As baby boomers retire, a wave of lawsuits could come against their employer's handling of 401(k) funds, a recent article form Lawyers Weekly USA claims.

So far, 401(k) lawsuits have been limited to class actions against large corporations, but experts warn that smaller firms could be next and more individual suits are possible.

"I think there's going to be an influx of suits, because 401(k) plans have become the primary retirement vehicle for Americans," said Derek Loeser, of the Seattle law firm Keller Rohrback, who is a specialist in ERISA-type suits.

Loeser speculates that if a plan fiduciary is not doing its job carefully enough, it could be ascribed liability for fund shortfalls. Even if a fiduciary spots imprudence and tries to mitigate it, but fails, fault will be on its side.

"If you are an officer or director and you know fraud or other illegal activity is going on that affects the investments, then it's not 'prudent,'" Loeser said. "And if you have made a mistake because you didn't go through the proper steps to evaluate whether the investments you provide are 'prudent,' you're liable under ERISA for procedural imprudence."

Plaintiffs can sue their companies for fund shortfalls if any of the following indiscretions have been committed: over-investing of the 401(k) in company stock, investing in high-fee mutual funds, or undisclosed financial relationships. Experts say that all of the practices are inappropriate, but only become legitimate if there has been a marked and significant loss to the employees' funds.

To avoid lawsuits raining on their heads, employers should make sure that proper protection tactics are set in place. Loeser advises practices like monitoring the fiduciary via forming a committee and taking minutes down, insuring the 401(k) funds sufficiently cover all potential losses, and hiring an investment advisor.

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