Excessive 401(k) Retirement Plan Fees Spur Class Action Ohio ERISA Lawsuits


Employees and attorneys are challenging retirement plans and revenue sharing arrangements, claiming that the various types of investment options, such as retail mutual funds and actively managed funds, charge plan participants excessive fees.

Since 2006, a wave of ERISA fiduciary lawsuits challenging the fees and expenses associated with 401 (k) plans have been filed on the behalf of American workers who feel they have been misled and cheated out of a percentage of their retirement funds.

Several recent rulings have resulted in large settlements and judgments, including a $62 million settlement with Lockheed Martin Corp. in 2015.

Joe Lyon is a highly-rated Cincinnati, Ohio lawyer representing plaintiffs nationwide in a wide variety of retirement plan and financial fraud in Ohio ERISA lawsuits.  


What is ERISA?

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for voluntarily established pension and health plans in private industry to provide protection for individuals.
ERISA requires plans to provide participants with important plan information including the following:

•    Plan features and funding
•    Minimum standards for participation
•    Vesting
•    Benefit accrual and funding


ERISA also provides fiduciary responsibilities for those who manage and control plan assets, requires plans to establish a grievance and appeals process for participants, and gives participants the right to sue for benefits and breaches of fiduciary duty.

The U.S. Department of Labor (DOL) recently updated its fiduciary rule, and could conceivably lead to more fee litigations. The new rules expand the scope of individuals and entities subject to ERISA’s fiduciary requirements.

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Excess Pension Fee Lawsuits

In 2015, several large corporations settled lawsuits with their employees regarding their retirement plans. Boeing Co agreed to pay $57 million to settle a lawsuit in which employees accused the company of mismanaging their 401(k) retirement plan. Other companies that have settled ERISA-related lawsuits include:

•    Verizon Communications Inc.
•    Chevron Corp.
•    Intel Corp.
•    Oracle Corp.
•    American Airlines Inc.
•    Anthem Inc.
•    Deutsche Bank Americas
•    Insperity Inc.
•    M&T Bank Corp.
•    BB&T Corp.
•    DST Systems Inc.
•    Putnam Investments LLC
•    Allianz Asset Management


Excessive Pension Fee Class Actions

In the last year, plaintiffs have brought claims new against 401(k) plans that offer Vanguard and Stable Value Funds as investment options. These claims are surprising, since plaintiffs previously argued that fiduciaries should use funds like Vanguard in 401(k) plans because they offer relatively lower index-based fees as compared to other investment options.

Plaintiffs have brought cases against Anthem and Chevron based on their inclusion of Vanguard funds that plaintiffs claim charged excessive fees in relation to other share classes that were allegedly available.

Plaintiffs have alleged that Anthem’s 401(k) plan, worth over $5 billion, failed to use its sizeable bargaining power to demand lower cost investment options.


Employers Liable for Excessive Fees

The most publicized settlements are levied against large companies because of the massive sums involved. However, many American workers in small companies providing retirement plans have also been victims of excessive fees. Research shows that smaller plans typically carry higher fees than larger plans that can use their size as leverage to negotiate better deals.

Nearly 75,000 401(k) plans have $25 million or fewer in assets, and over four million workers have their retirement savings in these plans.
In a recent class action lawsuit, a Minnesota auto body repair company with around 100 participants and less than $10 million in assets was sued for excess fee violations.

Most cases concern mega plans with assets in the billions of dollars, but this lawsuit, filed in May against LaMettry’s Collision and its $9 million 401(k) plan, has the attention of many companies and employers of the small-plan variety.


Ohio ERISA Lawsuits & Universities

Several highly-respected American universities such as, Columbia, Yale, Duke, New York University, MIT, Johns Hopkins, the University of Pennsylvania, Vanderbilt and Emory have been targeted with claims that retirement plans cheated employees through excessive fees.

In contrast to the 401(k) plan cases, most of the suits, including the newest one against Columbia, concern university 403(b) plans.


Company Retirement Plan Fraud

Over 60,000 workers filed a recent class action lawsuit against Morgan Stanley. The suit claims that the company mismanaged its own employees’ retirement plans by offering poorly performing funds and charging excessive fees.

The suit also alleges that the company used the 401(k) plan as an opportunity to promote its own business and maximize profits at the expense of its employees. It offered its own funds, without considering funds from other companies.


ERISA Lawsuits & Pension Fund Lawyer

Employee benefits attorneys have shown Ohio ERISA lawsuits are reshaping the 401(k) industry, pointing to lower industry-wide fees. To keep fees down, employers increasingly turn to index funds, which track a major index such as the Standard & Poor’s 500, since they’re cheaper than actively managed ones.
However, some companies and funds are still neglecting what is financially best for retirement plan participants in favor of maximizing profits for fund managers and banks.


Ohio Retirement Fund Lawsuits

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If you think your retirement fund may be charging excessive fees and have questions about the legal options available in Ohio, contact The Lyon Firm at (800) 513-2403. You will speak directly with Mr. Lyon, and he will help you answer critical questions regarding retirement fund plans and Ohio ERISA lawsuits.