The plaintiffs also claimed that defendants breached their fiduciary duties by selecting Retirement Services, a subsidiary of Insperity, as the plan's recordkeeper, paying it excessive administrative expenses, and failing to monitor and control the amount of those administrative expenses.
Plaintiffs allege that Insperity and Insperity Holdings, named in the plan as the fiduciary responsible for the plan's control, management, and administration, selected Retirement Services as the plan's recordkeeper without conducting any competitive bidding process. They also contend that all defendants breached their fiduciary duties as follows: Reliance, which is responsible for monitoring the compensation received by Retirement Services, failed to control the amount of asset-based revenue sharing and recordkeeping costs as the plan's assets grew; Retirement Services received compensation that was unreasonable because it drastically exceeded the direct expenses incurred in the administration of the plan; Holdings failed to adequately monitor Reliance's monitoring of Retirement Services; and Insperity billed participating employers for additional amounts for service and recordkeeping charges, which were paid to Retirement Services on top of the already allegedly excessive fees assessed.
As an initial matter, the Insperity defendants contend that plaintiffs' claim based on the initial selection of the recordkeeper is time-barred. Under ERISA, a plaintiff must file suit within the shorter of either six years after the "date of the last action which constituted a part of the breach or violation," or three years from the date that the plaintiff had "actual knowledge" of the breach. Retirement Services was selected as recordkeeper in October 2003, so Cohen said he will not consider plaintiffs' contention that Insperity and Holdings should have selected the recordkeeper through a competitive bidding process. He granted the Insperity Defendants' motion to dismiss that portion of the Amended Complaint.
However, because the majority of plaintiffs' assertions against Retirement Services concern its actions while operating as the recordkeeper, those allegations are not time-barred, Cohen said. He found the plaintiffs have sufficiently alleged that the Insperity defendants acted as fiduciaries concerning administrative and recordkeeping fees to withstand a motion to dismiss. NEXT: Money market versus stable value fund