Compliance

Emory University Excessive 403(b) Plan Fee Suit Moves Forward

By Rebecca Moore editors@plansponsor.com | May 12, 2017
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The complaint included allegations that the defendants’ “revenue sharing” method is improper and overcompensates the recorkeepers. Pannell said that at this point, the plaintiffs’ do not have the burden “to rule out every possible lawful explanation” for the allegedly overcharged recordkeepers’ fees used in the plan. “The defendants can be held accountable for failing to monitor and making sure that the recordkeepers charged appropriate fees and did not receive overpayments for their services. Therefore, the plaintiffs’ claim regarding “revenue sharing” will not be dismissed,” he wrote.

The plaintiffs’ complaint states “Despite the long-recognized benefits of a single recordkeeper for a defined contribution plan, defendants have continued to contract with three separate recordkeepers for the Plans: TIAA-CREF, Fidelity, and Vanguard. This inefficient and costly structure has caused plan participants to pay excessive and unreasonable fees for plan recordkeeping and administrative services.”

Pannell ruled that the plaintiffs’ allegation that a prudent fiduciary would have chosen one recordkeeper instead of three is sufficient to state a claim for relief. Also, he said the plaintiffs’ allegation of the absence of competitive bidding for the17 recordkeeping services was imprudent; therefore, the plaintiffs’ claim is sufficient to state a claim for relief.

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