401(k) plan fee case has broad implications for plan sponsors

HRS Insight
In Ronald Tussey v. ABB, Inc., the US District Court for the Western District of Missouri ruled against a plan sponsor, the plan committees and members and the plans' trustee and administrator for breaching their fiduciary duties toward the plan participants by not monitoring recordkeeping costs, failing to negotiate rebates for the plan, and other fiduciary breaches. The plaintiffs were awarded damages of $35.2 million (on plan assets of approximately $1.4 billion).

The case, which comes following a number of class action cases where plan sponsors and committees enjoyed procedural victories, has broad potential implications for plan sponsors and fiduciaries that the risks associated with a defined contribution plan can be significant and require strong oversight, processes, controls and governance to manage those risks.

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