Subscribe Now!
Free Daily News, Jobs, Webcasts, Discussions
Display and Distribute
Your Job Openings
COVID-19 News
COVID-19 Webcasts

Featured Jobs

Distribution Specialist

Carpenter Morse Group
(Telecommute / Longwood FL)

Carpenter Morse Group logo

Retirement Plan Consultant

Definiti
(Telecommute / Dallas TX / University Place WA / Spring TX)

Definiti logo

Free Daily News and Jobs

“BenefitsLink continues to be the most valuable resource we have at the firm.”

-- An attorney subscriber

Mobile App image LinkedIn icon
Twitter icon
Facebook icon

View Coronavirus (COVID-19) News and Resources

<< Older News  |  September 25, 2020

News

All News > Retirement Plan Investment Costs

Get this news and more in our free daily email newsletters.
ERISA Excessive Fee Self-Dealing Suit Targets Pentegra MEP
planadviser Link to more items from this source
Sept. 18, 2020

"Comparing Pentegra's plan to another large MEP, the complaint notes that the other plan uses an outside recordkeeper and paid an average of $80 per participant. 'Pentegra's 2018 average per participant fee of approximately $388 for similar 'contract administrator' services was 485% higher,' the complaint states." [Khan v. Bd. of Dir. of Pentegra Defined Contrib. Plan, No. 20-7561 (S.D.N.Y. complaint filed Sep. 15, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Often Confused: The Use and Impact of ERISA 408(b)(2) and DOL Reg 404(a)-5
Business of Benefits Link to more items from this source
[Guidance Overview]
Sept. 8, 2020

"[DOL Reg 2550.404(a)-5] is merely a rule which requires that participants regularly receive certain investment disclosures.... [ERISA Section 408(b)(2)] requires the service provider's contract with the plan's fiduciary contain certain, specific terms. It does NOT require that those fees be disclosed to participants, nor does it require annual disclosure. It is simply a business matter between the fiduciary and the service provider.... 408(b)(2) is, at its heart, a rule which requires specific, enduring contract terms. It is not a disclosure rule."

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

LinkedIn Joins List of Plan Sponsors Targeted in Stream of Excessive Fee Suits
PLANSPONSOR; free registration may be required Link to more items from this source
Aug. 19, 2020

"As in other excessive fee lawsuits, the use of the Fidelity Freedom Funds target-date fund (TDF) series is called out in the LinkedIn case. However, it is not just for the use of the actively managed version of the TDF suite rather than the index version, as has been the case in other lawsuits, it is also for not offering the CIT version offered by Fidelity. Notably, the complaint says LinkedIn changed the TDFs offered in the plan from Fidelity Freedom K funds to FIAM Blend Target Date Q Funds at some point in late 2018 or early 2019, but the plaintiffs says this was 'too little too late' and say the change 'should have been done much sooner.' " [Bailey v. LinkedIn Corp., No. 20-5704 (N.D. Cal. complaint filed Aug. 14, 2020)]

Tags: Retirement Plan Investment Costs

Costs Continue to Fall for 401(k) Investors
Investment Company Institute [ICI] Link to more items from this source
Aug. 17, 2020

"401(k) plan participants incurred an average expense ratio of 77 basis points for investing in equity mutual funds. By 2019, that figure had fallen to 39 basis points, which is a 49 percent decline.... In 2019, the asset-weighted average expense ratio incurred by 401(k) investors in equity mutual funds was 39 basis points -- lower than the industrywide asset-weighted average of 52 basis points."

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

Estee Lauder and Costco Targeted in 401(k) Lawsuit Surge
Forbes Link to more items from this source
Aug. 14, 2020

"Estee Lauder and Costco are now among a growing number of companies facing overwhelming backlash from employees, consumers and lawmakers for these alleged offenses. But these billion dollar plans aren't the only ones being targeted by lawsuits; they are slowly starting to trickle down to small and medium sized 401(k) plans as well."

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

Illinois Federal Court Dismisses ERISA Claims Against 401(k) Fiduciaries Over Fees and Investment Options
McDermott Will & Emery Link to more items from this source
Aug. 11, 2020

"The Seventh Circuit remains a difficult jurisdiction for plaintiffs seeking to file bare-bones, conclusory ERISA claims against 401(k) fiduciaries. [This case] highlights the importance of selecting a prudent overall mix of options for participants. [It] also rejects the one-size-fits-all pleading approach to choosing retail investment classes over institutional classes, selecting passive instead of active options and including funds from only one or two of the allegedly best investment managers." [Martin v. CareerBuilder, No. 19-6463 (N.D. Ill. Jul. 1, 2020)]

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

Here's How Much 401(k) Plan Mutual Fund Expense Ratios Have Dropped
American Retirement Association [ARA] Link to more items from this source
Aug. 5, 2020

"401(k) plan participants investing in equity mutual funds incurred an average expense ratio of 0.39% in 2019, compared with 0.42% in 2018 and 0.77% in 2000. The average expense ratio that plan participants incurred for investing in hybrid mutual funds fell to 0.46% in 2019, from 0.49% in 2018 and 0.72% in 2000. [T]he average expense ratio that 401(k) plan participants incurred for investing in bond mutual funds rose from 0.34% in 2018 to 0.35% in 2019. However, this is down from 0.60% in 2000[.]"

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

AIG Settlement Shows K-12 403(b) Not A-OK
403bwise Link to more items from this source
[Opinion]
Aug. 4, 2020

"On July 28, 2020 the SEC announced that AIG/Valic Financial Advisors (VFA) had agreed to a multi-million dollar settlement over the firm's practices in the Florida K-12 403(b) market.... It is estimated the firm reaped upwards of $30 million through the practices in question.... Unfortunately, this latest revelation is but a few grains of sand on a very dirty beach. The K-12 403(b) is still not A-okay."

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

Princeton 403(b) Excessive Fee Settlement Features $5.8 Million Price Tag
planadviser Link to more items from this source
July 31, 2020

"In addition to the payment into a settlement fund, Princeton ... will not increase the plans' recordkeeping fees for three years and will use commercially reasonable best efforts to continue to attempt to reduce recordkeeping fees. Princeton has also agreed to conduct [an RFP] process for recordkeeping-administrative services and outside independent investment consulting services within three years after the settlement approval." [Nicolas v. The Trustees of Princeton Univ., No. 17-3695 (D.N.J. proposed settlement filed Jul. 28, 2020)]

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

Quest Diagnostics Faces 'Excessive Fee' Litigation
planadviser Link to more items from this source
July 30, 2020

"A key fact included in the allegations is that the Quest Diagnostics plan reportedly has approximately $4 billion in assets, qualifying it as a 'jumbo plan' in industry parlance. The plaintiffs say this means it should be able to secure easy access to very low-cost investment options, given the economies of scale such buying power generates." [Rice v. Quest Diagnostics Inc., No. 20-9540 (D.N.J. complaint filed Jul. 28, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

SEC Charges VALIC Financial Advisors with Failing to Disclose Payments to Promote Services to Florida Educators
U.S. Securities and Exchange Commission [SEC] Link to more items from this source
[Official Guidance]
July 28, 2020

"The [SEC] today charged Houston-based VALIC Financial Advisors Inc. (VFA) in a pair of actions for failing to disclose to teachers and other investors practices that generated millions of dollars in fees and other financial benefits for VFA. In the first action, the SEC found that VFA failed to disclose that its parent company paid a for-profit entity owned by Florida K-12 teachers' unions to promote VFA and its parent company services to teachers. In the second action, the SEC found that VFA failed to disclose conflicts of interest regarding its receipt of millions of dollars of financial benefits that directly resulted from advisory client mutual fund investments that were generally more expensive for clients than other mutual fund investment options available to clients. VFA agreed to pay approximately $40 million to settle the charges in these two actions."

Tags: 403(b) Plans and Annuities  •  457 Plans  •  Retirement Plan Investment Costs

The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2019 (PDF)
Investment Company Institute [ICI] Link to more items from this source
July 28, 2020

32 pages. "In 2000, 401(k) plan participants incurred an average expense ratio of 0.77 percent for investing in equity mutual funds. By 2019, that figure had fallen to 0.39 percent, a 49 percent decline.... Employers offering 401(k) plans typically hire service providers to operate these plans, and these providers charge fees for their services. Employers and employees generally share the costs of operating 401(k) plans."

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

Cost Savings Seen as Main Force Behind Shifts in 401(k) Investment Offerings
Pensions & Investments Link to more items from this source
July 27, 2020

"Changes made to the investment lineups of corporate 401(k) plans in 2019 reflect U.S. sponsors' ongoing focus on cost savings ... Changes to index fund lineups among plans were prevalent, with many adding to their passive tiers or changing index fund providers[.]"

Tags: Retirement Plan Investment Costs

The Effect of Fee Disclosures on 401(k) Investment Allocations
National Bureau of Economic Research [NBER]; purchase required for full document Link to more items from this source
July 27, 2020

"[The authors] examine the effects of a 2012 regulatory reform that mandated fee and performance disclosures for the investment options in 401(k) plans.... [P]articipants became significantly more attentive to expense ratios and short-term performance after the reform. The disclosure effects are stronger among plans with large average contributions per participant and weaker for plans with many investment options."

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

2016 DOL Fiduciary Rule Cut Variable Annuity Sales in Half
National Bureau of Economic Research [NBER]; purchase required for full document Link to more items from this source
July 27, 2020

"Brokers earn higher commissions for selling inferior annuities, in terms of higher expenses and more ex-post complaints.... To help limit conflicts of interest, the [DOL] proposed a rule in 2016 that would hold brokers to a fiduciary standard when dealing with retirement accounts. [A]fter the proposed fiduciary rule, the sales of high-expense variable annuities fell by 52% as sales became more sensitive to expenses and insurers increased the relative availability of low-expense products. Based on [the authors'] structural model estimates, investor welfare improved as a result of the fiduciary rule under conservative assumptions."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

District Court Dismisses 401(k) Excessive Fee Lawsuit
Holland & Knight Link to more items from this source
July 22, 2020

"The court held that it was legally insufficient to state a cognizable cause of action premised primarily on allegations that the plan did not offer the cheapest or best performing funds available in the marketplace ... The district court's ruling is noteworthy in that it departs from other courts that have permitted lawsuits to survive a motion to dismiss based on similar allegations." [Martin v. CareerBuilder, No. 19-6463 (N.D. Ill. Jul. 1, 2020)]

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

Biogen Inc. Faces ERISA Challenge Over Funds, Fees
planadviser Link to more items from this source
July 20, 2020

"While not the smallest to face an excessive fee lawsuit in recent years, Biogen's defined contribution plan held less than $1 billion at the start of the proposed class period.... The plaintiffs ... say the defendants did not try to use the plan's bargaining power to reduce expenses. They also suggest plan fiduciaries failed to exercise appropriate judgment to scrutinize each investment option that was offered in the plan, to ensure it was prudent in terms of cost and performance." [Covington v. Biogen Inc., No. 20-11325 (D. Mass. complaint filed Jul. 14, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

CareerBuilder 401(k) Lawsuit Dismissed: No ERISA Violation in Fees or Investment Options
Proskauer Link to more items from this source
July 10, 2020

"The [federal district] court found that the plan offered an acceptable mix of options with expense ratios ranging from .04% to 1.06% -- within the range found to be reasonable as a matter of law by other courts. The court also found that plaintiff's allegations that defendants removed or modified a majority of the funds in the plan over a five-year period actually supported an inference that defendants had a prudent process in place for monitoring the plan's funds." [Martin v. CareerBuilder, No. 19-6463 (N.D. Ill. Jul. 1, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

ERISA Case Against CareerBuilder Dismissed
Pensions & Investments Link to more items from this source
July 8, 2020

" 'Defendants' failure to offer every index fund under the sun is not, in and of itself, imprudent, so long as the plan offers a mix of investments and there are no other indicia of a flawed process,' wrote [the district court judge]. 'Here, the plan offers an acceptable mix of options.' " [Martin v. CareerBuilder, No. 19-6463 (N.D. Ill. Jul. 1, 2020)]

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

Use of Relatively New CITs Challenged in Second Lawsuit
PLANSPONSOR; free registration may be required Link to more items from this source
July 7, 2020

"According to the complaint, instead of acting in the exclusive best interest of participants, Aon Hewitt, now known as Aon Investments USA, acted in its own interest by causing the plan to invest in Aon’s proprietary collective investment trusts (CITs) for Aon’s benefit. The [plan sponsor that appointed Aon Hewitt as an investment manager is] also accused of failing to use the plan’s bargaining power to negotiate reasonable fees for investment management services." [Miller v. Astellas US LLC, No. 20-3882 (N.D. Ill. complaint filed Jul. 1, 2020)]

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

A Framework for Key Recordkeeping Fee Decisions (PDF)
Portfolio Evaluations, Inc., via PSCA Defined Contribution Insights Link to more items from this source
June 25, 2020

"Three key recordkeeping fee decisions that go directly to the heart of the question of how fees should be allocated across participants are discussed ... First is the decision as to the type of recordkeeping fee structure. Second is the decision around using a lowest-cost share class strategy for the investment menu versus a revenue sharing model. Last is the decision of how to apply revenue sharing when there is an active decision to use that model or when it is unavoidable."

Tags: Retirement Plan Investment Costs

Excessive Recordkeeping Fees Alleged in KeyCorp ERISA Challenge
PLANSPONSOR; free registration may be required Link to more items from this source
June 12, 2020

"The complaint recites the fact that service providers charge for administrative services either on a per-participant fee basis or as an asset-based fee. Plaintiffs suggest asset-based fee arrangements are more common for smaller defined contribution plans, which have less leverage to negotiate how services are charged, noting that regardless of how these fees are charged, the cost of these services is typically borne by the plan participants." [Stark v. KeyCorp, No. 20-2922 (N.D. Ohio complaint filed Jun. 4, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Another Health System Faces ERISA Excessive Fee Challenge
planadviser Link to more items from this source
June 11, 2020

"The plaintiffs specifically allege that the defendants, as fiduciaries of the plan ... breached their duties 'by failing to objectively and adequately review the investment portfolio with due care to ensure that each investment option was prudent, in terms of cost; and by maintaining certain funds in the plan despite the availability of identical or materially similar investment options with lower costs and/or better performance histories.' " [Boley v. Universal Health Services, Inc., No. 20-2644 (E.D. Penn. complaint filed Jun. 5, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Lowering 401(k) Fees: Options for Plan Sponsors and Participants
Employee Fiduciary Link to more items from this source
June 10, 2020

"How to lower your 401(k) fees as a plan sponsor: [1] Check for lower-cost share classes.... [2] Replace your funds with lower-cost alternatives.... [3] Renegotiate with your current provider.... [4] Switch to a new provider.... How to lower your 401(k) fees as a plan participant: [1] Replace your funds with index funds.... [2] Lobby your employer.... [3] Move your assets to an IRA."

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

BlackRock's New ESG Priority May Be About Collecting More Fees
Institute for Pension Fund Integrity [IPFI] Link to more items from this source
[Opinion]
May 29, 2020

"BlackRock has been moving to redefine its identity from a firm focused on index investing to a firm that emphasizes ESG (environmental, social and corporate governance) investing. However, one organization argues that this move is less about doing something good for investors and more about enabling BlackRock to charge more in management fees."

Tags: Retirement Plan Investment Costs  •  Retirement Plan Investments  •  Retirement Plan Investments - ESG


<< Older News  |  September 25, 2020

© 2020 BenefitsLink.com, Inc.