Sometimes if you don’t want to be a target, don’t make yourself to be a target.
Insperity Inc. a provider of outsourced human resource and business management services to small and midsized businesses has been sued by participants in a Insperity 401(k) plan. It has been alleged the company and its subsidiaries charged “excessive” record-keeping fees and made other fiduciary breaches of ERISA.
The complaint also alleges that Reliance Trust Co., the discretionary trustee for the plan, breached its fiduciary duties by allegedly making “imprudent” investment decisions.
The employees of Insperity’s client companies are offered participation in the 401(k) plan. Insperity offers its services, which include payroll and benefits administration, to more than 100,000 businesses with more than two million employees.
The problem is that Insperity hired Insperity Retirement Services, a wholly owned recordkeeping subsidiary to be the service provider to the Insperity 401(k) plan. The 401(k) plan ended up being the new record keeper’s first client. The problem also is that in 2013, 95% of Insperity Retirement Services’ assets under administration as TPA belonged to the Insperity 401(k) Plan.
It was also alleged that the fiduciary trustee and advisor to the plan, Reliance Trust, selected and retained its own high-cost and poorly performing investments to benefit itself at the expense of plan participants.
Now the participants, Insperity, and Reliance Trust will have their day in court and the allegations in the complaint are allegations. However, I always believe that as an ERISA attorney, it’s my duty to keep my clients from partaking in prohibited transactions and it’s even my duty to avoid relationships that suggest that prohibited transactions take place.
Now perhaps no prohibited transactions took place, but do you think Insperity hiring a subsidiary for plan administration and hiring a trustee where the trustee’s proprietary investment options are available just doesn’t look right.
Now what did I say about not making yourself a target?
ERISA litigators love targets, whether there were improper transactions or not.