Lockheed Martin Sued for Using ‘Underperforming’ Funds with High Fees in Its 401(k) Plan

Lockheed Martin Corporation office in Crystal City, Virginia, USA

There’s been an uptick in 401(k) mismanagement lawsuits in the past year, and now Lockheed Martin is being sued by current and former employees. The suit alleges that the aerospace and defense company used underperforming target-date funds (TDFs) with high fees in its 401(k) plan, and that Lockheed chose those funds for its own benefit.

Last week, participants in three Lockheed Martin retirement plans totaling around $50 billion in assets—$47.2 billion in the salaried plan, $2.1 billion in the bargaining plan, and $267 million in the capital plan—filed a proposed class-action lawsuit, Fezer et al v. Lockheed Martin Corporation et al, in the U.S. District Court of Maryland. These retirement plans manage assets for around 140,000 plan participants, and according to the complaint, they have lost out on “hundreds of millions of dollars” since 2019 because of Lockheed’s decision to use high-cost and poorly performing target-date funds from a wholly owned subsidiary that provides investment management services.