The New York Times took up 401(k) fees in a recent lead article that highlighted lawsuits, especially the 15 cases brought by Jerome Schlichter, as well as last year’s DOL fee disclosure regulations. Stating the obvious —that fees make a difference—the Times calculated that a $25,000 account gaining 7% per year would be 39% higher if fees are just .5% lower. Perhaps prompting the article is Schlichter’s just-filed $35 million settlement of Cigna’s 401(k) participants’ case against Cigna and Prudential.
Commenting on the potential effects of declining 401(k) fees, University of Mississippi Law School professor Mercer E. Bullard said that providers may try to push participants into IRAs where fees are higher. Next up: IRA fee disclosure. Will lawsuits follow?
