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Is (k) For (k)aput?

A rough stock-market ride is making the retirement game tougher for 401(k) participants and plan sponsors who don't do the right thing by their plans

By Staff Writer | Updated on September 01, 2002

Ted Benna, creator of the first 401(k) plan and now president of an association charged with their preservation and growth, was shaking his head in disbelief. He had just visited a company that planned to merge its $33 million 401(k), featuring a line of funds from Merrill Lynch, with the plan of another company it was about to acquire. The acquirer’s first action: To make for an orderly administrative transition, it was going to order the company it was absorbing to liquidate its retirement savings investments with Fidelity Investments and shift to Merrill.

If Merrill’s funds underperformed, an attorney could easily make the case that the plan sponsor had not acted to protect the interests of plan participants, says Benna, noting that only months before there were published reports that Merrill had been raiding Fidelity managers to improve its own performance. “I said to them, ‘Your fiduciary responsibility is to make investment decisions based solely on the best interest of participants. And why in the world start a new relationship with employees by forcing them out of Fidelity funds?’” asks Benna, president of the 401(k) Association in Jersey Shore, Pa.

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