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401(k) Lawsuits Becoming More Prevalent

Nordstrom has been accused of allegedly selecting and retaining high-cost investment options in its $2.8 billion 401(k) plan when lower cost options were available. The suit states that Nordstrom allowed unreasonable, excessive fees to be charged to its plan participants, failed to use lower cost alternatives, and made inadequate disclosures regarding the specific dollar amount it charged them for administrative expenses.

The lawsuit against Novitex alleges the plan allowed unreasonable high fees to be charged for plan services, including advisory services. The lawsuit states that UBS, who is providing the advisory services, is “excessively compensated.” In addition, Novitex permitted unreasonable fees to be charged for record keeping and investment management.

Investment News reports that litigation targeting excessive retirement plan fees has grown over the past few years. Most often targeted are fees paid to service providers (such as TPA’s for record keeping and mutual fund companies).

“It is rare, for now, but something I think you will see with increased frequency,” Marcia Wagner, principal at The Wagner Law Group, said.

The Novitex lawsuit also furthers a developing trend of excessive-fee lawsuits targeting smaller retirement plans rather than just the multibillion-dollar ones.

“Smaller plan fiduciaries increasingly are in the crosshairs of ERISA class actions, as illustrated most recently by Novitex,” said Duane Thompson, senior policy analyst at Fi360.

If you are a sponsor of a 401(k), then you need to be up to date on how your plan stacks up due to the new Department of Labor rules and increased scrutiny of these plans.

At Jarred Bunch, we review a lot of small to mid sized company 401(k) plans. It is not unusual to see high fees and limited/outdated investment choices. In addition, there is rarely an education program available to employees, and, in many cases, the company (sponsor) is the investment fiduciary.

Our goal is to help relieve this burden for our clients by offering the following:

  1. We serve as the investment fiduciary on the plans we implement.
  2. We offer financial education for companies and their employees.
  3. We benchmark your plan, investment options, and costs to make sure your plan is where it should be.

If you haven’t looked at your 401(k) plan in the past couple years, then you need to contact us right away. We offer a free analysis so you can see exactly where you plan stands.

Let us address these issues with our Future 401k Plan, visit to learn more or sign up. You can also call or email one of our 401(k) experts today. An analysis takes very little time and could save you a lot of money and headache.


There are many other areas to consider but most people ignore these. If you need help designing your plan for retirement or just a second look, we’re happy to help.

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