Nordstrom Inc. is facing a lawsuit filed in Washington federal court, accusing the company of burdening its employees’ 401(k) retirement plan with excessive fees and misusing forfeited plan funds to offset its own contribution obligations. The suit, filed by a group of current and former workers on Monday, claims that Nordstrom and its 401(k) retirement committee violated the Employee Retirement Income Security Act (ERISA) by failing to act in the best interests of the plan’s participants.
Allegations of Excessive Fees and Mismanagement
The workers argue that Nordstrom’s $3.4 billion retirement plan, which serves over 100,000 participants, failed to leverage its considerable size to negotiate lower fees for recordkeeping and administrative services. As a result, participants allegedly paid significantly higher fees than those associated with similarly sized plans, such as those offered by Lowe’s, Costco, and Aldi.
According to the complaint, from 2018 to 2023, Nordstrom’s plan charged an average annual recordkeeping fee of $42 per participant. In comparison, other large plans reportedly charged fees ranging from $18.50 to $23 per participant, which the workers argue should have been achievable for Nordstrom’s plan. The lawsuit estimates that the excessive fees resulted in an additional cost of nearly $1.85 million per year to participants.
