Empower Sued for Another Company’s 401k Mistake?

Careful where you step with 401(k) fiduciary issues.

Careful where you step with 401(k) fiduciary issues.

Safeway’s got some rotten produce—at least according to one of its 401(k) plan participants. In a clear example to 401(k) advisors of the dangers of buying another 401(k) business, book of business, record keeper, whatever, Safeway is being sued for allegedly breaching its fiduciary duty.

The issue arose when J.P. Morgan Retirement Plan Services managed the Safeway plan. J.P. Morgan Retirement Plan Services was then purchased by Great-West, which made it part of its Empower subsidiary.

Specifically, plan participant Dennis M. Lorenz claims negligence in Safeway’s selection of JPM Smartretire Passiveblend Funds as its target date option, but Great West is also named. The suit further alleges:

Additionally, the suit alleges an untoward revenue sharing arrangement.

“The management fee charged to participants for investing in the JPM Smartretire Passiveblend Funds included a 20 basis point revenue sharing payment to JPMRPS and later Great West,” according to court filings. “This revenue sharing payment was purportedly compensation to JPMRPS/Great-West for record-keeping services in connection with the Plan but, as set forth below, resulted in compensation to JPMRPS/Great West far in excess of reasonable compensation for such services.”

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