In the first class action over 401(k) fees to be tried and decided on its merits, a Missouri federal district court ruled in March that manufacturer ABB Inc. breached its Employee Retirement Income Security Act (ERISA) fiduciary duties.
A federal district court has found the plan sponsor, employee fiduciaries and a recordkeeper of 401(k) plans liable for more than $35 million in damages under ERISA for failing to control costs, permitting the plans to pay excessive revenue-sharing compensation to service providers and imprudently selecting investment options.
On March 31, 2012, the US District Court for the Western District of Missouri decided Tussey v. ABB, Inc., a closely-watched ERISA class action brought by participants of two 401(k) plans challenging the selection of investment options for the plans and the fees paid to the plans’ recordkeeper.
Recent years have brought many challenges by 401(k) plan participants contesting either the reasonableness of fees charged to them for various administrative and investment-related services or the adequacy of the disclosure of such fees.
After a four-week bench trial, the court in Tussey et al. v. ABB, Inc. et al., No. 2:06-CV-04305 (W.D. Mo. Mar. 31, 2012) held that the fiduciaries of two 401(k) retirement plans breached their fiduciary duties to plan participants and were liable for $35 million in damages.