Compliance April 3, 2024

Minnesota Sponsor Sues Adviser for True-Up Plan Amendment

The cost of a plan amendment to allow safe harbor and true-up contributions prompted Great Lakes Management Co. to allege USI Consulting Group acted negligently.  

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Great Lakes Management Co. is suing its retirement plan consultant and retirement plan adviser USI Consulting Group Inc., alleging the firm negligently counseled the retirement plan to change plan contributions to a safe harbor and true-up that caused it to contribute nearly $100,000 over two years. Great Lakes Management was advised by USI to amend the plan, according to a March 28 complaint filed in U.S. District Court for the District of Minnesota.  

Per the Employee Retirement Income Security Act, Great Lakes Management claims USI Consulting Group owed a duty to advise the plan of the implications—including the cost to the company—of the amendments, particularly the true-up. The company also claims USI breached its duties to the plan by failing to properly advise Great Lakes Management of the implications of the amendments, the complaint argues.  

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Great Lakes Management “relied on the advice [of USI] when it decided to adopt the amendment,” its attorneys argue in the complaint. “But for defendant’s negligence, the plaintiff would not have suffered damages.”

The lawsuit seeks monetary compensation for damages, which Great Lakes Management claims USI caused the plan to incur—specifically $98,605 over the years 2022 and 2023.

Great Lakes Management claims the plan was unaware the true-up amendment “contractually required the plan to match an employee’s 401(k) contribution for the entire year” an employee was enrolled, even if an employee only enrolled partway through the year.

According to the amendment, if an employee enrolled in the plan in September 2022, the true-up required the plan to match the employee’s contribution as if they had enrolled in January 2022.

USI has provided professional consultation and advice to the plan since 2018. Great Lakes Management agreed to amend the plan in November 2021. The change took effect January 1, 2022.

Great Lakes Management manages and serves as the trustee of the Great Lakes Management 401(k) Retirement Savings Plan. The plan included about $6.59 million in retirement assets for 833 participants, as of the plan’s most recent filing to the Department of Labor.

Great Lakes Management Co., based in Plymouth, Minnesota, is in the business of senior living property management.

Representatives of Great Lakes Management Co. did not respond to a request for comment. A representative of USI Consulting Group declined comment. Great Lakes Management is represented by attorneys with the law firm Chestnut Cambronne PA.

Products April 3, 2024

Alera Group Unveils PEP Enhancements With the Standard

The retirement adviser is leaning into the small-plan market and startup plan creation.

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Alera Group’s Retirement Plan Services, a division of the insurance and financial services firm, Tuesday announced enhancements to the Alera Group Pooled Employer Plan, a PEP it launched three years ago with the Standard. In the new iteration, the PEP can provide flexible plan design depending on the adopting employer’s needs, the firm stated.

“Alera Group was an early believer in the potential for PEPs to serve our clients,” said Christian Mango, executive vice president and national practice leader for Alera Group’s Retirement Plan Services division, in a statement. “The success of the Alera PEP has surpassed all expectations, and we believe we can make it even better by creating efficiencies across our retirement plan services platform at a time when interest in and adoption of PEPs has been growing.”

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The Standard serves as the pooled plan provider and Employee Retirement Income Security Act 3(16) fiduciary, while Alera Group provides ERISA 3(38) investment management and consulting services. Alera Group did not name the specific amount of assets or adopting employers within the PEP.

The announcement follows a March 28 release by the firm noting a partnership with digital 401(k) provider Vestwell to offer a workplace retirement plan solution for companies with fewer than 100 employees.

“We see a tremendous opportunity to provide retirement solutions to an underserved plan sponsor and participant population that deserves access to features and solutions typically found only in larger plans, whether that be internally here at Alera Group across our Insurance and Employee Benefits client base or externally,” said Mango in a statement.

Alera is adding the service on expectations of 401(k) plan assets tripling over the next five years, in part due to the implementation of state-facilitated retirement programs and the passing of the SECURE 2.0 Act of 2022.

The firm’s partnership with Vestwell is “designed to lower costs and administrative burdens while streamlining the fulfilment of fiduciary duties compared to traditional options in the market,” according to the announcement.

“We designed the Vestwell platform to address pain points plaguing the savings industry and help deliver the leading solution in a scalable, efficient manner,” said Aaron Schumm, CEO and founder of Vestwell, in a statement.

The Alera Group solution bundles ERISA 3(38) investment governance and an adviser-managed account using Franklin Templeton’s Goals Optimization Engine.

Alera Group is an independent, national insurance and financial services firm with more than $1.3 billion in annual revenue, offering employee benefits, property and casualty insurance, retirement plan services and wealth services solutions to clients nationwide.

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