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Wal-Mart 401(k) Fees Class Action Settlement
By Matt O’Donnell
Wal-Mart workers who claim they were charged way too much in fees for their 401(k) plans have won a $13.5 million class action lawsuit settlement with the retailer and its plan administrator, Merrill Lynch, a unit of Bank of America.Like most 401(k)s, Wal-Mart’s plan passes along the costs of managing an array of mutual funds to employees. The workers allege in the 2008 class action lawsuit, however, that Wal-Mart and Merrill Lynch passed along “unreasonably high fees and expenses” to Wal-Mart’s 2 million workers.
One of the most explosive allegations in the Wal-Mart 401(k) class action lawsuit was that Merrill Lynch received undisclosed kickback payments from outside mutual fund companies “simply for allowing them to be in the plan,” Forbes.com reports.
The Wal-Mart 401(k) plan settlement is a legal landmark because Wal-Mart provides one of the largest 401(k) plans in the world and is the national’s largest private employer. It also comes at a time when the government is trying to fine-tune a rule concerning “fiduciary duty” that will require employers to provide full disclosure of all fees paid to middlemen and will establish stricter legal guidelines on how to provide the most prudent offerings at the lowest possible cost.
Under the terms of the Wal-Mart 401(k) plan class action settlement, the lead Plaintiff will collect $20,000. Other Wal-Mart employees covered by the class action lawsuit will not receive payouts, but will benefit in the form of up to $9 million in reduced 401(k) fees going forward.
Wal-Mart and Merrill Lynch admitted no wrongdoing in the class action settlement.
The case is Jeremy Braden v. Wal-Mart Stores, Inc., et al., Case No. 08-cv-3798.
Updated December 13th, 2011
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