New 401(k) Suit Targets Vanguard Fund Fees

Advisers should consider whether collective trust funds and separate accounts offer lower expenses than their mutual fund counterparts

Even Vanguard Group mfund fees may be excessive when it comes to 401(k) plans.

A new class-action lawsuit is pitting participants in the Anthem Inc. 401(k) plan, a massive plan with more than $5 billion, against plan fiduciaries for an alleged fiduciary breach due to excessive investment management and administrative fees.

Anthem’s fund lineup is predominantly made up of funds offered by Vanguard, widely recognized as a low-cost fund provider. Vanguard is also the plan’s record keeper.

“Even so-called low cost might be too high cost,” said Marcia Wagner, principal of The Wagner Law Group.

The suit, Bell et al. v. Anthem Inc. et al., was filed Dec. 29 in the U.S. District Court for the Southern District of Indiana, Indianapolis division. Schlichter Bogard & Denton, a firm at the epicenter of several 401(k) fee suits over the past several years, is representing plaintiffs.

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