In an era where innovation drives every facet of business operations, even the most forward-thinking companies can face challenges when it comes to retirement plan fee diligence. NVIDIA, renowned for its groundbreaking advancements in artificial intelligence, recently settled a lawsuit alleging excessive fees in its 401(k) plan. The case underscores a crucial takeaway for plan sponsors: Actionable fee intelligence is an essential part of the fiduciary prudence necessary in today’s retirement plan landscape.
Case Winds Down After a Few Reboots
NVIDIA’s legal trouble began in 2020, when a group of employees alleged that the chip manufacturer had been overcharging participants in its nearly $3.5 billion 401(k) plan. They asserted that investment costs and recordkeeping fees were higher than those of similar plans — and in the case of recordkeeping, the alleged cost differences were stark.
According to the complaint, participants were charged between $53 and $63 each for recordkeeping, but similarly sized plans frequently charged around half as much. The plaintiffs argued that NVIDIA executives should have initiated an RFP to seek less costly recordkeeping. They also alleged that NVIDIA maintained higher fee investments, despite the availability of lower cost options.
In 2021, Judge Lucy H. Koh dismissed the case but granted a motion that allowed the plaintiffs to amend their claim. NVIDIA argued that the case lacked enough detail to prove it failed to uphold its fiduciary duty. In 2023, Judge John S. Tigar ruled that the evidence was sufficient to proceed.
In December 2024, more than four years after the initial filing, both parties agreed to settle, with NVIDIA paying out $2.5 million. This case is just one of the latest in a continuing trend of 401(k) lawsuits, where plan sponsors are being scrutinized for excessive fees and inadequate oversight. These suits reflect an increasing demand for transparency and fiduciary accountability, underscoring the importance of consistent benchmarking and prudent plan management practices.
Intelligent Benchmarking: A Fiduciary’s First Line of Defense
The PlanFees suite of benchmarking tools empowers advisors to help keep fees in line with tools that are fast, affordable, and easy to use. Prism Total Fees Benchmarking provides an accurate, 2-minute benchmark of investment, recordkeeping, advisor,y and administrative fees that you can conduct wherever — and whenever — you need to. Prism365 benchmarks advisor fees and service frequency with options to add any custom services you offer. RFP Express delivers live quotes from top providers in under 24 hours, equipping plan sponsors with timely, accurate data to make more informed decisions.
With these tools in your arsenal, you can bring a new level of actionable fee intelligence to plan sponsor clients, helping them stay ahead of potential risks while more confidently navigating today’s complex retirement plan landscape.
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