On behalf of Kadish & Associates Law Group posted in Business Litigation on Wednesday, September 2, 2015.
Some Arizona readers may already be aware that Boeing has agreed to settle a lawsuit involving numerous employees who participate in the company’s 401(k) plan. The business litigation centers around fees charged to the participants. The Boeing case is one of several filed in an attempt to compensate victims for their losses due to excessive fees.
Federal laws mandate that employers protect the best interests of their workers when it comes to retirement plans. Some sources say that keeping to those federal mandates requires companies to make good investment choices that are well diversified and low-cost to the participants. Some companies fail to follow this model, and employees end up paying fees that could become a significant amount over time.
For example, a difference in fees of just 1 percent can amount to approximately 28 percent of assets over the course of 35 years. Employees might need to work an additional six to seven years in order to make up the difference. One source says that companies might receive kickbacks for the higher fees at the expense of their workers. There is no information to indicate that this was the case with Boeing, which says that its retirement plan meets federal standards.
Despite that, Boeing agreed to settle the business litigation instead of spending additional time and money going to court. This is a tactic that many Arizona businesses use in order to keep down their litigation costs. Often, it is not necessary to admit that the company did anything improper in order to agree to settle. Once that agreement is made, the details of the settlement can be worked out, drafted and executed — putting the matter to rest.
Source: kpbs.org, “Boeing Case Is Latest Targeting 401(k) Plans With Excessive Fees“, Chris Arnold, Aug. 27, 2015