When monitoring investment and recordkeeping fees, a plan sponsor would be smart to remember the recurring themes of recent 401(k) participant fee lawsuits.
“If you haven’t paid any attention to these issues as a sponsor, you’re a little behind the game. But it’s never too late,” says Sam Henson, director, legislative and regulatory affairs at adviser Lockton Retirement Services in Kansas City, Missouri. Story Continued
Most 401(k) fee lawsuits so far have targeted large, well-known companies. “But there are only so many mega plans in the country, and so these suits are starting to move down-market,” he says. “It doesn’t matter whether you have $10 billion in your plan or $10 million: Everybody has the same fiduciary obligations.”
The settlements in some recent fee litigations “have been pretty astronomical,” says Emily Seymour Costin, a partner at law firm Alston & Bird LLP in Washington, D.C. “We have recently seen settlements ranging from $15 million to upward of $60 million. It is definitely worth your time to understand these issues—and to adjust, if necessary, your processes to monitor fees.”