prudence: No viable methodology was applied to choose investment options).
. Chose an administrator whose charges increase as the plan’s assets increase (This is an outcome of a Breach of Fiduciary Duty of Prudence; No viable methodology was applied to choose administrators/record-keepers).
. Did not monitor the investment options (This is an outcome of a Breach of Fiduciary Duty of Prudence; No viable methodology was applied to monitor/oversee investment options).
The participants of 401(k)s and 403(B)s are vulnerable and exposed to potential harm. The sophistication gap between the fiduciaries and participants is potentially wide. Fiduciaries of these plans have a duty to be prudent and loyal to the participants. ERISA, for the most part, applies to both. With regards to Fiduciary Duty, 403(b)s CAN and SHOULD be compared to 401(k)s. All else is a matter of outcomes that either result from a breach or don’t.
The viability of this Class Action should have little to do with comparing 403(b)s to 401(k)s. It will, however, have everything to do with the plaintiff’s ability to evidence the allegations.