Mutual of Omaha Sued Over Affiliated Funds in 401(k) Plan

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

Mutual of Omaha Insurance Co. is the latest company to be sued over the affiliated investment products in its 401(k) plan.

The proposed class action accuses Mutual of Omaha of filling its 401(k) plan with affiliated investment funds that were essentially funds offered by third parties plus an extra layer of fees that went to the Nebraska-based insurer. The company also tacked on extra layers of fees to unaffiliated funds in the 401(k) plan, according to the complaint.

These extra layers of fees allowed Mutual of Omaha to pocket more than $1 million per year at the expense of workers’ retirement savings, the lawsuit says. The company also earned up to $3 million per year from an affiliated capital preservation option included in the plan, according to the lawsuit.

With this lawsuit, Mutual of Omaha joins the growing list of nearly 30 companies that have been sued over the affiliated investment products in their 401(k) plans since 2015. Many cases have led to early losses for the financial companies, with courts granting wins to employees of BB&T Corp., Deutsche Bank, American Century, and Edward Jones. Wells Fargo and Capital Group have succeeded in defeating these claims in the early stages of litigation. The first case to go to trial resulted in a victory for Putnam Investments.

Mutual of Omaha is a privately held Fortune 500 company that offers insurance products, retirement plans, and banking services. The company’s 401(k) plan has more than 6,000 participants and assets of more than $500 million, according to the complaint.

A spokesman for Mutual of Omaha declined to comment on the lawsuit.

The case was filed Jan. 25 in the U.S. District Court for the District of Nebraska by Berger & Montague and Schneider Wallace Cottrell Konecky Wotkyns LLP.

The case is Lechner v. Mutual of Omaha Ins. Co. , D. Neb., No. 8:18-cv-00022-JFB-CRZ, complaint 1/25/18 .

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Try Benefits & Executive Compensation News