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<< Older News  |  September 20, 2021

News

All News > Retirement Plan Investment Costs

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Complex Ruling Dismisses NVIDIA Fiduciary Breach Lawsuit, for Now
planadviser Link to more items from this source
Sept. 20, 2021

"The dismissal order in the case includes several points of success for the plaintiffs, and while the suit has been tossed out due to a lack of standing, the court has left room for [filing of] an amended complaint." [Tobias v. NVIDIA Corp., No. 20-6081 (N.D. Cal. Sep. 13, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Growth in Managed Accounts Reflects Growing Desire for Customization
Qualified Plan Advisors Link to more items from this source
Sept. 17, 2021

"The Pension Protection Act of 2006 (the PPA), the resulting increased transparency, and more than a decade of accelerating retirement fee litigation caused what many call the 'race to zero'. Many plan fiduciaries ... succumbed to pressure to offer a plan as cheap as it could be, with the focus more on driving costs low instead of driving value high. While that approach may limit a company's risk on paper, it also limits participants' potential."

Tags: 401(k) Plans  •  Retirement Plan Design  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

Second Circuit Revives Share-Class Claim in NYU Retirement Plan Class Action
Jackson Lewis P.C. Link to more items from this source
Sept. 13, 2021

"The Court observed Plaintiffs' complaint alleged in detail that the cost differentials of specified basis points for the funds were included in the fund prospectuses and, therefore, available to the fiduciaries when making their decision, and that an adequate investigation would have revealed the readily apparent superior alternative investments.... The Court clarified that, between the fiduciaries and those covered by the employee benefit plans, the burden of proof first lay upon Plaintiffs and then on the fiduciaries[.]" [Sacerdote v. New York Univ., No. 18-2707 (2d Cir. Aug. 16, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

If You Meet Your Objectives, Does It Make Sense to Worry About Fees?
Fiduciary News; free registration required Link to more items from this source
Sept. 8, 2021

"Fees are important, they're just not the only important element in the analysis.... If you really want to complicate things, you need to look at all sources of fees. Ideally, you'll compartmentalize each source and match it with the comparable service. Within each of these compartments lies a competitive environment that continually changes; hence, the need for periodic fee analysis."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

District Court Dismisses Oshkosh Fees Challenge
PLANSPONSOR; free registration may be required Link to more items from this source
Sept. 8, 2021

"[A]ccording to the ruling, the plaintiff does not allege any facts as to what would constitute a reasonable fee or any facts suggesting that the fee charged by the recordkeeper is excessive in relation to the services provided.... The plaintiff's arguments regarding the provision of inappropriate share classes and the offering of actively managed investments were met with similar skepticism by the court." [Albert v. Oshkosh Corp., No. 20-901 (E.D. Wis. Sep. 2, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

Participants Sue $1.52 Billion Baptist Health South Retirement Plan
LawyersAndSettlements.com Link to more items from this source
Sept. 7, 2021

"The allegations outlined in the Complaint are similar to those in raised in many other ERISA breach of fiduciary duty lawsuits. [This case] is different, however, in the sheer size of the potential plaintiff pool. Counsel for the plaintiffs has also apparently been careful to draft the Complaint to avoid the risk of dismissal that has plagued similar lawsuits. This may augur well for a quick settlement." [Holmes v. Baptist Health of South Florida, Inc., No. 21-22986 (S.D. Fla. complaint filed Aug. 17, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Emerging Issues in 401(k) Fee Litigation
October Three Consulting Link to more items from this source
Sept. 1, 2021

"[T]wo elements of [this complaint] are somewhat unusual. First, plaintiff's theory that two share classes included in the fund menu were not 'prudent, in terms of cost' because of the availability of revenue sharing in an alternative share class (that plaintiff asserts should have been selected), even though that alternative share class carried a higher sticker price. And, second, plaintiff's attack on the plan's managed account arrangement." [Reichert v. Juniper Networks, No. 21-6213 (N.D. Cal. complaint filed Aug. 11, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

When It Comes to Fees, How Does a 401(k) Fiduciary Measure Value?
Fiduciary News; free registration required Link to more items from this source
Aug. 31, 2021

"From the plan sponsor's perspective, the 'right fee for the right value' represents a very broad window of acceptability. In fact, it might be accurate to say 'it's reasonable until it's not.' Nobody wants to test the limit of reasonableness, so the safest thing is to stay within a fairly common range. Still, it's a wide range because plans can be widely different."

Tags: Retirement Plan Administration  •  Retirement Plan Investment Costs

Plummeting Fund Fees Saved Investors $6.2 Billion in 2020
American Retirement Association [ARA] Link to more items from this source
Aug. 30, 2021

"[T]he average expense ratio paid by [mutual fund and ETF] investors is half of what it was two decades ago. Between 2000 and 2020, the asset-weighted average fee fell from 0.93% to 0.41%.... The asset-weighted average expense ratio for active funds dropped from 0.65% in 2019 to 0.62% in 2020 ... The asset-weighted average expense ratio for passive funds fell from 0.13% in 2019 to 0.12% in 2020[.]"

Tags: Retirement Plan Investment Costs

40% of 401(k) Participants Say Fees a Mystery, GAO Reports
Pensions & Investments Link to more items from this source
Aug. 27, 2021

" 'The GAO's findings are a wake-up call for the [DOL] and for consumers who have 401(k) plans,' said Rep. Robert C. 'Bobby' Scott, D-Va., chairman of the House Education and Labor Committee ... 'This report is clear evidence that the [DOL] should require plan providers to make fee disclosures easier to understand and ensure that participants are fully informed about how these fees impact their savings.' "

Tags: 401(k) Plans  •  Retirement Plan Investment Costs

Editor's Pick GAO Report: 401(k) Retirement Plans: Many Participants Do Not Understand Fee Information, But DOL Could Take Additional Steps to Help Them
U.S. Government Accountability Office [GAO] Link to more items from this source
Aug. 26, 2021

"DOL could take additional steps to help 401(k) plan participants improve their understanding and use of fee information, based on GAO survey responses and analysis.... [D]isclosures are not required to include certain information, such as fee benchmarks and ticker information ... that could be helpful for participants.... This report [1] assesses the extent to which 401(k) plan participants can understand and use fee information in disclosures; [2] describes disclosure practices used by selected countries to help retirement plan participants; and [3] examines any additional steps that DOL could take to advance participant understanding and use of fee information." [GAO-21-357, pub. Jul. 27, 2021, released Aug. 26, 2021]

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Investment Costs

Second Circuit Sends NYU Back to the Drawing Board
Kantor & Kantor Link to more items from this source
Aug. 26, 2021

"The court also faulted the district court's rationale that prudent fiduciaries might chose retail over institutional shares because they offer greater liquidity. This argument, the Second Circuit found, goes to the merits, impermissibly requires plaintiffs to rule out every possible innocent explanation and runs counter the principle that the complaint must be construed in favor of the plaintiffs. The appellate court also cautioned against using as benchmarks other decisions about prudent cost ranges." [Sacerdote v. New York Univ., No. 18-2707 (2d Cir. Aug. 16, 2021)]

Tags: 403(b) Plans and Annuities  •  Fiduciary Duties  •  Retirement Plan Investment Costs

New 403(b) Plan Suit Says Fees Were 'Astronomical'
American Retirement Association [ARA] Link to more items from this source
Aug. 23, 2021

"Another multibillion-dollar plan -- this one a faith-based, not-for-profit health care organization and clinical care network -- finds itself in the crosshairs of a Capozzi Adler lawsuit.... [T]he suit notes that they delivered and received confirmation of their administrative demand -- but got no response, and so they declared that the 'failure to respond within the time prescribed by the SPD deems Plaintiffs' administrative claim exhausted.' " [Holmes v. Baptist Health of South Florida, Inc., No. 21-22986 (S.D. Fla. complaint filed Aug. 17, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Supreme Court to Weigh in on Retirement Plan Fiduciary's Duty to Manage Plan Fees
Congressional Research Service [CRS] Link to more items from this source
Aug. 20, 2021

"This [CRS Legal Sidebar] provides background on ERISA's requirements for retirement plans and plan fiduciaries, discusses the issues before the Court in [Hughes v. Northwestern University], and concludes with select legal considerations for Congress.' [LSB10636, Aug. 19, 2021]

Tags: 403(b) Plans and Annuities  •  Fiduciary Duties  •  Retirement Plan Investment Costs

Court Revives Part of NYU 403(b) Plan ERISA Suit
PLANSPONSOR; free registration may be required Link to more items from this source
Aug. 18, 2021

"The appellate court agreed with the plaintiffs that the district court erred in dismissing claims regarding the use of retail share classes rather than cheaper share classes for funds in the plan. It also agreed with the plaintiffs that the district court improperly denied their motion to amend the complaint to include individual retirement plan committee members as defendants in the suit." [Sacerdote v. New York Univ., No. 18-2707 (2d Cir. Aug. 16, 2021)]

Tags: 403(b) Plans and Annuities  •  Fiduciary Duties  •  Retirement Plan Investment Costs

Pleading Standard for Excessive Fee Lawsuits: An In-Depth Analysis of the Northwestern Excessive Fee Case Before the Supreme Court (PDF)
Euclid Specialty Managers Link to more items from this source
Aug. 17, 2021

20 pages. "[P]lan sponsors need a fair and reliable pleading standard to be articulated by the Supreme Court. There must be some set of rules to regulate how and when plaintiffs can claim that retirement fees are too high: simply claiming fees are too high without substantiation should not be allowed to subject plan fiduciaries to the current litigation burdens and disruption.... But with these high stakes, plan sponsors should be wary of the prospects of the Northwestern case.... [T]he Northwestern plan's recordkeeping and investment arrangement is, at best, problematic, and bad facts often make bad law."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Policy

SeaWorld Soaked With Excessive Fee Suit
American Retirement Association [ARA] Link to more items from this source
Aug. 13, 2021

"The plaintiffs ... allege that since the inception of the plan (March 1, 2010), defendants offered higher cost mutual fund share classes as investment options for the Plan 'even though 90% of the time lower cost class shares of those exact same mutual funds with the same attributes were readily available.' They also claim that defendants 'offered higher cost share classes rather than readily available lower cost options to Plan participants for a decade before finally acknowledging their imprudent actions and changing share classes in January 2020.' " [Coppel v. SeaWorld Parks & Entertainment, Inc., No. 21-1430, (S.D. Cal. complaint filed Aug. 10, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Reducing the Risk of an Excessive Fee Lawsuit: Plan Committee Checklist
Euclid Specialty Managers Link to more items from this source
Aug. 12, 2021

"The best defense is to reduce your chance of being targeted by: [1] offering only the lowest-cost institutional share class investments; [2] offering primarily index investment options, particularly for the target-date suite; [3] requiring the plan sponsor to pay all recordkeeping fees, or ensuring that plan recordkeeping fees are on a low, flat, per-participant structure that does not increase as plan assets grow; and [4] requiring a full RFP on a regular basis, but at least once every three years."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Plaintiffs in Excessive Fee Suit Overcome Hurdles to Move the Case Forward
PLANSPONSOR; free registration may be required Link to more items from this source
Aug. 4, 2021

"Most of the plaintiffs' claims ... concerned the active suite of the Fidelity Freedom target-date funds (TDFs), which was the plan's qualified default investment alternative (QDIA). The lawsuit alleges that the active suite consistently underperformed the benchmark index suite of the Fidelity Freedom Funds, while charging much higher management fees, resulting in much higher expense ratios than comparable funds." [In re Omnicom ERISA Litigation, No. 20-4141 (S.D.N.Y. Aug. 2, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Great-West Defendants Prevail in Appeal of Fee Challenge
PLANSPONSOR; free registration may be required Link to more items from this source
Aug. 2, 2021

"Much of the text of the appeals court ruling is spent recounting the factual background of the case, including discussion of many actions taken by Great-West defendants to review and reconsider the investment fees questioned by the plaintiffs. The ruling also considers in close detail the legal analysis of the district court, backing its conclusions time and again[.]" [Obeslo v. Great-West Life & Annuity Ins. Co., No. 20-1310 (10th Cir. Jul. 26, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Majority of Investors Don't Fully Understand Investment Costs
State Street Corporation Link to more items from this source
July 27, 2021

"Those who think they understand expense ratios and basis points believe the average expense ratio considered no longer 'low cost' is 0.61%, which exceeds the asset-weighted average expense ratio of U.S. open-end mutual funds and exchange-traded funds. Fund price is not ranked highly as a primary criteria when evaluating investments like mutual funds and ETFs."

Tags: Retirement Plan Investment Costs

District Court: Plaintiff Lacks Standing to Challenge Retirement Plan Investment Options and Fees
Jackson Lewis P.C. Link to more items from this source
July 27, 2021

"The court found that plaintiff lacked standing to assert her ERISA claims for two main reasons. First, plaintiff included a list of the allegedly imprudent funds in her complaint, but Infinity provided evidence that all of her retirement assets were invested in a fund that was not included on the list.... Second, with respect to plaintiff's excessive fee argument, Infinity provided evidence that the one fund in which plaintiff invested did not pay any recordkeeping fees." [Lange v. Infinity Healthcare Physicians, S.C., No. 20-737 (W.D. Wis. Jul. 16, 2021)]

Tags: 401(k) Plans  •  Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

Fifth Circuit Affirms Dismissal of Putative Class Action Against American Airlines for Allegedly Imprudent 401(k) Plan Investment Options
Roberts Disability Law Link to more items from this source
July 21, 2021

"[The appellate court] disagreed with the district court that Plaintiffs had standing to sue FCU because they incurred a cognizable injury by receiving a lower interest rate in the FCU Option.... Lastly, the court found that the district court did not abuse its discretion in denying preliminary approval of the settlement. Even if the terms of the settlement agreement did not provide for further appellate review of the district court's decision, the court found that Plaintiffs cannot now challenge the district court's assessment of the settlement itself." [Ortiz v. American Airlines, Inc., No. 20-10817 (5th Cir. Jul. 19, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

SEC Extracts $96 Million Settlement from TIAA Subsidiary for Rollover Practices
The Wagner Law Group Link to more items from this source
July 20, 2021

"[The authors] believe that this action by the SEC is meant to be fair warning and that other advisors can expect the SEC to bring charges for their rollover practices.... it is clear that paying different compensation for different advisory products brings conflicts of interest and so does paying more to roll assets outside of an employer-sponsored plan.... It is critical that advisors maintain appropriate policies and procedures, monitor that the procedures are being followed, and keep adequate records of their findings."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

Supreme Court Has Opportunity to Bring Clarity to ERISA Fee Litigation
Michael P. Barry, via American Retirement Association [ARA] Link to more items from this source
[Opinion]
July 20, 2021

"The Supreme Court agreeing to review Hughes v. Northwestern presents the very real possibility that finally someone -- the Supreme Court -- will say something authoritative about exactly what a plan fiduciary's obligations are in building a fund menu. Must the fiduciary inspect every fund to make sure it carries the lowest possible fee? Or is simply giving participants an adequate choice, including low-cost index funds -- the sort of choice an ordinary investor has -- 'good enough?' "

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs


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