Cornell 401(k) Lawsuit: Key Lessons for Retirement Plan Sponsors and Business Owners

At Foundation Wealth & Tax Advisors, we proactively help businesses mitigate fiduciary risks, optimize participant outcomes, and control retirement plan costs through expert corporate retirement plan advisory services.

Understanding the Cornell University 401(k) Lawsuit

Participants alleged fiduciary failures including:

• Excessive recordkeeping fees.
• Poor investment management with duplicative fund options.
• Insufficient fiduciary decision documentation.

The court affirmed these breaches, highlighting risks that every retirement plan sponsor must proactively avoid.

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Key Fiduciary Failures Identified

Common fiduciary governance errors revealed by this case include:

• Insufficient plan fee benchmarking
• Absence of competitive vendor searches
• Duplicative investment options
• Poor documentation of fiduciary decisions
• Inadequate vendor oversight

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Implications for Retirement Plan Sponsors

As a sponsor of a 401(k) or 403(b) plan, your fiduciary responsibilities under ERISA include prudent fee management, investment oversight, and safeguarding participant interests. Neglecting these duties exposes your organization to costly lawsuits, Department of Labor audits, and reputational harm.

The Cornell case underscores four critical areas every retirement plan sponsor should prioritize:

• Regular plan fee benchmarking
• Simple, clear investment lineups
• Comprehensive fiduciary documentation
• Independent oversight of service providers

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Four Critical Fiduciary Lessons for Plan Sponsors

1. Regularly Benchmark Plan Fees

Periodic reviews of your recordkeeping and investment management fees against market rates are essential. Failure to benchmark can lead to fiduciary breaches. At Foundation Wealth & Tax Advisors, our independent retirement plan fee audits provide objective insights to protect your business.

2. Streamline Your Investment Lineup

Complex investment menus increase fiduciary risk and confuse participants. Our advisors help create streamlined, diversified, participant-friendly investment menus designed for clarity and retirement readiness.

3. Document Your Fiduciary Governance Processes

Good fiduciary decisions must be documented thoroughly. Regulators and courts require clear evidence of prudence, including detailed meeting minutes, investment reviews, and documented fee evaluations. Our team assists with creating robust fiduciary governance processes and formal investment policy statements.

4. Independently Monitor Your Service Providers

Never assume your recordkeeper or investment provider always acts in your plan's best interest. Sponsors must actively oversee vendors and periodically conduct competitive reviews. We support sponsors with structured service provider evaluations and competitive Request for Proposal (RFP) processes.

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How Foundation Wealth & Tax Advisors Supports Fiduciary Success

As a leading retirement plan fiduciary advisor, we offer comprehensive advisory services tailored to plan sponsors and fiduciary committees, including:

• Fiduciary governance consulting
• Plan fee benchmarking and cost control
• Investment lineup design and ongoing review
• Retirement plan fiduciary outsourcing solutions
• Financial wellness program development

Our fiduciary support options include serving as an ERISA 3(21) co-fiduciary or an ERISA 3(38) Investment Advisor. We integrate advanced tax strategies to further optimize benefits for employers and employees alike.

Whether establishing a new 401(k) or enhancing your current plan, we are here to help.

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Avoid Fiduciary Mistakes That Cost Cornell

Cornell’s case illustrates how even prominent organizations can fail fiduciary obligations. Proactive fiduciary governance significantly reduces your company's risk and improves outcomes for your employees.

If you haven’t recently performed a plan fee audit, investment lineup review, or fiduciary process evaluation, now is the optimal time to act.

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Schedule Your Complimentary 401(k) Fiduciary Risk Assessment Today

Foundation Wealth & Tax Advisors offers a no-cost fiduciary risk assessment, including:

• Detailed retirement plan fee benchmarking
• Investment menu analysis
• Fiduciary governance process review
• Actionable, customized recommendations

Protect your organization and strengthen your fiduciary standing.

Contact us today for your complimentary consultation.

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