Five former participants in a 401(k) plan offered by Taylor Corp. have sued the company and fiduciaries alleging ERISA violations in their management of record-keeping fees, investment management fees and investment selection.
The plaintiffs argued that the plan charged investment management fees that were excessive when compared with fees in plans of a similar size, said the complaint filed Monday in U.S. District Court in Minneapolis.
Fiduciaries "failed to prudently monitor the plan to determine whether the plan was invested in the lowest-cost share class available for the plan's mutual funds, which are identical to the mutual funds in the plan in every way except for their lower cost," said the complaint in Fritton et al. vs. Taylor Corp. et al.
The plaintiffs, who are seeking class-action status, also criticized the plan's record-keeping strategy. "In this case, using revenue sharing to pay for record keeping burdened the plan's participants with excessive, above-market record keeping and administrative fees," they wrote.
"The best practice is a flat price based on the number of participants in a plan, which ensures that the amount of compensation paid to the record keeper will be tied to the actual services provided," the complaint said. This approach means "record-keeping fees will not fluctuate or change based upon, e.g., an increase in assets in the plan," they added.
A representative for Taylor Corp. did not respond to a request for comment.
Taylor Cos. 401(k) and Profit-Sharing Plan, North Mankato, Minn., had $878 million in assets as of Dec. 31, 2020, according to the latest Form 5500.
