October 11, 2008 Your 401k Plan – Breach of Fiduciary Duty? Posted by Karen DeCoster at October 11, 2008 06:24 AM
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Some friends and family have asked me to advise them on their choice of investments because they are down – an obvious point – in their 401k plans. A bit late, and there’s not much you can do anyways. But …prior to the meltdown, so few people were really willing to understand and believe that there was a financial storm in their future.
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While snooping around, I immediately noticed something in this Wachovia plan that is epidemic nowadays. There is absolutely no option to invest in something that is low in risk. Typically, if you are predicting that the market will go South (as I have been for years), you’d look for a 100% US T-Bill option in your 401k, even if you only park it there in the short term. However, this person’s plan had absolutely no low-risk option whatsoever.
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I know that everyone TRIES to keep liability at arm’s length from the business.
BUT, (there is always a big butt),
in this case, I think there may be a claim that has some merit against the employer and the fund company.
In my younger days, I would sneer at derision at “guaranteed return” offerings. I still do.
(Look at all those “safe” bond funds who have Lehman bonds in their portfolio, and tell me about safe! Money market funds as well. Icelandic banks. Inet banks. Yada, yada, yada!)
If a 401k has no “guaranteed” offering, I suspect that a claim could be made and imho would be paid off quietly.
Disclaimer: I’m not a lawyer, CPA, or even “thin, young, and handsome” any more. (Any More?)
Get me on the jury, present me with a good case, and I find for the “little guy” all the time.
Just my nickel’s work. (Two cents after inflation?)