Supreme Court Allows Excessive 401(k) Fee Lawsuits to Proceed to Trial

Excessive 401(k) Fee Lawsuits Given Green Light by Supreme Court

Another nail in the coffin of 401(k) fees was just hammered in. The Supreme Court has ruled that lower courts cannot easily dismiss 401(k) fees lawsuits, as they have in the past. This is big news for people who follow the ultimate fate of 401(k) fees. This recent ruling is another dramatic indication that 401(k) fees are on the losing side of economic history. The current order puts massive new levels of pressure on 401(k) plan fiduciaries, who are typically the persons that are the leading targets of excessive 401(k) fee lawsuits.

The Supreme Court’s “anti-401(k) fees” ruling supports lower court lawsuits that target plan fiduciaries for breach of their responsibilities. These fiduciaries who are being sued are, it is alleged, not properly monitoring 401(k) investments or putting a critical eye on 401(k) fees.

It is important to remember that self-directed 401(k) accounts in brokerages such as Charles Schwab essentially shield fiduciaries from these lawsuits. Under the self-directed 401(k) format, employee-participants make their own investment selections from thousands of investment choices. In this day and age, is this absurd that all 401(k) plans do not offer self-directed accounts to 401(k) plan participants. It seems like a no-brainer—If companies let their employees have control over their retirement savings, hidden and not-so-hidden 401(k) fees cannot be as easily skimmed from participants’ retirement savings by financial advisors and their partner 401(k) recordkeepers.