Ameriprise Financial Inc. has agreed to pay $27.5 million to settle a 2011 class-action lawsuit over the operation of its 401(k) plan for the company's employees and retirees.

The suit accused Minneapolis-based Ameriprise of loading up the company 401(k) plan with its own expensive, underperforming mutual funds and charging employees excessive fees, thus violating its responsibility to plan participants under federal retirement law.

Jerry Schlichter, managing partner of the firm that brought the suit, said in a statement that the settlement included provisions to improve the plan. "Competitive bids and enhanced communications and disclosure will increase the value of the employees' and retirees' 401(k) plans for years to come."

A joint motion for approval of the settlement was filed Thursday by the parties for consideration and approval by U.S. District Judge Susan Richard Nelson in St. Paul. The Schlichter firm would get about $10 million of the settlement proceeds for fees and expenses.

The proposed settlement would cover about 24,000 current and former employees. The 401(k) plan currently covers about 12,000 Ameriprise participants and boasts about $1.5 billion in assets, Ameriprise said.

Ameriprise, one of the nation's largest investment houses and financial planners, indicated the preliminary deal reached in the federal case was not that big of a deal.

"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 company said in a statement. "The plan has always included funds we manage, as well as funds from other companies and a brokerage window that offers participants additional choice."

A spokesman declined to elaborate beyond the written statement.

Nelson declined to dismiss the lawsuit in a 2012 ruling. She ruled at the time that those bringing the suit had a "plausible" allegation that Ameriprise was out to benefit itself at the expense of plan participants. In allowing the case to proceed at that point, she 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.

Schlichter, who had sought more than $70 million in compensatory damages, charged that Ameriprise stuffed the employee plan with higher-cost, lower-performing funds that it had acquired in 2010 from Bank of America and branded with its "RiverSource" funds label. Ameriprise argued that it had a sufficient mix of popular funds for employees.

Ameriprise described the lawsuit as a copy of about a dozen others that the St. Louis-based Schlichter firm had filed against other large employers. The firm has achieved similar settlements with several of those employers in recent years. The most recent and largest was a $62 million settlement reached in February with Lockheed Martin.

Neal St. Anthony • 612-673-7144