Lockhead Martin settled their excess fee lawsuit concerning their 401(k) plan by making a $62 million settlement with plan participants. That is probably the highest excess fee settlement on record. I know how people think and most plan sponsors like yourself will say: what me worry? I don’t even have $62 million in my 401(k) plan that I sponsor.
Settlements like this Lockhead Martin case s always about a trickle down effect. There will be more concern about excessive fees and companies as large or even smaller than Lockhead Martin will get a review from an ERISA litigator interested in potential class action lawsuits. A small or medium sized plan sponsor may not get the lawsuit from a class action ERISA litigator, but there are other concerns. There can always be that lone wolf former plan participant who will threaten litigation for a quick 5 figure settlement or there maybe action by the Internal Revenue Service and the Department of Labor that can certainly get traction.
A plan sponsor needs to be vigilant about excess fees and a $62 million settlement may never be an issue for their smaller plan, but there is always a trickle down effect that excess fees will bring more litigations and more oversight by the government.