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Workers are suing employers over 401(k) expenses Some employers are facing lawsuits for providing 401(k) plans that charge higher fees than the alternatives for similar low-cost plans, according to this article on Money. These lawsuits have prompted many companies to include low-cost index funds to replace pricey stock-picking funds in their plans. Although as a new lawsuit against New York Life Insurance illustrates, even index funds don’t necessarily escape workers' scrutiny when looking for unnecessary costs. The proposed class-action lawsuit, which is just one of several similar suits in recent years, challenges the company’s decision to offer a Mainstay S&P 500 index fund, which charges investors $35 per year for every $10,000 invested. And according to an analysis from Morningstar cited by this article, the typical index investor only pays about $20 per $10,000. Moreover, 401(k) investors often pay lower fees than other investors because plans can pool their assets to gain discounts, according to the article. In this case, New York Life should be able to offer its employees an essentially identical stock index fund from Vanguard that costs just $2 per $10,000 invested, the suit charges. --Money
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