Current and former participants in a 401(k) plan offered by Mutual of America Life Insurance Co. sued the company for violating ERISA in its record-keeping and investment policies.
"By using its own proprietary record keeping platform and by failing to control or monitor the plan's administrative expenses," the company "caused plan participants to pay excessive administrative fees," said the lawsuit filed Sept. 14 in a U.S. District Court in New York.
The company "also applied an imprudent and disloyal preference for its own proprietary funds within the plan despite their poor performance and high costs," said the lawsuit in the case of Goldstein et al. vs. Mutual of America Life Insurance Co.
By year-end 2020, the plan contained 28 proprietary mutual funds and one proprietary fixed-income fund, the lawsuit said. "A prudent and objective review of comparable investments in the marketplace would have revealed numerous available investments that were less costly and superior" to the proprietary funds.
The plaintiffs criticized the plan's closed architecture record-keeping policy because it "limits a plan's investment menu to one of the approximately 50 investment options that Mutual of America makes available, including numerous Mutual of America proprietary investments," the lawsuit said.
"While it is not per se imprudent to use a proprietary closed-architecture recordkeeping platform, plan fiduciaries must monitor and control recordkeeping expenses, which includes investigating the recordkeeping options available to a plan," the lawsuit said.
The company "has a long history and extensive experience in providing a competitive array of retirement savings plan products and services to its clients," Brian Q. Severin, senior executive vice president and chief marketing officer, wrote in an email. "As a retirement company, we take pride in helping our own employees plan and prepare for their retirement."
The Mutual of America Life Insurance Company Savings Plan, New York, had assets of $436 million as of Dec. 31, 2020, according to the latest Form 5500.