Former employees of Ameritas Holding Co. filed a proposed class action suit on July 28, alleging the company had mismanaged the $779 million 401(k) plan.
As first reported by Bloomberg Law, plaintiffs Amber Colston, Willis Bramwell, and Roseann Blessing accused the Nebraska-based firm of ERISA violations in the case of Colston et al vs. Ameritas Holding Co. et al, adding that the company failed to “adequately review the plan’s investment portfolio to ensure each investment option was prudent, in terms of cost and performance.”
Plaintiffs argue that Ameritas’ mismanagement cost the plan and its participants “millions of dollars” by subjecting them to high fees for annuity products, which then impacted their retirement savings. As participants of the Ameritas 401(k) plan, plaintiffs were invested in funds that included “costly retail level annuity products” offered by Ameritas. As a result, plaintiffs say they suffered from excessive expenses and fees to their account and claim defendants did not engage in a prudent process when evaluating investment management fees.
The complaint alleges that defendants had acted in multiple conflicts of interest and “disloyalty” towards plan participants. More specifically, plaintiffs accuse Ameritas of receiving excessive and unreasonable compensation through annuity contract management fees, annuity investment management expenses, and excessive fees for actuarial services.
Furthermore, plaintiffs say that Ameritas did not try to reduce the plan’s expenses or “exercise appropriate judgement to scrutinize each investment option that was offered in the plan to ensure that it was prudent.” They also claim that a “much lower-cost plan structure” was available to the plan, but not chosen because Ameritas or its affiliates are connected to the annuity industry.
Plaintiffs are seeking equitable relief in the form of class-action status, damages, and a declaration that defendants breached their fiduciary duties under ERISA, among others. The complaint also asks that an independent fiduciary be added to run the Ameritas 401(k) plan.
401(k) Specialist reached out to Ameritas for comment but had not heard back before publication.
SEE ALSO:
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
