Tussey Case is a Warning for Retirement Plan Fiduciaries.
A federal district judge recently ruled (in Tussey v. ABB, Inc.) that an employer violated its fiduciary duties to its 401(k) plan, and the court ordered the employer to pay the plan $35.2 million in damages. The fiduciary violations found by the court were: (1) replacing an existing fund option with a fund option that had significantly higher fees despite a history of underperformance, and (2) allowing Fidelity to charge the plan higher, nondiscounted recordkeeping fees while receiving discounted fees from Fidelity for other corporate services. Fidelity Investments, also named in the suit, was ordered to pay an additional $1.7 million to the plan for failing to transfer float income to the plan. Other named defendants included the company’s director of plan management, its employee benefits committee, and its pension review committee.