The latest excessive fee suit targets “wildly excessive compensation,” an allegedly imprudent stable value offering, and the unmonitored use of “float” income.
More specifically, the participant-plaintiffs of Miami, Florida-based Lennar Corp. are raising issues with the recordkeeping/administrative fees (“wildly excessive compensation”) paid by the plan, the prudence of retaining Prudential’s stable value fund, and the use of float income by Prudential (the plan’s recordkeeper).
The lawsuit, filed in the U.S. District Court for the Southern District of Florida (Catenac v. Lennar Corp., S.D. Fla., No. 1:22-cv-23232, complaint 10/5/22), is directed at a plan with approximately $1.2 billion in assets and nearly 13,000 participants. The participant-plaintiffs are represented here by Morgan & Morgan PA.
Author(s): Nevin E. Adams, JD
Publication Date: 6 Oct 2022
Publication Site: NAPA-net
Looks like those hoping for some clarity on a threshold issue involving ERISA fee litigation will have to wait for another day.
I’m referring, of course, to last week’s ruling by the Supreme Court on the case of Hughes v. Northwestern University et al.—a case that the law firm of Schlichter Bogard & Denton—which seems to have “invented” this class of excessive fee litigation—said was having a “chilling effect” on this type of lawsuit, more precisely their ability to proceed to trial (or settlement). Consequently, ERISA fiduciaries were waiting anxiously for a ruling on the case, which involved allegations that Northwestern University had failed to comply with its fiduciary responsibilities with regard to the options available to plan participants.
Indeed, the allegations in this case weren’t all that different from the litany transgressions outlined in any number of such cases over the years—but in making their case to be heard by the nation’s highest court the plaintiffs’ attorneys (the aforementioned law firm)—had noted (complained?) that suits “with virtually identical” claims were being dismissed out of hand, while other courts were allowing them to go to trial. This they claimed was “…not a factual disagreement about whether the specific allegations at issue clear the pleading hurdle,” but rather “a legal disagreement about where that hurdle should be set.”
Consequently. some clarity as to how, and how much, must be established by those who file the suits before they get to take the issue(s) to trial is timely, to say the least. Or, said another way, how much is “enough.”
Rather, the court had merely determined that there were some prudent alternatives on the menu, and that the participants could choose them if they had an issue with those that (allegedly) weren’t as expensive and that, for that district court, was enough.
Author(s): Nevin E Adams, JD
Publication Date: 3 Feb 2022
Publication Site: ASPPA
Legislation before the House Ways & Means Committee plans to help pay for a multiemployer plan bailout by utilizing a budget “gimmick” that would freeze retirement plan contribution limits—though not for collectively bargained plans.
More specifically, the Butch Lewis Emergency Pension Plan Relief Act of 2021, included as subtitle H of a nine-part package that the committee plans to mark up this week, would impose a cost-of-living freeze on:
the Code Section 415(c) annual contribution limit for defined contribution plans;
the Section 415(b)(1)(A) annual defined benefit limit; and
the Section 401(a)(17) annual compensation limit.
This appears to be designed to fill a budget hole in the 10-year scoring window—and as such would freeze these limits starting in calendar year 2030. Ironically, it’s scored to lose money in the years leading up to the effective date, apparently anticipating that individuals will be inclined to increase contributions before the limits are imposed.
Author(s): TED GODBOUT AND NEVIN E. ADAMS
Publication Date: 9 February 2021
Publication Site: ASPPA