Mutual of America Life Insurance Co. will pay $2.75 million to settle a lawsuit by current and former participants in a 401(k) plan who alleged ERISA violations regarding record-keeping fees and the use of proprietary investments in the defined contribution plan.
The settlement, which requires court approval, was submitted April 14 to a U.S. District Court in New York.
Plaintiffs sued in September 2022. The parties announced a preliminary agreement March 31 but didn't reveal terms at that time in Goldstein et al. vs. Mutual of America Life Insurance Co. et al.
The plaintiffs' argued that the 401(k) plan was filled with Mutual of America Life Insurance's own investment products that were expensive and/or poor-performing compared with investments in the marketplace.
As part of the settlement, the defendants agreed, within the next three years, to offer non-proprietary investments for at least half of the plan's lineup.
"Although defendants dispute the allegations and deny liability for any alleged violations of ERISA or any other law, they do not oppose the relief sought in this motion," said the settlement document filed by plaintiffs' attorneys.
The settlement was reached while the defendants' motion to dismiss was pending before the court.
"While plaintiffs are confident that they would have prevailed on the pending motion to dismiss, there was a risk that the court might have dismissed the claims," the document said. "And, if the case proceeded to trial, defendants still might have prevailed."
Mutual of America Life Insurance Co. Savings Plan, New York, had $471 million in assets as of Dec. 31, 2021, according to the latest Form 5500.