Plan sponsors today have unprecedented options available to them when making investment selection decisions for their plans. At the same time, plan sponsors face increasingly complex fiduciary requirements, as well as pressure to provide an optimal plan experience for participants at a reasonable cost. Making investment selection decisions under these conditions can prove challenging.

These challenges are compounded by the fact that defined contribution plans are increasingly the target of class action litigation. Claims are often brought by current or former employee-participants who have been recruited by plaintiff law firms to assert claims on behalf of the plan. Alleged claims are often based on little more than publicly available information about a plan’s investments, and lack the benefit of any insight into the fiduciaries’ selection and oversight process. Nonetheless, the specter of a lawsuit has many fiduciaries reevaluating how they select and monitor their plan investments.

After more than a decade of litigation, a body of decisional law is emerging that can offer plan fiduciaries insights into how courts analyze claims concerning plan investments. This white paper aims to help fiduciaries navigate the waters of plan investment evaluation, selection, and monitoring processes by:

• Decoding the legal standards in recent court decisions that apply to fiduciaries who are responsible for choosing investment options for their plans.
• Identifying some key takeaways from legal authorities that may assist fiduciaries assessing investments for their plan lineup.
• Emphasizing the importance of process as the most important factor in fiduciary decision-making.