You’ve worked hard to save for your retirement and contributed to a 401(k) plan you thought was a well-managed, low-cost investment. Unfortunately, the executives and investment advisors that manage 401(k) plans don’t always have your best interests at heart.
The single biggest failure of plan administrators today is allowing excessive fees to creep into people’s retirement plans. According to the U.S. Department of Labor, the three most common types of 401(k) fees are:
- Plan Administration Fees – including recordkeeping, accounting, legal and trustee services, and customer-related conveniences such as telephone voice response systems, access to customer service representatives, educational programs, retirement planning software, investment advice, electronic access to plan information, daily valuation, and online transactions. These costs may be deducted from investment returns or directly billed to your employer.
- Investment Fees – the largest expense of a 401(k) plan, fees for investment management and related services are usually assessed as a percentage of the assets invested in the plan.
- Management, Investment Advisory, or Account Maintenance Fees – commonly calculated as a percentage of the amount of invested assets, these fees may be used to cover administrative expenses. The level of management fees can vary widely, depending on the investment manager and the investments themselves, but a greater investment management fee does not necessarily translate into better investment performance or returns.
Because plan fees are typically deducted directly from the participant’s investment returns, the amounts are hard to monitor. They also tend to increase automatically over time, often becoming excessive.
In the past few years, Anthem, Chevron, Cigna, Fifth Third Bancorp, Oracle, Reliance Trust, and the Vanguard Group have all been sued for allowing excessive fees to creep into their employees’ 401(k) plans.
If you believe your 401(k) plan is charging too much, the attorneys in Sommers Schwartz’s Complex Litigation Group are here to help. Please contact us today to discuss your rights under the Employee Retirement Income Security Act (ERISA). If the fees your plan charges are excessive, we will help you recover.