Two cases he presented offer easy reasons for why cybersecurity should be everyone's concern.

In Barnett v. Abbott Laboratories, a cyber thief was able to impersonate a participant and request and obtain a sum from that person's account. The participant had signed up for phone and email notifications of such requests, but the recordkeeper instead sent a notification via postal mail. By the time the participant received it, the money had been transferred to overseas banks where it couldn't be retrieved. The participant sued the plan sponsor and the recordkeeper.
In Leventhal v. MandMarblestone, a cyberthief obtained a copy of the participant's application for a previous withdrawal, modified it, and sent it to the plan provider as if it had come from the plan sponsor. The money was transferred to a bank, then transferred overseas before it could be stopped. The plan sponsor sued the provider, but in an interesting – and significant — twist, the plan provider countersued the plan sponsor, arguing that the plan sponsor's "carelessness" with respect to its employees and computer policies enabled less stringent security policies, which made the theft possible.

Part of a plan sponsor's responsibliity is looking at cyber security procedures of your providers, Reish said. Although the DOL would likely start enforcement actions with the largest companies, he said, you should still incorporate the recent DOL cyber guidance for fiduciaries, providers, and participants now, including doing the following:

Take the participant guidance and distribute it to your participants. Then redistribute it annually.
Make sure all retirement plan committee members have copies of the guidance and go over it, making sure the meeting minutes include the fact that you went over the guidance.
Consider possibly using the guidance to modify your recordkeeper RFPs.

DOL Guidance: Cybersecurity (Employee Benefits Security Administration)

Instant Insights /

2 plan sponsor responsibilities that new DOL guidance addresses: 2021

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