Whole Foods Market in Baltimore, MD. September 7, 2020. Photo: Diego M. Radzinschi/ALM
While the retirement plan excessive fee lawsuits keep coming, Whole Foods has reached an agreement to end its class-action lawsuit, which alleged the grocery chain failed to keep its $1.9 billion 401(k) plan’s administrative fees in check, costing 97,000 workers millions of dollars in retirement savings. The parties struck a deal after a private mediation session and plan to file details of the agreement for court approval by mid-June, according to a status report filed last week in the U.S. District Court for the Western District of Texas.
According to the complaint filed by former employees in 2023, Winkelman v. Whole Foods Market, Inc., the Amazon-owned grocer breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA) by failing to rein in per-participant fees that reached $31 or more, even though services were “routine” and comparable plans run by Apple, Costco, Lowes, Google, and Macy’s paid between $8 and $23 for the same services.
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The plaintiffs alleged that the plan was very large (known as a “jumbo” plan); that its size as a jumbo plan should have enabled it to bargain with Fidelity Investments for a better deal than it got for participants; and that its failure to do so constituted a breach of the fiduciary duties owed to the plan and participants. The contract with Fidelity “did not identify any unique services Fidelity would have to provide to the plan that would make the recordkeeping services provided to the plan differ in any material way from recordkeeping services provided by Fidelity or other nationally recognized recordkeepers to other jumbo plans like the plan,” according to the complaint.
Further, Winkelman noted in the lawsuit that Fidelity charged a per participant rate of between $31 and $34 from 2016 to 2020 and that “these rates continued to exceed, by far, the reasonable rate for a plan” the size of the Whole Foods Market Growing Your Future 401(k) Plan.
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From: BenefitsPRO
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
