Former participants of the 401(k) plan offered by Magna International of America Inc., Troy, Mich., sued the automotive parts supplier and plan fiduciaries alleging ERISA violations, ranging from excessive fees to extensive use of investments from the plan's trustee.
"The plan had substantial bargaining power regarding the fees and expenses that were charged against participants' investments," said the complaint, which seeks class-action status, filed April 30 in U.S. District Court In Detroit.
"Defendants, however, did not try to reduce the plan's expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent," the complaint said.
The participants alleged that plan's fiduciaries "abdicated their fiduciary oversight, allowing Principal Trust Co. to lard the plan with funds managed by the trustee and/or its affiliates," the lawsuit said. "These plan funds charged excessive fees in violation of ERISA and the plan's own investment policy."
Principal Trust Co., an affiliate of Principal Financial Group, isn't named as a defendant.
The plaintiffs also accused the fiduciaries of failing to select lowest-cost shares for many mutual funds in the plan's lineup and failing to negotiate "reasonable expenses" for the collective trusts and separate accounts offered to participants.
A company representative didn't respond to a request for comment.
The Magna Group of Companies Retirement Savings Plan, Aurora, Ontario, has assets of $1.66 billion for the year ended Dec. 31, 2018, according to the latest Form 5500.
