Get Our Blog
  • Eric Hahn

Retirement Plan Excessive Fee Suits Move Down Market

In many of the retirement plan excessive fee suits involving large plans, it is argued that the size of the plans' portfolios gives them real bargaining power to negotiate lower fees for investments and administration.

A new lawsuit argues that a $9 million dollar plan also has the ability to negotiate for substantially lower fees than an individual would pay.

The primary argument in Damberg v. LaMettry’s Collision, Inc. is that LaMettry’s 401(k) plan used higher-priced retail class shares when lower-priced institutional class shares were available. The plaintiffs say plan fiduciaries breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by selecting inappropriate and imprudent mutual fund classes for plan assets that exposed plan participants to excessive fees, even when lower-cost options were available for the same set of investments and when the plan could meet required minimum investment hurdles.

With the increase in retirement plan excessive fee suits and a wider range of arguments in those suits, this case is one example of how unpredictable it is what plan sponsors will be targeted.

The plaintiffs also accuse plan fiduciaries of failing to have or engage in a prudent process—or any process—for the consideration, evaluation, selection, and active monitoring for these funds or lower fee alternatives.

In addition to the excessive investment fees, the lawsuit argues that the 114-participant plan paid too much for other fees. Plaintiffs claim plan fiduciaries breached their fiduciary duty by selecting an unduly expensive structure for the 401(k) plan—a bundled recordkeeping and investment management structure.

According to the complaint, Voya charged plan participants fees to offset sales and marketing expenses in addition to various support services. Voya charged plan participants two separate charges to administer this structure in addition to the previously mentioned investment fees: the Daily Asset Charge and the Voya Admin Fee. The charges were assessed as a percentage of plan assets daily and deducted from the participants monthly. When both fees are combined, the Total Daily Asset Charges (TDAC), the daily fees associated with administering the structure range from 0.00% up to 0.90%.

The lawsuit accuses plan fiduciaries of failing to conduct a request for proposals (RFP) for the structure to minimize expenses, failing to evaluate whether an unbundled or alternative fee structure was a better option, failing to conduct due diligence regarding whether the assessed fees were appropriate, and failing to actively monitor the selected structure’s fees and expenses.

The lawsuit contends that for retirement plans with more than 100 participants, a reasonable annual per capita fee paid by retirement plan participants should not exceed $18. It says plan fiduciaries allowed the plan to pay dramatically higher fees than reasonable throughout the statutory period. For example, in 2014, Voya received revenue from the plan for recordkeeping services that varied with participants’ investment choices and dollar amounts invested, and the total fees approximated 1.22% of plan assets, for a total of $113,000. “Despite a reasonable per-capita fee for these services being no more than $18 for a plan of this size in terms of total participants, the plan paid almost $886, or 4,900% higher than a reasonable fee for these services,” the complaint says.

Plaintiffs allege plan fiduciaries had a flawed process—or no process at all—for soliciting competitive bids, evaluating proposals with respect to services offered and reasonableness of fees for those services, actively monitoring the reasonableness of fees assessed to plan participants, and choosing a service-provider on a periodic, competitive basis.


#excessivefees #lawsuits

Portfolio &
Money Management


Contact Us

4 Landmark Square - Suite 315
Stamford, CT 06901





ADV Part 2 | ADV Part 3 (CRS) Privacy Policy | Cyber Security Policy | Business Continuity Plan Client Secure Upload


Check the background of this firm on FINRA’s BrokerCheck.           


NS Capital LLC is a Registered Investment Adviser. NS Capital and its representatives are in compliance with the current filing requirements imposed upon registered investment advisers by those states in which NS Capital maintains clients. NS Capital may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. NS Capital’s web site is limited to the dissemination of general information pertaining to its advisory services, and through the NS Blog access to additional investment-related information, publications, and links.  Accordingly,  NS Capital’s web site on the Internet should not be construed by any consumer and/or prospective client as NS Capital’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.  Any subsequent, direct communication by NS Capital with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of NS Capital, please contact the SEC or the state securities regulators for those states in which NS Capital maintains a notice filing.  A copy of NS Capital current written disclosure statement discussing NS Capital’s business operations, services, and fees is available from NS Capital upon written request. NS Capital does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to NS Capital’s web site or incorporated herein, and takes no responsibility such content.  All such information is provided solely for convenience purposes only and all users should be guided accordingly.


Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by NS Capital), will be profitable or equal any historical performance level(s).


Certain portions of NS Capital’s web site (i.e. newsletters, articles, commentaries, etc.) may contain a discussion of, and/or provide access to, NS Capital (and those of other investment professionals) positions and/or recommendations as of a specific prior date.  Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s).  Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from NS Capital, or from any other investment professional. NS Capital is neither an attorney nor an accountant, and no portion of the web site content should be interpreted as legal, accounting or tax advice. 


Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if NS Capital is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of NS Capital by any of its clients.  Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Each client and prospective client agrees, as a condition precedent to his/her/its access to NS Capital web site, to release and hold harmless , NS Capital’s officers, directors, owners, employees and agents from any and all adverse consequences resulting from any of his/her/its actions and/or omissions which are independent of his/her/its receipt of personalized individual advice from NS Capital.

© 2020-2025 NS Capital LLC. All Rights Reserved.