Revisiting the LaRue Takeaways

I am sure everyone remembers the discussions following the LaRue ruling in February. Just in case you missed it, let's take some time to review some of the recommended takeaways and best practices:

• Documentation and Due Diligence – Ensure best practices of documentation and due diligence are taking place for all fiduciary decisions to demonstrate that decisions are being made with the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan.
  
  
  • Plan Expenses – Review the Plan Expenses to ensure that fees charged by service providers, attorneys, valuation firms, etc. are reasonable.
    
    
  • Service Agreements – Review service agreements to ensure the allocation of liability and indemnification rights between the plan sponsor and service providers is clear.
    
    
• Compliance with ERISA Section 404(c) – Review Plan Documents and Disclosures, administration policies and procedures, and quality control processes to ensure full compliance with ERISA Section 404(c).
  
  
  • Administrative Policies and Procedures – Make sure that the possibility of administrative errors is minimized and that participant directions are promptly processed and implemented. Make changes to the plan document, SPD, and administrative forms and processes as needed.
    
    
  • Investment Policies and Procedures – Review investment policies and procedures to make sure that the investment options are prudent. Consider providing access to investment advisors when appropriate.
    
    
• Claims Procedures – Treat challenges to plan administration and investment errors as claims for benefits under the plan. Denial of benefit claims under ERISA Section 502(a)(1)(B) require the participant to first exhaust administrative remedies and give the plan the opportunity to review the claim and either grant the claim or potentially put the plan in a better position to defend itself if the claim is denied and later litigated.
  
  
• Fiduciary Liability Insurance and Training – Make sure you have adequate Fiduciary Liability Insurance for all plan fiduciaries and that the coverage is non-wasting. Provide training to fiduciaries on an ongoing basis about their fiduciary exposure and ways to minimize their risk.
  

For more information on the case itself, check out the LaRue v. DeWolff, Boberg & Assoc. Inc., No. 06-856 (Feb. 20, 2008) information page and related links.