KeyCorp 401(k) Plan Expenses and Oversight Class Action

When a company sets up a retirement plan for its employees, the people overseeing the plan have a fiduciary duty to the members of the plan. They must act in the interests of those members and not in the interest of themselves, the company, or any other party. The complaint for this class action alleges that those overseeing the KeyCorp 401(k) Savings Plan have breached their fiduciary duties. The law in this case is the Employee Retirement Income Security Act of 1974 (ERISA).

The class for this action is all participants and beneficiaries of the KeyCorp 401(k) Savings Plan at any time on or after June 4, 2014.

ERISA imposes the duties of loyalty and prudence on those who take care of company retirement plans like the one at issue in this case. The complaint quotes the law as saying that fiduciaries for such plans must act “solely in the interest of the participants and beneficiaries” with the “care, skill, prudence, and diligence” to be expected managing such a plan.

Among other things, fiduciaries must pay attention to the level of expenses for the plan, since these expenses take from the earnings of the plan and therefore the amounts that the plan participants can receive.

These alleged breaches of loyalty and prudence are the first count in this class action. The second count alleges that KeyCorp failed to properly monitor those in charge of the plan, costing participants “millions of dollars in excessive fees…”

The complaint alleges that the market for those who perform services for plans is “highly competitive, with many vendors equally capable of providing high-level service.” With this competition, the complaint alleges, administrative fees for plans have been declining.

During the class period, the KeyCorp plan has had between 21,000 and 29,000 participants and between $1.8 billion and $2.9 billion in assets, which makes it “one of the 300 largest defined contribution plans” in the US. “Accordingly,” the complaint claims, “the Plan has significant leverage to negotiate administrative expenses.”

The plan has been using the services of Alight Financial Advisors. Besides being recordkeeper for the plan, Alight also administers KeyCorp’s pension plan and retiree medical plan, and has been involved in setting up and administering KeyCorp’s online HR portal for benefits. In these roles, its fees are paid by KeyCorp.

In the 401(k) plan, Alight charges $63 per participant per year; the complaint claims that the same services could be purchased at $30-40 per participant per year. The complaint alleges that the plan’s fiduciaries should either have “engaged in rigorous benchmarking analysis,” keeping track of what others were paying for similar services, or should have put out a Request for Proposal (RFP) to review what others offered for similar services.

Article Type: Lawsuit
Topic: Employment

Most Recent Case Event

KeyCorp 401(k) Plan Expenses and Oversight Complaint

June 4, 2020

When a company sets up a retirement plan for its employees, the people overseeing the plan have a fiduciary duty to the members of the plan. They must act in the interests of those members and not in the interest of themselves, the company, or any other party. The complaint for this class action alleges that those overseeing the KeyCorp 401(k) Savings Plan have breached their fiduciary duties. The law in this case is the Employee Retirement Income Security Act of 1974 (ERISA).

KeyCorp 401(k) Plan Expenses and Oversight Complaint

Case Event History

KeyCorp 401(k) Plan Expenses and Oversight Complaint

June 4, 2020

When a company sets up a retirement plan for its employees, the people overseeing the plan have a fiduciary duty to the members of the plan. They must act in the interests of those members and not in the interest of themselves, the company, or any other party. The complaint for this class action alleges that those overseeing the KeyCorp 401(k) Savings Plan have breached their fiduciary duties. The law in this case is the Employee Retirement Income Security Act of 1974 (ERISA).

KeyCorp 401(k) Plan Expenses and Oversight Complaint
Tags: Breach of Fiduciary Duty, ERISA Violations, Employment Violations, Retirement Plan Mismanagement