Short of not offering a 401(k) retirement plan, it would be difficult to completely avoid the possibility of receiving one of these lawsuits. Many employers need to offer a 401(k) plan to compete for the best talent. That said, there are ways to reduce the chances of receiving an excessive fee claim:

Select and monitor plan service providers who are reputable and accept status as fiduciaries.
Conduct a request for proposal (RFP) for plan service providers with some degree of regularity, ideally every 3–5 years or as plan changes warrant. Also, review plan fees between RFPs and have them benchmarked by an outside consultant.
Use counsel focused on the Employee Retirement Income Security Act (ERISA) to stay informed about trends in litigation against fiduciaries. Consider using ERISA counsel or the plan recordkeeper for annual fiduciary education training.
Monitor plan investment options for performance, and place options that are underperforming on a watch list.
Restrict the use of plan participant data by the recordkeeper for sales of products or services outside of the retirement plan contract. If restricting the use of this data cannot be accomplished, plan fiduciaries should use this to negotiate lower fees.
Refrain from using a subsidiary or affiliate as a service provider to the plan.
Refrain from offering funds the employer sells to third parties as investments.
Listen to experts hired to provide advice for the plan, but, at the same time, be willing to challenge their recommendations and ultimately make decisions that are in the best interests of plan participants.

What are some of the biggest challenges and exposures for fiduciaries in offering a defined contribution retirement plan?

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