Lawsuit Targets Fiduciary Failures of One of the ‘Most Expensive’ 401k Plans in U.S.

401k lawsuit, fiduciary failures

One of the "most expensive" 401k plans in the country is the subject of a new breach of fiduciary duty lawsuit

The latest class action 401k lawsuit was filed in Texas on Tuesday against San Antonio-based grocery chain H-E-B, which plaintiffs allege is the plan sponsor of one of the “most expensive” retirement plans in the country.

The lawsuit accuses H-E-B of fiduciary failure by not properly monitoring and controlling the plan’s expenses. The plan’s fees, the lawsuit says, were nearly three times the average, and at least 50% higher than the 90th percentile, to propel it toward that “most expensive” status.

In a statement, H-E-B said it will defend against the “unsubstantiated allegations,” telling FOXSanAntonio,”We’ve made significant commitments to provide our partners quality retirement benefits, helping them achieve their financial and retirement goals.”

The lawsuit says plan participants have suffered “significant losses” as a result of H-E-B’s failure to rein in costs.

The H-E-B Savings & Retirement Plan had about $2.5 billion in assets at the end of 2017, the most recent figure publicly available. About 67,000 current and former H-E-B employees were part of the plan at that time, reports the San Antonio Express News.

Alleged fiduciary failures

To protect workers from mismanagement of their retirement assets, ERISA imposes strict duties of loyalty and prudence upon retirement plan fiduciaries.

The lawsuit states that, “contrary to these fiduciary duties, Defendants have failed to administer the Plan in the best interest of participants and have failed to employ a prudent process for managing the Plan.”

The “fiduciary failures,” the suit continues, have manifested themselves in the following ways:

The suit, which seeks unspecified financial damages and class action status, is the latest in a string of similar lawsuits brought under ERISA to be filed against plan sponsors in recent years. The suit estimates the class could number between 33,000 and 45,000 participants.

Overall, the number of settlements and monetary value in these types of fiduciary failure cases dropped significantly in 2018 compared to 2017. A report by the Chicago law firm Seyfarth Shaw found the top 10 ERISA settlements fell to $313.4 million last year from $927 million in 2017.

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