Did your ERISA Plan Administrator Charge Excessive Fees?

Employees are often given few choices when it comes to their 401(k) or retirement plan. In many instances, plans contain excessive or hidden fees. Brokers and middle-men may be collecting fees which grossly exceed the value of the services provided to plan participants. Furthermore, plan sponsors may be failing to satisfy affirmative obligations to act in the best interest of the plan participants. These excessive fees deprive you of valuable retirement savings.

401k fees Know Your Rights & Examine Your Retirement Plan

401(k) plan abuses are not without remedy. Federal law prohibits excessive fees and allows you to recover damages from a plan sponsor who violates its fiduciary obligations. Employees can look to several factors that might indicate excessive fees, including: (1) if your plan does not offer the lowest-cost index funds; and (2) high expense ratios for each fund in your plan. Employees have a right to request fee and expense information from their employer. The United States Department of Labor's website provides a closer look at the type of fees that may be relevant to your 401(k) or retirement plan.

Plan Participants' Rights under ERISA

The Employee Retirement Income Security Act of 1974 (" ERISA") is a federal statute delineating the minimum standards for private industry pension plans. ERISA plans include traditional pension plans, 401(k) plans, employee stock ownership plans, employee health plans, among other employee benefits.

Under ERISA, employers, plan sponsors, and individuals involved in the management and administration of employee benefit plans have a fiduciary duty to place the interests of the plan participants and beneficiaries above all else. ERISA defines "fiduciaries" to include entities that (1) make recommendations on investing in, purchasing or selling securities or other property, or give advice as to their value (2) on a regular basis (3) pursuant to a mutual understanding that the advice (4) will serve as a primary basis for investment decisions, and (5) will be individualized to the particular needs of the plan. In typical employee benefit plans, ERISA fiduciaries are most often the employer, plan sponsor and plan service providers.

Employee plan participants may sue for breach of these fiduciary obligations under ERISA. Excessive or hidden fees, improper selection or monitoring of investment options, revenue sharing and self-dealing, among other things, may give rise to ERISA claims.

401(k) Class Action Litigation

401(k) Class Action Litigation

ERISA 401(k) claims are often brought as class actions, where one or more individuals sue on behalf of all other similarly situated plan participants. Many ERISA class actions allege that plan participants are paying "hidden" or "excessive" fees. Potential conflicts of interest arise when fees paid by plan participants to investment advisers (mutual fund companies) are then paid to brokers or other service providers as rebates or reimbursements. Known as "revenue sharing," this practice may provide an incentive for service providers to promote certain investment funds, marketing services and record keeping expenses over other more prudent and less costly options. Fiduciaries may also breach their duty to the plan by paying excessive investment management, administrative and record keeping fees. Excessive fees often occur when plan sponsors fail to monitor and change 401(k) investment fund options to maximize revenues and minimize expenses for the benefit of plan participants, such as selecting higher cost retail class shares or bundled service arrangements.

Dreyer Boyajian LLP's Commitment to Protecting Your Retirement Savings

Dreyer Boyajian LLP is committed to protecting the rights of employees and their retirement plans. If you suspect that your 401(k) or retirement plan is paying excessive fees, contact us for a free initial consultation and speak with an ERISA attorney who will fight to protect you and your family's retirement savings.