McDonalds, the world’s largest fast-food chain, offers its managers a “supersized” 401k plan that has drawn raves from some of the leading financial publications, including U.S. News World Report and Investopedia.com.
But class action lawyers are looking into whether the massive hamburger chain may have invested McDonalds managers’ 401k money in risky ventures, resulting in diminished values of the fund.
McDonalds own website details its profit sharing and savings plan, which lets employees save from 1 percent to 50 percent of their pay on a tax-deferred basis in their tax-deferred 401k plan. “McDonald’s matches eligible employees’ contributions with $3 for each $1 of the first 1% of pay they contribute, and $1 for each $1 on the next 4% they contribute,” according to the website. “Eligible employees may also receive a discretionary profit sharing match of 0% to 4% based on the first 1% of pay they contribute. Employees are always 100% vested in their contributions and the company matches.”
In theory, that’s a hefty savings vehicle for McDonalds managers, who according to the salary website Glassdoor.com earn an average of $45,188 for general managers, $43,095 for store managers, $30,817 for assistant managers and between $9.95 and $10.18 for shift managers.
“That’s a tremendous way to inspire employees at all income levels to participate,” Mellody Hobson, president of Chicago investment firm Ariel Investments told U.S. News & World Report.
“Salaried restaurant managers are automatically enrolled in the plan at 1 percent, unless they opt out or change their contribution level. Ninety-eight percent of these managers participate in the 401k plan.”
The Employee Retirement Income Security Act of 1974 (ERISA) states that plan sponsors – employers — must operate their retirement plans in the best interests of their employees. This means the employer is the fiduciary on behalf of the employee. At issue is whether McDonalds’ fiduciaries – the people in charge of administering and managing the 401k plans — breached their fiduciary responsibility for the company’s 401k plan by including unsuitable investments in its portfolio, resulting in the portfolio earning less than it could have.
According to an item from a New York City Bar publication, by the year 2000, McDonalds concentrated the bulk – 81 percent — of its employee’s retirement savings in company stock, a practice begun by many large American corporations in the 1980s “when the proliferation of 401(k) plans was coupled with a record bull market,” according to a posting by the New York City Bar about employer stock litigation.
Should McDonald’s fiduciaries breach their fiduciary duty by not acting in the best interest of their employees and risking the value of a 401k plan, they risk being sued in an ERISA lawsuit for allegedly violating ERISA statutes.
In addition to acting in the best interests of the plan participants, ERISA requires that fiduciaries provide participants with plan information, which must contain information about plan features and funding. Breaches of fiduciary duty can result in a lawsuit being filed against plan fiduciaries.
Join a Free McDonalds 401k Class Action Lawsuit Investigation
A class action lawsuit investigation is currently underway to pursue the possibility of taking legal action against McDonalds for potentially violating ERISA. If you are a McDonalds employee who signed up for a McDonalds 401k account since 2007, you may have a legal claim.
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