Custodian Millennium
Trust Company and recordkeeper Paychex, Inc. have partnered to offer a SIMPLE
IRA (Savings Incentive Match Plan for Employees Individual Retirement Account)
for employers with 100 or fewer employees.
The SIMPLE IRA gives employers the
opportunity to automatically enroll employees into the plan, as well as
escalate their deferrals every year, and offers them investment fiduciary services.
“Small businesses increasingly recognize the important of retirement plans in
attracting and retaining talent, but there are barriers that keep them from
investing in employer-sponsored workplace savings solutions,” says Gary
Anetsberger, CEO of Millennium Trust. “A SIMPLE IRA plan is a low-fee
retirement savings plan that offers many of the same features found in 401(k)
and state-based retirement savings programs, including auto enrollment and auto
escalation.”
Citing 2016 data from Pew Charitable Trusts, Terry Dunne, Millennium Trust’s
managing director of retirement services, notes that “approximately 40% of
Americans don’t have access to retirement benefits plans at their place of
work.”
Another
participant in the General Electric Company (GE) 401(k) Savings Plan has filed
a lawsuit alleging self-dealing by the company in offering investments managed
by GE’s investment management arm, General Electric Asset Management (GEAM).
The
complaint says 401(k) plan fiduciaries violated the Employee Retirement Income
Security Act’s (ERISA)’s fiduciary laws and ERISA’s prohibited transactions
regulations by offering and failing to follow five investment fund options
offered by the plan—GE Institutional International Equity Fund; GE Institutional
Strategic Investment Fund; GE RSP US Equity Fund; GE RSP US Income Fund; and GE
Institutional Small Cap Equity Fund.
The
plaintiff says these funds were among the 15 investment options (other than target-date
funds) offered in the plan during the class period, and all were managed by
GEAM. The complaint further says the GEAM funds are the only non-index funds
offered to plan participants, so if a participant wants to invest in actively
managed funds, he/she is forced by GE and the plan trustees to invest in GEAM funds.
As
actively managed funds, there were investment advisers and/or portfolio
managers to be paid by plan participants from their plan savings, the complaint
notes. “The mere act of limiting actively managed equity funds to GEAM Funds
indicates that Defendants put GEAM interests before the interests of the Plan
or Plan Participants,” it says. “GE has profited handsomely from these
arrangements, earning tens of millions of dollars in fees during the Class
Period and enhancing GEAM’s sale value.”
The
lawsuit alleges that the defendants caused the investment decisions made by plan
and “parties-in-interest” to engage in prohibited transactions during the class
period. “Each time the Plans invested Participant assets or allowed parties-in-interest
to be paid fees and costs from Plan assets to GEAM in connection with the
Plans’ investment in a GE-affiliated investment option, these Defendants caused
the Plans to engage in a prohibited transaction under ERISA. Each time the
Plans paid fees to a GE-affiliated investment manager, the Plan engaged in
transactions prohibited by ERISA Section 406(b), which prohibits Defendants
from causing the Plans to engage in a transaction benefiting a party-in- interest
person,” the complaint says.
The
plaintiff also alleges that the defendants GE and GEAM failed to monitor the trustees
and other fiduciaries of the plan to ensure that all fiduciaries were acting in
accordance with ERISA fiduciary duties of prudence and loyalty and avoiding
engaging in prohibited transactions. In addition, he alleges a co-fiduciary
liability under ERISA 405(a) against all defendants who had knowledge of other
fiduciaries’ breach of duties and/or role in prohibited transactions.
The
lawsuit seeks disgorgement of unlawful fees, expenses, and profits taken by the
defendants, and to obtain such further equitable or remedial relief as may be
appropriate to redress and to enforce the provisions of Title 1 of ERISA.