Using data from 2016 Form 5500 annual reports, the American Benefits Council found that there were over half a million 401k plans in the United States, covering more than 100 million participants. Total assets were approaching $6 trillion. And they’re an irresistible target for hackers, not just for the assets held in the accounts, but the sensitive information that can be sold or used for fraud.
Advisors aren’t subject to regulations regarding 401k cybersecurity specifically, but everyone in the 401k-food chain could find themselves on the wrong end of a lawsuit for failing to meet their fiduciary duties if a plan is breached.
When a participant in a plan offered by Estée Lauder had $99,000 stolen through unauthorized electronic distributions, she sued the makeup giant, the plan recordkeeper and the plan custodian for breaching “fiduciary responsibilities of loyalty and prudence owed under ERISA by allowing the unauthorized distributions and for failing to detect and halt the fraudulent distribution requests,” according to a brief from Groom Law Group.
SPONSORED
There are common-sense measures to protect advisory firms and retirement plan participants from
