Mercedes Benz employees missed out on 401(K) earnings because the company mismanaged the fees on the account, according to a lawsuit filed by two employees who participate in the company plan.
The plaintiffs say the carmaker’s financial mismanagement resulted in more meager retirement accounts for its employees primarily because Mercedes Benz used high priced record keeping and advisory services, the cost of which ate into benefit balances. Approximately 4,000 Mercedes Benz 401(k) plan participants were affected by the mismanagement, the complaint alleges.
“Defendants did not engage in prudent decision-making processes, as there is no other explanation for why the Plan paid these objectively unreasonable fees for retirement plan services,” the suit says.
Employees allege in the class action lawsuit that Mercedes violated a federal law that protect retirement accounts. ERISA, or the Employee Retirement Income Security Act, protects retirement accounts, along with disability benefits, irecord keeping, and account management.
Mercedes Benz 401(k) Mismanagement
The class action lawsuit alleges that plan participants up to 10 times as much as they should have in retirement plan service fees for their 401(k)s, maybe more.
The Mercedes Benz 401(K) plan comprises more than $500 million in assets, according to the complaint. The plaintiffs claim the company could have leveraged the buying power of its 401(k) plans to secure competitive administrative fees. Instead, say the plaintiffs, Mercedes failed to obtain plan managers that monitored investment fees appropriately.
Specifically, the class action lawsuit points out that plan participants paid between about $300 to over $500 per year for retirement plan services, when the going rate was approximately $53 per year. The plaintiffs also claim that plan participants were dinged with double fees for retirement account services.
Despite adding around 700 plan participants since 2016, account fees have only gone up, the suit claims. The class action lawsuit seeks to represent Mercedes Benz 401(k) plan participants and beneficiaries.
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The plaintiffs are represented by James B. Eubank and W. Daniel Miles III of Beasley Allen Crow Methvin Portis & Miles PC.
The Mercedes Benz 401(k) Class Action Lawsuit is Case No. 7:21-cv-00074, in the U.S. District Court for the Northern District of Alabama.
This content was originally published here.