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ARTICLE · 25 MAY 2012

401(k) Fee Suit Yields Big Judgment Against Plan Sponsor And Others

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A federal district court has found the plan sponsor, employee fiduciaries and a recordkeeper of 401(k) plans liable for more than $35 million in damages under ERISA for failing to control costs, permitting the plans to pay excessive revenue-sharing compensation to service providers and imprudently selecting investment options.

United StatesEmployment and HR
Steven Kittrell
Steven Kittrell
Michael Hoes
Michael Hoes

A federal district court has found the plan sponsor, employee fiduciaries and a recordkeeper of 401(k) plans liable for more than $35 million in damages under ERISA for failing to control costs, permitting the plans to pay excessive revenue-sharing compensation to service providers and imprudently selecting investment options. Tussey v. ABB, Inc., 2008 U.S. Dist LEXIS 45240 (W.D. Mo. Mar. 31, 2012).

The court's decision will heighten the already intense scrutiny of 401(k) plan fees and will put additional pressure on fiduciaries to monitor and control revenue-sharing payments. In addition, the court's use of a plan's investment policy statement (IPS) against the plan's fiduciaries may prompt fiduciaries to reevaluate the contents and usage of the IPS.

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