Five former employees of Hy-Vee Inc. have sued the grocery/drug store chain and its fiduciaries, alleging that a company 401(k) plan violated ERISA guidelines by charging excessive record-keeping and administrative fees and retained high-cost, poor-performing investments.
"Defendants did not adhere to fiduciary best practices to control plan costs when looking at certain aspects of the plan's administration such as monitoring investment management fees for the plan's investments, resulting in several funds during the class period being more expensive than comparable funds found in similarly sized plans," said the complaint filed March 1 in a U.S. District Court in Des Moines, Iowa.
The plaintiffs are seeking class-action status in Rodriguez et al. vs. Hy-Vee Inc. et al. They claim the ERISA violations affect participants who had invested in the plan starting in March 1, 2016.
"Defendants' failure to obtain reasonably-priced and properly performing investments from 2016 to 2020 is circumstantial evidence of their imprudent process to review and control the plan's costs," the complaint said, referring to seven funds in the investment lineup.
"Looking at recordkeeping costs for other plans of a similar size as of 2019 shows that the plan was paying higher recordkeeping fees than its peers — an indication the plan's fiduciaries failed to appreciate the prevailing circumstances surrounding recordkeeping and administration fees," the complaint said.
A Hy-Vee representative did not return a request for comment.
Hy-Vee and Affiliates 401(k) Plan, West Des Moines, Iowa, had $2.27 billion in assets as of Sept. 27, 2020, according to the latest Form 5500.