Heed the Plan or Face Your Peril: Failing to Follow Plan Procedures Produces Nightmares
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- Avoid liability by following benefit plan procedures! In Stanford v. Foamex L.P. et. al., despite making what appeared to be good decisions for the Foamex 401(k) plan, the company's executive officers nonetheless lost a lawsuit because they failed to execute those decisions in accordance with the plan's procedures. The Foamex case should serve as a reminder to heed the plan.
- Keep careful and complete records of all decisions and actions that are taken on behalf of the plan, and take care to draft clear plan communications that cannot be misconstrued to have unintended or ambiguous meanings.