Ameriprise Financial Settles ERISA Fee Litigation

The settlement also includes non-monetary benefits for 401(k) plan employees, according to plaintiffs’ attorney Jerry Schlichter, managing partner of the St. Louis-based firm Schlichter Bogard and Denton. He says the non-monetary relief obtained, in addition to the financial terms, “not only significantly benefits Ameriprise’s employees and retirees but also sets a standard for best practices for plan sponsors.”

A joint motion for approval of the settlement was filed by the parties in the court of Judge Susan Richard Nelson of the U.S. District Court for the District of Minnesota, who must approve the settlement. 

In a complaint originally filed on September 28, 2011, the plaintiffs alleged that Ameriprise failed to ensure that the recordkeeping and management fees and expenses paid out of the assets in its defined contribution 401(k) plan were reasonable. They alleged that the plan’s fiduciaries breached their duties of prudence and loyalty in selecting and retaining proprietary investment options. Further, it was alleged they engaged in prohibited transactions by receiving compensation from the plan as a result of those decisions in order to benefit its subsidiary Columbia Management Investment Advisers, LLC. 

Ameriprise denied all of the allegations, contended that the fees were reasonable and contended it complied in all respects with the law and did not commit any fiduciary breaches. In the settlement, Ameriprise has agreed to terms designed to strengthen and add value to its 401(k) plan as part of the non-monetary relief, Schlichter says. The settlement period will be three years during which the Minnesota court will retain jurisdiction. 

In a statement to PLANADVISER, Ameriprise said: “We have a strong 401(k) plan that is administered for the sole interests of participants. The settlement does not require any changes to our plan, which will maintain the existing broad and competitive selection of investment options and features. The plan has always included funds we manage, as well as funds from other companies and a brokerage window that offers participants additional choice.”

According to the Schlichter announcement, within one year of the effective settlement date, Ameriprise has agreed to conduct a request for proposal (RFP) competitive bidding process for recordkeeping and investment consulting services.  Second, Ameriprise will refrain from receiving compensation for administrative services provided to the plan other than reimbursement of direct expenses from the plan as permitted by ERISA. Third, Ameriprise will pay fees to the plan recordkeeper on a flat fee or per-participant basis. 

Finally, Ameriprise will provide participant statements that comply with all applicable Department of Labor participant disclosure regulations that include a disclosure of all plan expenses paid by the participant (directly or through investment options); a list of all transaction fees paid by the participant; benchmarks for each fund; and statements, in dollar terms, of the money paid by the participant in administrative recordkeeping costs and for each investment option. Ameriprise will also consider the use of collective investment trusts or separately managed accounts and will seek the lowest cost of participation for any collective trusts used. 

Moving forward the plan’s fiduciary committee for investment selection will not include any member who is an executive of Columbia Management Investment Advisers, LLC or its investment management affiliates. 

An estimated 24,000 current and former Ameriprise employees will benefit from the settlement, Schlichter says.