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As 401(k) suits mount, check your own plan

Are high costs lurking in your retirement plan?

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As more employees file suit against their employers claiming excessive 401(k) fees, perhaps it's time for you to take a closer look at the costs inside your own retirement savings plan.

Two former employees of American Century, with $149.3 billion in assets under management, recently filed suit against the money manager, claiming that the company's use of its own mutual funds in the retirement plan resulted in participants paying "millions of dollars in excess fees."

According to the suit, the plan's total expenses were 48 percent higher than the average retirement plan with similar balances.

"We firmly believe that this suit is without any merit," said Chris Doyle, a spokesman for American Century.

Meanwhile, the case is the latest in a volley of suits filed by employees who allege that their retirement plan fees are too high. Among them are a $62 million settlement against Lockheed Martin, a $27.5 million settlement against Ameriprise Financial, and a $31 million settlement against Massachusetts Mutual Life Insurance.

So how do your retirement plan fees stack up? Are they too high?

Where Do Your Fees Stand?

Total costs in 401(k) plans have been falling since 2009, according to BrightScope, a provider of retirement plan data. In 2013, the average total plan cost was 0.89 percent of assets, compared to 1.02 percent of assets in 2009.

Participants who suspect their fees are higher than the norm should talk to their employer – known as the plan sponsor – about these costs, said Brooks Herman, head of data and research at BrightScope. The sponsor has a fiduciary responsibility to the retirement plan and its participants.

Employees need to get an understanding of the different fees in their retirement plan, said Dave Goldman, director of business development at FeeX.

FeeX is a service that researches fees within IRAs, retirement plans and brokerage accounts, while BrightScope rates retirement plans based on fees, company generosity and other metrics. Both can help you better understand your plan's costs.

"A lot of the plan fees are hidden, so it's not just expense ratios," Goldman said. Those additional items include administration fees and record-keeping fees, among other costs.

"Research and look into alternatives, and go back to the [plan service] provider to get an explanation of the fees and discounts," Goldman said.

If you're no longer employed at the company that's overseeing your plan, consider the pros and cons of a rollover to an IRA or your current employer's 401(k) plan, if one is offered. Large plans have access to institutional share classes, which are generally cheaper than retail share classes. However, you may still be paying more to remain in the plan if you consider administration fees and record-keeping costs.

"It starts with understanding what you're paying," Goldman said. "We're not against fees, but we're for transparency."