$124 Million 401(K) Settlement Signals a Wake-Up Call for Retirement Savers

Trustees of a 401(K) plan have agreed to pay an astonishing $124.6 million to settle claims of mismanagement. This settlement serves as a powerful reminder of the importance of careful oversight when it comes to managing retirement funds.

The case was initiated by the US Department of Labor and private plaintiffs who alleged that the trustees, including DST Systems and New York City-based investment management firm Ruane, Cunniff & Goldfarb, failed to adequately diversify the plan’s assets.

Due to this lack of diversification, the plan suffered significant losses when it over-invested in a single pharmaceutical stock – Valeant Pharmaceuticals.

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— WhatsNew2Day (@whatsn2day) September 28, 2023

The stock, which represented over 45 percent of the plan’s assets at one point, experienced a significant price drop.

This had a devastating impact on the plan’s participants, as their retirement savings dwindled considerably. This case serves as a stark reminder of the risks involved in concentrating all your investments in one place, especially when it comes to retirement savings.

Interestingly, neither DST Systems (acquired by SS&C Technologies in 2018) nor Ruane, Cunniff & Goldfarb admitted any wrongdoing in this case. However, the substantial settlement amount reflects the seriousness of the situation and the potential consequences of mismanaging employee profit-sharing plans.

According to the Department of Labor, approximately 9,000 participants are entitled to a portion of the settlement. The exact amount each participant will receive depends on their current status.

Current participants will have their share deposited directly into their accounts, while former participants will receive a check in the mail.

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However, there is a deadline approaching for those who want to transfer the funds to another qualified retirement account.

Participants who had a positive balance in the plan at any time between March 14, 2010, and July 31, 2016, but no longer have a positive balance as of August 3, 2023, must file a claim by October 12.

Assistant Secretary for Employee Benefits Security, Lisa M. Gomez, stated that the settlement is aimed at restoring hard-earned retirement funds for over 9,000 participants in DST Systems’ retirement plan.

She further emphasized the Department of Labor’s commitment to investigating and finding remedies for potential violations of the Employee Retirement Income Security Act.

This case serves as a wake-up call for all Americans saving for retirement, highlighting the importance of diversification in investment portfolios and the need for vigilant oversight of retirement plans.

This article appeared in Conservative Cardinal and has been published here with permission.