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You can sue your 401(k) provider for charging excessive fees

If you are like many people, your 401(k) is a big part of your retirement plan. You diligently allocate money towards it each month and look forward to the day when your hard work and dedication pay off.

Of course, you recognize that there are risks involved with a 401(k) - but these are calculated risks that you trust your plan administrator to manage. Unfortunately, sometimes the risks are more than what any investor should endure, especially when the loss of money is due to poor plan management or excessive fees.

Recent lawsuits over 401(k) plans

Many people who are tired of seeing their hard-earned dollars slip away due to mismanagement or excessive fees are turning to legal action for help. In 2015, the Supreme Court ruled in favor of the plaintiffs in the Tibble vs. Edison case, alerting investors and retirement plans that plan managers are accountable for monitoring fee and investment activities within these plans.

Recently, a settlement was reached in a 401(k) suit between American Airlines Group, Inc., and its plaintiffs for $22 million. In this case, American Airlines allegedly offered mutual funds at a high cost from an affiliated investment company that may have benefited American Airlines financially. While American Airlines did not admit to wrongdoing, it removed the fund from its 401(k) plans.

When to consider suing over your 401(k)

While it is expected for markets to fluctuate, you should not have to accept ongoing poor fund management. Nor can you afford to accept it long-term if you plan to use your 401(k) funds to retire. So, what are the signs that something is wrong with your plan? Here are the top three:

  1. Your retirement is dwindling due to middleman fees - According to federal law, employers have a legal obligation to change the plan under such circumstances.
  2. There are much better plans available than the one you are in - It is the responsibility of your employer to show prudence when selecting a plan. Your employer should offer you and other employees a fund that is well-diversified and low-cost.
  3. You are being lied to about fees - Your employer is claiming to pay the middleman fees but is, in fact, charging you and hiding it.

If you notice anything unsettling about your retirement plan, contact an experienced attorney who can review your case and advise you of your legal rights.

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