Retirement Plan Fees: Are Your Recordkeeping Fees Too High?
Employees and participants in 401(k) and other employer-sponsored defined-contribution retirement plans may lose retirement savings when their plans pay unreasonable administrative or recordkeeping fees. Under ERISA, plan fiduciaries must act prudently and in the interests of plan participants when managing plan expenses.
Why Retirement Plan Recordkeeping Fees Matter
Recordkeeping fees pay for services used to administer a retirement plan, such as maintaining participant accounts and records. Even relatively small differences in per-participant fees can become significant when a plan has thousands of participants. The central issue is not simply whether a fee appears high, but whether plan fiduciaries used a prudent process to monitor the fees and determine whether they were reasonable for the services provided.
Trader Joe’s Decision: A Recent Example
A September 28, 2026 federal court decision involving the Trader Joe’s Company Retirement Plan provides a recent example of the importance of monitoring retirement plan recordkeeping fees. Following a bench trial, U.S. District Judge William G. Young found in favor of the plan participants on their claims concerning recordkeeping fees, while ruling in favor of Trader Joe’s on the other claims addressed in the decision.
The court found that the plan’s recordkeeping fee was $48 per participant in 2019, later reduced to $40 effective April 1, 2021, and then to $38 effective July 1, 2024. The court also found there was no formal request for proposal (RFP), request for information (RFI), or other evidence of active competitive testing of the market for an optimal recordkeeping fee.
Addressing the fiduciary process, the court stated: “The Committee in this case has provided no robust evidence indicating that it engaged in a process compliant with its fiduciary duties of prudence and loyalty, to ensure that the recordkeeping fees were adequately monitored and controlled.”
The court concluded that the defendants breached their fiduciary duties concerning recordkeeping fees and caused losses to plan participants. It calculated $715,264 in overpaid recordkeeping fees and awarded $471,957 in prejudgment interest, for a total surcharge of $1,187,221.
What Should Retirement Plan Participants Know?
The Trader Joe’s decision highlights a broader fiduciary issue: employers and retirement plan committees responsible for plan administration must prudently monitor recordkeeping costs. Depending on the circumstances, relevant questions may include whether fiduciaries compared fees with the market, sought competitive information or bids, negotiated with the recordkeeper, and considered the services the plan actually received.
Retirement Plan Participants with Questions: Contact Kehoe Law Firm
If you participate or participated in an employer-sponsored 401(k) or other employer-sponsored defined-contributuion plan and are concerned that excessive administrative or recordkeeping fees reduced your retirement savings, you are encouraged to send us a message to learn more about your potential legal rights.
For a free, no-obligation legal evaluation:
Michael Yarnoff, Esq.
(215) 792-6676, Ext. 804
[email protected]
[email protected]
About Kehoe Law Firm, P.C.
Kehoe Law Firm, P.C. is a nationally recognized, plaintiff-side class action law firm representing investors, consumers, and employees in matters involving securities fraud, corporate misconduct, mergers and acquisitions, antitrust violations, whistleblower claims, data breaches, consumer fraud, employment law violations, and ERISA and retirement plan litigation. Its attorneys have served as lead or co-lead counsel in major securities cases, recovering more than $10 billion for institutional and individual investors.
Kehoe Law Firm’s class action legal services are provided on a contingency-fee basis, meaning plaintiffs are not responsible for attorneys’ fees or litigation expenses. Any request for attorneys’ fees and expenses will be subject to court approval.
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