A plan participant has alleged excessive fees in the $96.5 million Gucci America Inc. 401(k) Plan recordkept by Transamerica Retirement Solutions, LLC. Fiduciaries are thought to have neglected to exercise their bargaining power to demand lower administrative and investment management fees. Additionally, the plan offered solely proprietary funds, while advertising open architecture on the Transamerica website and failed to offer less expensive institutional share classes. In 2011, the Plan did replace some Transamerica funds with their respective institutional counterparts. However, the resulting expenses of the institutional funds are alleged to be more costly than non-proprietary institutional funds. “Substantial revenue sharing” (40 basis points on average) is also of issue for the non-proprietary funds in the menu and one Transamerica fund. Also of issue is that fiduciaries failed to ensure that revenue sharing was applied on a dollar-for-dollar basis to reduce eligible plan expenses and applied equally across all participants so that all would incur equitable fees. Additionally, the plaintiff claims unnecessary additional fees as a result of Transamerica funds’ administrator’s outsourcing of certain functions to State Street.
www.napa-net.org; September 20, 2017.