It’s not often that an ERISA issue gets prominent play in the press, but a recent article by Gretchen Morgenson is an exception. A Lone Ranger of the 401(k)’s began:
The arithmetic could not be simpler. The more fees you pay in your 401(k) plan, the less cash you’ll have for retirement.
Still, fees hidden from view can make it hard for 401(k) holders to find out what they are paying. Plan sponsors, usually an employer, have a fiduciary duty to safeguard workers’ retirement accounts. But sponsors don’t always push providers like mutual funds to reduce fees or cut costs.
That may be about to change. On March 19, the Eighth Circuit Court of Appeals in St. Louis affirmed a lower-court ruling in one of the first 401(k) fee cases to go to trial. In that case, the court found that ABB Inc., a power and automation technology company, failed to monitor its plan’s internal costs and paid excessive fees by not negotiating for rebates from investment companies whose funds were offered in the plan. This, the court said, violated ABB’s fiduciary duties to the 401(k) participants