401(k)-fee lawsuits are up: Is your plan vulnerable?
401(k) plans are meant to help employers attract and retain top talent. But an increasing number of companies are finding themselves in court because of these very plans.
Recently, there’s been a spike in employee lawsuits over excessive 401(k) fees. The scary part: If you can’t prove that your company did its best to negotiate lower fees from your 401(k) provider, courts are likely to rule against you.
A good example is the case of Edison International. Employees sued Edison, claiming the company did “substantial” harm to them by failing to negotiate lower 401(k) fees.
And a federal judge ruled in favor of Edison’s employees. According to the judge, Edison could have easily brokered a better deal on three of the mutual funds in its plan – but it didn’t even try.
Here’s one way to gauge if your company’s 401(k) fees could be considered excessive: Ask your provider to disclose all of the fees your 401(k) plan includes.
If your total fee level is greater than 2% of the total assets in the plan, then you’ll probably will want to see if you can negotiate lower fees.
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