How to Know Your 401(k) Plan is the Best Your Employer Can Choose
By SUSANNA KIM
Oct. 14, 2011
Is your 401(k) account loaded with high, hidden fees? New federal 401(k) plan disclosure rules will soon be implemented to highlight how much fees are eating into employer-sponsored retirement accounts.
But more workers are already going after companies that they allege are taking advantage of those retirement accounts. Ameriprise Financial Inc. employees participating in the company’s 401(k) plan filed a suit last month against the company, alleging the financial services firm invested employee retirement money into its own untested funds and charged expensive, uncapped fees.
Several employees filed a suit in a Minnesota district court on Sept. 28, seeking class-action status for all employees participating in Ameriprise’s 401(k) plan, established in October 2005. The basis of the suit is the Employee Retirement Income Security Act of 1974 (ERISA), which directs employers to exercise fiduciary duties “solely in the interest of the participants and beneficiaries…defraying reasonable expenses of administering the plan.”
Jerome Schlichter, attorney for the Ameriprise employees, said they are accusing Ameriprise of self-dealing and breach of fidiciary duties.
“As a direct result of these prohibited transaction violations, the plan, directly or indirectly, paid millions of dollars in investment management and other fees that were prohibited by ERISA and suffered millions of dollars in losses,” the suit states.
Schlicter said the suit potentially applies to tens of thousands of employees if it is granted class-action status.