If you’re a 401(k) plan provider and think you can get away with charging sky-high fees while prioritizing your own bottom line, think again. A federal jury just reminded us all—fiduciary responsibility under ERISA isn’t just a suggestion, it’s the law.
In the case of Khan et al. v. Board of Directors of Pentegra Defined Contribution Plan et al., a class of over 26,000 participants in Pentegra’s $2.1 billion Multiple Employer Plan for Financial Institutions sued over—you guessed it—excessive fees, self-dealing, and failure to act like actual fiduciaries.
The plaintiffs alleged that Pentegra:
- · Let the plan rack up unreasonably high administrative and recordkeeping fees.
- · Lined its own pockets instead of looking out for participants (a big ERISA no-no).
- · Didn’t even bother using the plan’s scale to negotiate better deals. Spoiler: when you’ve got $2.1 billion in assets, you’ve got leverage. Use it.
Apparently, the jury agreed. After a close look at the facts, they hit Pentegra with a $38.7 million verdict—a clear message that fiduciary breaches are expensive, especially when you’re dealing with retirement assets.
This case is more than just a big number. It’s a wake-up call. If you’re a fiduciary, acting in the best interests of plan participants isn’t just your job—it’s your legal duty. Ignore that, and you might just find yourself on the wrong side of a courtroom, with a jury reminding you exactly how much that duty is worth.
