A primary responsibility of the fiduciary of an employer-sponsored retirement plan is to reasonably defray the plan’s expenses. It is becoming increasingly common for fiduciaries to face litigation regarding excessive plan fees and investment choices.

Here are some of the typical retirement plan excessive fee allegations and a few steps that can help minimize excessive fee litigation.

Common Excessive Fee Allegations Against Fiduciaries

Most excessive fee litigation centers around record-keeping fees and investment decisions.

Record-keeping complaints typically involve how the record-keeping fees are determined and paid or cite a failure by the fiduciary to monitor and attempt to reduce record-keeping fees.

Excessive investment fee allegations often claim a failure by the fiduciary to remove under-performing funds or offer less expensive funds and complaints about fund selection.

Ways to Reduce Excessive Fee Litigation

Fiduciaries should create a well-documented plan to evaluate fees quarterly. This helps ensure and document that every precaution is being taken to keep plan fees in check. It is also beneficial to hire a consultant to review the plan’s investments, performance and associated fees annually. 

Additionally, fiduciaries should carry liability insurance to protect against litigation costs if a claim does occur. A solid fiduciary process and thorough documentation will not entirely protect a plan’s fiduciary against excessive fee litigation.