U.S. Bank class action alleges employer paid excessive fees for retirement plan

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U.S. Bank retirement plan class action overview: 

• Who: Two participants in the U.S. Bank 401(k) savings plan sued the bank.
• Why: The plaintiffs say the bank mismanaged the plan by allowing it to pay overly high fees.
• Where: The U.S. Bank retirement plan class action was filed in a Minnesota federal court.

Two participants in the U.S. Bank’s 401(k) savings plan are suing the bank, alleging it mismanaged their retirement savings by allowing the plan to pay overly high fees.

Plaintiffs Ana L. Dionicio and Alejandro M. Wesaw filed the class action lawsuit against U.S. Bancorp (U.S. Bank) and its directors on Jan. 5 in a Minnesota federal court alleging violations of the Employee Retirement Income Security Act (ERISA).

According to the lawsuit, U.S. Bank and the defendants have legal obligations under ERISA as fiduciaries exercising discretionary authority over the U.S. Bank 401(k) Savings Plan that it sponsors and provides to its employees.

However, from Jan. 5, 2017, until the present, U.S. Bank breached the duty of prudence it owed to the plan by requiring it to pay excessive recordkeeping, administrative and account fees, the lawsuit states.

Under ERISA, U.S. Bank should have removed its “high-cost” recordkeeper, Alight Solutions, and its “high-cost” managed account service provider, Alight Financial Advisors, for the benefit of its plan participants, the plaintiffs allege.

“These objectively unreasonable recordkeeping and managed account fees cannot be contextually justified… Defendants breached their fiduciary duty of prudence by causing the Plan participants to pay excessive RKA and managed account fees,” the U.S. Bank class action states.

U.S. Bank retirement plan could have leveraged size to get cheaper fees, lawsuit alleges

U.S. Bank failed to leverage the size of its retirement plan to pay reasonable fees, the lawsuit states. It could have undertaken a competitive bidding process to see if the same level and quality of services could be had by the plan for less, but it did not, the U.S. Bank class action alleges.

As a result of the breaches of fiduciary duty, U.S. Bank retirement plan participants face “tens of millions of dollars of harm” in the form of lower retirement account balances than they otherwise should have had in the absence of these “unreasonable” plan fees and expenses, the lawsuit states.

The plaintiffs seek to represent all participants and beneficiaries of the U.S. Bank 401(k) Savings Plan from Jan. 5 2017 to now. The class includes about 87,000 members. 

The plaintiffs sued for breaches of ERISA and seeking certification of the class action, an order for the U.S. Bank to “make good” to all the plan losses resulting from the alleged breach of duty, disgorgement of profits, fees and costs. 

In related U.S. Bank news, in November, U.S. Bank notified around 11,000 of its customers that one of its third-party vendors accidentally shared their personal information in a data breach. 

Are you a member in the U.S. Bank 401(k) plan? Let us know in the comments! 

The plaintiffs are represented by Amy R. Mason of Miller & Stevens, P.A. and Paul M. Secunda of Walcheske & Luzi LLC. 

The U.S. Bank class action lawsuit is Ana L. Dionicio et al., v. U.S. Bancorp et al., Case No. 0:23-cv-00026, in the U.S. District Court District of Minnesota. 

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