Megan K. Mechak
Tue, 07/25/2023
Workers deserve to have their savings protected from unnecessary fees, poor investment options, and slick enticements to invest in bad choices. And they are protected! If you believe your 401(k) or other retirement plan is shortchanging you, please contact us at MSE at info@mselaborlaw.com.
The Employee Retirement Income Security Act of 1974 (“ERISA”) is a federal law that sets standards for private sector retirement and health benefit plans. The law also protects members of those plans from abuse by those who administer them. ERISA imposes a fiduciary duty on the individuals and entities that administer retirement and health benefit plans covered by the law, which means that they are required to act in the plan participants’ and beneficiaries’ best interests. The fiduciary duty includes the obligations to act prudently, comply with the terms contained in the plan’s documents, avoid conflict of interests, and diversify the plan’s investments to minimize the risk of loss.
Recent ERISA litigation has focused on whether defendants with fiduciary duties mismanaged retirement plans, either by charging excessive administration fees or offering low-performing investment options when higher-performing choices were available.
For example, a federal judge in California preliminarily approved settlement of a lawsuit against LinkedIn Corp., which alleged that the company’s 401(k) plan fiduciaries failed to appropriately monitor the plan’s investments, keeping “imprudent” investments instead of less expensive and better performing available alternatives, and causing the plan to pay unreasonable expenses. The lawsuit focused on actively managed Fidelity Freedom Funds. Actively managed funds generally charge higher fees than index funds and those fees are passed on to investors. If the settlement is finally approved at a hearing in November, LinkedIn will pay $6.75 million to its plan participants.
In another similar case, also filed in California, Retailer 99 Cents Only Stores LLC agreed to pay $750,000 to plan participants who alleged that their 401(k) plan charged excessive recordkeeping fees and offered high-cost mutual funds that could have been obtained for less money.
MSE represents plan participants who believe they have been charged excessive fees or offered overly expensive investment options by their retirement benefit plans. For more information, contact MSE at info@mselaborlaw.com.
