Tyson Foods Employees Allege Excessive 401(k) Plan Fees

Tyson Foods Inc.’s retirement plan committee is the defendant in a class action complaint filed by three employees accusing the Arkansas-based meat production company for passing on to participant excessive fees for 401(k) recordkeeping done by Northwest Plan Services Inc.

The complaint, Ruebel et al. v. Tyson Foods Inc. et al., was filed Thursday in the U.S. District Court for the Western District of Arkansas. Plaintiffs are seeking class action status for the Tyson 401(k) plan that, by year-end 2022, had 67,276 participants and $3.2 billion in assets, according to BrightScope, which, like PLANADVISER, is owned by ISS STOXX.

In the complaint, the plaintiffs allege that during the class action period from November 30, 2017, through the date of judgement, Tyson’s plan committee breached two fiduciary duties. First is an allegation of “violation of the duty of prudence against defendants” for “charging plan participants excessive total RKA fees.” Second is an allegation that defendants failed to “monitor fiduciaries responsible for plan administration with regard to plan total RKA fees.”

The first count argues that, among other allegations, the defendants paid “over a 75% premium per-participant for total RKA fees” at an average of $42 per participant.

The complaint contains analysis of what the plaintiffs called comparable plans, including those administered by Fidelity Investments, Alight and the Vanguard Group, with total fees between $20 and $32. It also aggregated those comparable plans to show that, according to its figures, Tyson Foods plan should have been charging around $27 per participant on average for the market at that time.

“Defendants should have lowered its total RKA fees by soliciting bids from competing providers and using its massive size and correspondent bargaining power to negotiate for fee rebates, but it did not do so, or did so ineffectively, during the class period,” the plaintiffs allege.

To argue the scale of the plan, the plaintiffs note that Tyson Foods’ plan had more participant than 99.98% of the defined contributions in the U.S., and more assets than 99.97% of plans.

The second count alleges a breach of fiduciary duty for “failing to monitor those individuals responsible for paying these unreasonable total RKA fees.”

The complaint does not name recordkeeper Northwest Plan Services or any other administrators or providers of the plan.

Neither Tyson Foods nor Northwest responded to requests for comment on the complaint.

Legal firm Euclid Fiduciary, which tracks retirement plan litigation, noted in August that excessive fee and investment imprudence litigation was tracking lower in 2023 than the year prior—but the experts also noted that the plaintiffs’ bar was getting more intelligent in their arguments. At the time, the firm forecast 45 such complaints in 2023, up from 89 in 2022.

The complaint alleges Tyson Foods cost the plaintiffs and class members millions of dollars of harm, and it seeks to recoup those losses for all plan members.

The plaintiffs are being represented by the law firms of Walcheske & Luzi LLC and Carney Bates & Pulliam PLLC.