For the past six years, participants in American Airlines’ 401(k) plan have potentially lost about $88 million in returns they might have expected. This is the opinion of a U.S. District Court judge who rejected a settlement the airline proposed to bring to an end a dispute with those participants. American offered $8.8 million to settle the case in which the participants accuse the company of failing in the fiduciary duties outlined by the Employee Retirement Income Security Act. Those in Tennessee may know this better as ERISA.
ERISA places strict standards on benefits offered by private companies, such as pensions and health plans. When those who manage the benefits fail in their fiduciary duties, the participants have the right to seek redress and potentially compensation for the returns they may have made had the plan been handled properly. In the case of American Airlines, the participants say the 401(k) plan contained a credit union mutual fund instead of more stable offerings typical for the conservative product.
American Airlines recently lost its bid to have the case dismissed. The participants’ complaints convinced the judge to continue with discovery in the case. Courtrooms are seeing an increase in ERISA lawsuits pertaining to stable value funds, although not every case has ended in a win for plan participants.
When an employer offers a retirement plan, it is likely the participants count on that plan to be a significant part of their later years. If fiduciaries breach their duties, the consequences to the participants can be catastrophic. Fortunately, those in Tennessee who have concerns about the management of their benefits can seek advice from an attorney experienced in ERISA law.
Source: bna.com, “American Airlines Can’t Nix Retirement Plan Investment Lawsuit“, Carmen Castro-Pagan, Nov. 28, 2017