In another advance for participants disputing retirement plan fees, employees of Massachusetts Institute of Technology (MIT) have moved forward in their lawsuit against MIT alleging excessive retirement plan fees. (Tracey v. Mass. Inst. of Tech. , D. Mass., No. 1:16-cv-11620, report and recommendation 8/31/17.) The suit is based primarily on the plan’s inclusion of retail class options (rather than institutional class options) in funds provided by Fidelity, and alleges breaches of ERISA's duties of loyalty and prudence. The MIT participants also claim that Fidelity was paid excessive compensation for its record-keeping services, and that MIT never engaged in a competitive bidding process for those services. Taking the excessive fees claim to greater heights, the plaintiffs further claim that the absence of a competitive bid amounted to a kickback where Fidelity received inflated fees at the expense of the plan’s participants in exchange for making donations to MIT.
While this litigation is on-going and the outcome uncertain, the wake of excessive fees litigation in recent years serves good reminder to all employee benefit plans sponsors of a few ERISA basics:
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