Getting “Schlichtered”: A rash of lawsuits hit 403(b) plans


403(b) plans are under attack!

Over the last few weeks a rash of class action lawsuits have hit higher education.  The lawsuits have been filed by Schlichter Bogard & Denton on behalf of current and former participants.  Accusations cover a wide array of improprieties focused around fiduciaries’ failure to adhere to ERISA’s duties of loyalty and prudence.

403(b) plans, typically offered by schools or non-profits, haven’t been the source of much scrutiny or litigation–until now.  In the suits, Schlicter follows his typical modus operandi; accusing plan sponsors of paying excessive fees and holding under-performing investment options.  Interestingly, Schlicter adds a number of new accusations to the mix including;

  • Excessive fees for using multiple record-keepers instead of aggregating assets with one provider to achieve economies of scale.
  • Duplication of funds within asset classes.
  • Offering too many investment options leading participants to investor paralysis.

See the following links for additional reading:

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Todd Zempel, known as "Z", has over 12 years of extensive industry experience. Prior to taking over retirement plan operations for the Gordon Asset Management, Z spent a decade as a TPA and record-keeper. Z holds the Accredited Investment Fiduciary Analyst (AIFA) designation Qualified 401(k) Administrator (QKA) designation, and is a Certified Plan Fiduciary Adviser (CPFA). Z was voted one of the nation’s top 50 retirement plan advisors under the age of 40 in 2015.