No one can be sure how this case will be resolved. What I do know is that plan sponsors have a fiduciary duty to provide a retirement plan for the sole benefit of their employees. The new disclosure rules will make it very difficult to provide a plan at no cost to the employer.

A federal judge has refused to dismiss a lawsuit in which employees of Ameriprise Financial Inc. accuse it of loading up the company 401(k) plan with its own expensive, underperforming mutual funds and charging employees excessive fees.U.S. District Judge Susan Richard Nelson in St. Paul noted that the plaintiffs “plausibly allege that the defendants selected Ameriprise-affiliated funds to benefit themselves at the expense of plan participants.” In her order filed Tuesday, the judge let stand seven counts, ranging from failure to monitor fiduciaries, to prohibited transactions and excessive record-keeping fees. One count of unjust enrichment was dismissed.

“Of any company, Ameriprise should know what is a good financial product,” said plaintiffs’ lawyer Jerome Schlicter. “This is a case of frank self-dealing.”

The plaintiffs — seven current and former Ameriprise employees in the Twin Cities — are seeking class-action status, and the outcome of the case could potentially affect more than 14,000 participants in the company’s $1 billion 401(k) plan. A judgment against Minneapolis-based Ameriprise would be a black eye for the country’s largest employer of certified financial planners.

Plan sponsors need to verify that their 401(k) plan is for the sole benefit of the plan participants and their beneficiaries.

Please comment or call to discuss how this affects you and your company.