Mutual Fund Options in 401(k) Plans: Are you paying too much?
Today, twice as many workers have 401(k) plans than have lifetime pensions, a complete reversal from 30 years ago. 72 million individuals participated in 401(k) plans, with assets totaling $3 trillion.
Unlike traditional pension plans, a 401(k) plan offers employees no set retirement benefit. Instead, the employee’s benefit is whatever he or she manages to save in the plan account. Every dollar saved or earned matters. The monthly or yearly fees currently being withheld from the plan accounts may seem relatively small when compared to the total account value, but over time the fees end-up costing individual investors thousands, or even hundreds of thousands, of dollars.
Keller Rohrback L.L.P. is investigating various companies for potential ERISA violations regarding the investment options available in the company-sponsored 401(k) plans and the fees and expenses pertaining to those options.
Our investigations focus on whether these and other companies have breached their fiduciary duties under ERISA by, among other things, causing 401(k) plans to incur excessive management and administration fees, entering into improper fee sharing arrangements with mutual fund companies, and selecting mutual funds that charge excessive fees to plan participants, based on self-interest as opposed to the prudent evaluation of the merits of the funds. These abuses, though sometimes difficult to detect based on the information given to plan participants, can cost plans millions of dollars and substantially reduce the retirement savings of plan participants.
Additionally, we are investigating the fees that service providers, such as recordkeepers, collect from mutual fund companies or other entities. Some of these fees may be regularly disclosed. Others have been undisclosed for many years and are now subject to new Department of Labor disclosure rules. Whether disclosed or not, these "indirect" fees paid to plan service providers increase the total cost of retirement plans and decrease participant savings. In addition to potentially being excessive, and particularly if these fees are undisclosed, they may be prohibited transactions under ERISA.
If you are a plan fiduciary or a plan participant concerned about fees associated with your 401(k) plan and would like more information regarding our investigation, please contact paralegal Jennifer Tuato’o or attorneys Gretchen Obrist or Erin Riley at 800/776-6044, or via e-mail or via e-mail at firstname.lastname@example.org.
Click here for information on how fees affect your retirement savings.