A proposed class action alleges Old Dominion Freight Line has imprudently and unnecessarily selected expensive share classes for its 401(k) plan, causing participants to lose roughly $3 million in retirement savings.
The 25-page case claims the trucking company has breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA) by failing to prudently monitor and select proper share classes of 11 investments offered by its 401(k) retirement plan. As a result of the alleged mismanagement, the company has wrongfully caused current and former employees to lose part of their retirement savings to excessive fees, the filing argues.
Per the complaint, the Old Dominion Freight Line 401(k) plan had more than $2 billion in assets and more than 24,000 participants as of December 31, 2021.
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To protect retirement plan participants from losing money on high fees or poorly performing investments, ERISA imposes on employers “strict fiduciary duties of loyalty and prudence,” the filing explains. More specifically, a fiduciary is responsible for evaluating and monitoring plan expenses, investments, and investment costs “solely in the interest of the participants and beneficiaries” and with “care, skill, prudence, and diligence,” the lawsuit relays.
However, the suit contends that Old Dominion Freight Line selected more expensive “share classes,” or pricing discounts offered by investment companies, over cheaper, identical share classes of the same investments. According to the case, the company failed to conduct an analysis when it selected and retained these imprudent share classes, in which plan participants had invested nearly $500,000,000 as of December 31, 2021.
“A prudent fiduciary conducting an impartial review of the Plan’s investments would have identified the prudent share classes available and selected those for the Plan instead of the identical but higher-priced investments,” the complaint reads. “There is no good-faith explanation for selecting and retaining the higher-priced and poorly performing share classes when the lower-priced and better performing share classes are/were available.”
Per the filing, the company’s purported imprudence has resulted in millions of dollars in losses and excessive fees that can significantly reduce the savings available for participants when they retire. A report from the U.S. Department of Labor found that just a one-percent increase in fees over 35 years reduces an individual’s retirement assets by 28 percent, the case states.
The lawsuit looks to represent anyone who has been a participant in or beneficiary of the Old Dominion 401(k) Retirement Plan at any time between November 18, 2016 and the present.
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