Recent Department of Labor (DOL) emphasis on fees combined with numerous 401(k) plan fee-related lawsuits have led some plan fiduciaries to question whether offering actively managed funds is riskier than passive funds that are typically less expensive.
Groom Law Group, a leading ERISA firm, has concluded that passive strategies do not reduce fiduciary liability:
ERISA does not mandate, and the DOL has not opined, that any particular investment strategy is prudent or imprudent.
"Court decisions do not support the view that actively managed funds are inherently less appropriate for 401(k) plans than passively managed funds, or vice versa," Groom Law Group's Stephen Saxon and Jason Lee note in a white paper.
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