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Compliance June 14, 2024
84 Lumber Co. Retirement Plan Sued for High-Fee Investments In-Plan
A lawsuit against the Pennsylvania-based company has alleged the plan’s recordkeeper fees were higher –than average and that the plan included higher-cost investments instead of cheaper ones.
Reported by Noah Zuss
For selecting and retaining comparatively higher cost, lower yielding investment options and allowing recordkeepers to charge the plan annual fees of $60 per participant—from 2018 through 2022—Angel Runciman, employed by 84 Lumber Co., has sued the Amended and Restated Savings Fund Plan for Employees of 84 Lumber, alleging fiduciary breach of the Employee Retirement Security Act.
The 84 Lumber Co. retirement plan, 84 Lumber Company Administrative Committee of the retirement plan and individual members of the plan’s administrative committee were targeted with violating ERISA’s duty of prudence and of failure to monitor other fiduciaries, the complaint shows.
“Defendants failed to monitor or control the grossly excessive compensation paid for recordkeeping and administrative services and had a flawed process for selecting and retaining investments and service providers,” attorneys for the plaintiff wrote in the complaint.
From 2010 until 2022, the plan’s recordkeeper was Prudential Retirement Insurance and Annuity Company, which sold this business to Empower Retirement LLC in 2021. Since 2022, Empower has served as the plan’s recordkeeper. Neither were named as defendants in the lawsuit.
The case, Runciman v. 84 Lumber Company et al., was brought in the U.S. District Court for the Western District of Pennsylvania.
The 84 Lumber Co. plan held $518.710 million in retirement plan assets for 9,932 participants, according to the most recent Form 5500 filing to the Department of Labor for the 2022 plan year.
Regarding the fees, the plaintiff’s attorneys argue in the complaint that similar-size plans charge lower per-participant fees than $60, ranging between $24 to $39 per participant.
Additionally, the complaint alleges 84 Lumber Co. retirement plan fiduciaries improperly selected and retained for the plan higher cost T. Rowe Price target-date mutual funds instead of essentially identical but lower-cost collective investment trusts with the same strategy.
“Defendants chose and/or retained the mutual fund version of the TDFs which charged fees up to 72 basis points a year versus the CIT version of the TDFs which charged just 30 basis points,” attorneys for the plaintiff wrote.
The plaintiff also argues 84 Lumber Co. fiduciaries imprudently selected and retained more expensive Class A shares of the Victory Sycamore Established Value Fund when less expensive, better performing and otherwise identical share classes of the same fund, including Class I, Class R, Class R6 shares, were available.
In 2019 Class A shares of the fund cost 89 basis points while R6 cost 57bps, shows the complaint.
Currently, Class A shares have a 90bps fee, Class R cost 66bps and Class R6 cost 54bps, show the fund’s prospectuses.
The accuser requests the court certify the lawsuit as a class action applying to all persons who were participants in or beneficiaries of the plan at any time between June 11, 2018, through the date of judgment.
The plaintiff and proposed class are represented by attorneys with the law firm Wade Kilpela Slade LLP and Muhic Law LLC. The complaint did not list attorneys for the defendants.
Neither the attorneys for the plaintiffs nor representatives for 84 Lumber Co. responded to requests for comment.