401(k) Fee Litigation

Analysis Group recently helped counsel for the administrator of large defined contribution plans win a dismissal with prejudice in litigation involving allegations that plan participants were being charged excessive fees. The plaintiffs had contended that arrangements for the investment managers to allocate revenues to the providers of other services were not adequately disclosed to participants and that this alleged lack of disclosure contributed to the alleged "excessive and unreasonable fees and costs" of investment options offered under the plans. The Analysis Group team, led by Managing Principals Mark Egland and Lee Heavner, worked with our academic affiliate using economic theory and data analyses to demonstrate that only total fees and not the allocation of fees affected participants. We also analyzed whether excessive fees could be sustained given the structure of the retirement plan services industry and whether the fees paid by the plan participants were similar to those paid by participants in comparable plans. In the court's dismissal, the judge ruled that the information regarding "revenue-sharing" arrangements was not material to participants' investment decisions and that neither the plan sponsor nor the plan administrator were obligated to disclose such information.

Associated Experts & Staff