Many plan sponsors have a fear of liability and that's a good thing is they put that fear into use by putting good practices in place for their retirement plan. It means nothing if plan sponsors process that fear into something that isn't constructive for the plan.

Plan sponsor liability is real. Whether a plan sponsor can get sued is dependent on a lot of things such as plan assets, plan costs, and processes in place.

First off, big class action lawsuits on fees are going to be against larger plans. Smaller lawsuits by plan participants are a threat, but a low threat against most plans. If I was a small or medium size plan, I would be more fearful from the Department of Labor and/or the Internal Revenue Service taking a bite through an audit.

FDR said the only thing you have to fear is fear itself, but what plan sponsors need to do is turn that fear into a process to minimize risk and liability by putting good plan processes in plan and that just starts by hiring good plan providers. Hiring a good third party administrator and financial advisor are two huge keys to getting a good plan in place.

The threats to liability are always going to be there and litigation shows that anyone can sue anyone even if there is absolutely no liability and wrongdoing. A plan sponsor getting sued is like getting hit by a bus. No matter how care you use in handling it, crazy things can happen. Like looking both ways when you cross, good plan processes can go a long way in minimizing the plan sponsor's liability.