Connect with:
Wednesday, August 4, 2021

Fidelity is facing more litigation from plan participants

While we’ve been talking about new lawsuits coming out every day, just yesterday reported that Fidelity is facing more litigation from plan participants, this time for the T-Mobile 401(k) plan. The plaintiff is alleging that Fidelity was charging “secret” fees to participants on their mutual funds. For example, if the 12b-1 or revenue sharing fees on the funds were below a certain threshold, Fidelity would take an additional payment from the fund to make up for this lost compensation.

One of the big problems of this is that these payments (indirect compensation) were not being properly reported or disclosed. While Fidelity claims that they were complying with all reporting requirements, it is yet to be seen how the court will decide.

With more lawsuits comes more scrutiny for big fund companies and recordkeepers. Every week we can read new articles on the endless lawsuits around 401(k) plans. The effect that these lawsuits seem to be having may lead to a better world for plan participants since “secret” payments and high-cost funds are finally being exposed. However, some claim that this could also stifle innovation because plan fiduciaries are scared of being sued. We will see in the coming year whether this will be true or not. Stay tuned to our blog for more updates.


It’s nice to meet you.

Sign up to receive awesome content in your inbox, every month.

We don’t spam! Read our privacy policy for more info.

%d bloggers like this: