Is the Tide Turning on 401(k) Excessive Fee Cases?
In the midst of the current Brexit hangover circling the globe, in the United States we are facing (k)Exit – where companies sponsoring 401(k) Plans are giving consideration to – abandoning the 401(k) plan – due to unmanageable risks, such as excessive fee cases. As Executive Director of The Plan Sponsor University I have the opportunity to regularly meet with 401(k) Plan Sponsors in an educational setting to discuss What is Working and What is Not Working in Today’s Retirement Plans. In these sessions it is obvious that employers support the concept of offering a qualified retirement plan; however, plan sponsors are not enamored with all of the risks associated with such plans. For all plan sponsors who fall within those parameters – there is hope based upon a recent action in an Excessive Fee case within the U.S District Court of Minnesota.
Small Victory and a Large Ray of Hope
In what has been described by ERISA attorney and principal of The Wagner Law Group, Marcia Wagner as “highly atypical” the Plaintiff for the excessive fee case brought against the LaMettry Collision Inc. et al has withdrawn their case within weeks of the initial filing of the case. Normally the withdrawal of a case would not be newsworthy but this is not the normal excessive fee case that we in the industry have observed – for a number of reasons.
What Makes this Case Different?
In most ERISA related cases, the target of the class action excessive fee case has been a company with a national prominence which means the numbers are larger (both in employees and what the plaintiff was seeking). The LaMettry Collision Inc. case was filed as a breach of fiduciary duty under the Employer Responsibility Income Security Act of 1974. An unusual aspect of this case is the size of the Plan that is being targeted, $9 Million. This size plan is not of the magnitude that prior plaintiffs have set their sights on in recent cases.
What also distinguishes this case from others is that this case was withdrawn by Plaintiff’s counsel within weeks of it being filed.
In an environment where employers are considering (k)Exit as a possible strategy, the outcome of this case yields a victory for the plan participants and plan sponsors across the United States.
