An excessive-fee claim under the Employee Retirement Income SecurityAct has been filed against Insperity, Inc., a providerof outsourced human resource and business management services tosmall and midsized business.

The case, brought in U.S. District Court for the NorthernDistrict of Georgia, alleges trustees to the Insperity 401(k) planallowed excessively high recordkeeping costs that amounted toself-dealing on the part of plan fiduciaries.

It also alleges participants were offered investment optionswith unnecessarily high fees.

The plan, which held more than $2 billion in assets and servedmore than 50,000 participants at the end of 2014, is one of thelargest 401(k) plans in the country, according to thecomplaint.

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The employees of Insperity’s client companies are offeredparticipation in the plan. Insperity offers its services, whichinclude payroll and benefits administration, to more than 100,000businesses with more than two million employees.

The company’s revenues were $2.3 billion in 2013, according todocuments on its website. A request for comment on the case was notmade available before press time.

In 2003, the company created Insperity Retirement Services, awholly owned recordkeeping subsidiary of Insperity, Inc., and soonafter became the service provider to the Insperity 401(k) plan, thenew record keeper’s first client.

By 2013, Insperity Retirement Services administered more than $2billion 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 RetirementServices received both hard-dollar fees, or direct payments fromparticipants’ accounts, and fees from revenue sharing agreementswith investment providers to the plan.

At the heart of the case is the claim that that combination ofrecord keeping revenue streams resulted in excessively high costs to planparticipants.

“Defendants acted for their benefit to drive revenue and profitsto themselves, and Insperity’s own recordkeeping business, at theexpense of Plan participants,” according to court documents.

Furthermore, the fiduciary trustee and advisor to the plan,Reliance Trust, an Atlanta-based bank, “selected and retained itsown high-cost and poorly performing investments to benefit itselfat the expense of plan participants,” the claim alleges.

In return for the opportunity to offer its propriety products,Reliance Trust used investment optins with asset-based revenuesharing agreements, to the benefit of Insperity RetirementServices, and ultimately to Insperity, Inc.

One example of the alleged imprudence was the Insperity HorizonRisk-Managed Funds, a proprietary target-date option Reliancecreated in November 2012 and added to the plan days later.

To select a fund with no performance history was “whollycontradictory to the most basic prudent fiduciary practices,” theclaim says.

Given the plan’s size, about 50,000 participants, the claim saysfixed recordkeeping costs should have been about $30 perparticipant.

But the plan paid approximately $119 to $142 per participant peryear from 2009 through 2014, as much as 473 percent higher than areasonable fee, resulting in millions of dollars in excessive fees,according to the complaint.

Plaintiffs’ attorneys allege participants lost over $30 millionto excessive record keeping costs.

And as recently as the end of 2014, the plan offered 11investment options that charged fees from 23 percent to 133 percentin excess of fees with similar funds available on the market.

In July 2015, the plan added several new investment options,which the suit also alleges came with excessive fees.

Even when cheaper institutional class shares of funds wereoffered, participants still paid higher fees than had Insperityused the plan’s size to negotiate investments in a separateaccount, which plaintiffs’ attorneys argue would have been theprudent strategy, given then plan’s sheer size.

“Had Defendants offered separate accounts rather than high-costmutual funds for the Plan’s investment options, Plan participantswould have paid significantly less of their retirement savings forinvestment management services, thereby having available millionsof dollars to build their retirement assets,” the claim argues.

St. Louis-based Schlichter, Bogard and Denton is representingthe four named plaintiffs in the suit. The law firm has lednumerous excessive fee claims under ERISA.