An excessive-fee claim under the Employee Retirement Income Security Act has been filed against Insperity, Inc., a provider of outsourced human resource and business management services to small and midsized business.
The case, brought in U.S. District Court for the Northern District of Georgia, alleges trustees to the Insperity 401(k) plan allowed excessively high recordkeeping costs that amounted to self-dealing on the part of plan fiduciaries.
It also alleges participants were offered investment options with unnecessarily high fees.
The plan, which held more than $2 billion in assets and served more than 50,000 participants at the end of 2014, is one of the largest 401(k) plans in the country, according to the complaint.
The employees of Insperity’s client companies are offered participation in the plan. Insperity offers its services, which include payroll and benefits administration, to more than 100,000 businesses with more than two million employees.
The company’s revenues were $2.3 billion in 2013, according to documents on its website. A request for comment on the case was not made available before press time.
In 2003, the company created Insperity Retirement Services, a wholly owned recordkeeping subsidiary of Insperity, Inc., and soon after became the service provider to the Insperity 401(k) plan, the new record keeper’s first client.
By 2013, Insperity Retirement Services administered more than $2 billion in defined contribution assets, 95 percent of which, or $1.9 billion, came from the Insperity 401(k) plan.
Over the course of that relationship, Insperity Retirement Services received both hard-dollar fees, or direct payments from participants’ accounts, and fees from revenue sharing agreements with investment providers to the plan.
At the heart of the case is the claim that that combination of record keeping revenue streams resulted in excessively high costs to plan participants.
“Defendants acted for their benefit to drive revenue and profits to themselves, and Insperity’s own recordkeeping business, at the expense of Plan participants,” according to court documents.