Two participants in a 401(k) plan offered by Lennar Corp. have sued the company, accusing it of ERISA violations in the management of the plan.
"Instead of leveraging the plan's tremendous bargaining power to benefit participants and beneficiaries, the defendant caused the plan to pay 'excessive fees and compensation' to its record keeper," said the complaint filed Wednesday in U.S. District Court in Miami.
The participants alleged the retirement plan paid triple the market rate for administrative services, in a case named Catenac et al. vs Lennar Corp.
Prudential had been the record keeper, but its retirement business was acquired in April 2020 by Empower Retirement.
Lennar is the only defendant named in the lawsuit.
The plaintiffs also allege in the lawsuit that the plan chose a Prudential stable value fund that was a worse performer than other stable value funds in the marketplace, and worse than "virtually identical" Prudential stable funds offered to other retirement plans.
Lennar's plan "never undertook any reasonable investigation into the performance of the Prudential Stable Value Fund," the lawsuit said. Importantly, the company "never took any prudent measures to discover the actual compensation Prudential was pocketing from the plan via the Prudential Stable Value Fund."
The plaintiffs, who are seeking class-action status, also accused Lennar of using "flawed and ineffective processes" to monitor the expenses and compensation to make sure they were "reasonable," the lawsuit said.
A company representative did not return a request for comment.
The Lennar Corp. 401(k) Plan, Valencia, Cal., had assets of $1.2 billion as of Dec. 31, 2020, according to the latest Form 5500.
