Retirement services provider Pentegra Retirement Services has agreed to settle a high-profile class action lawsuit involving excessive administrative fees in its multiemployer 401(k) plan, just weeks after a federal jury returned a unanimous $38.8 million verdict in favor of plan participants.
The settlement stems from allegations that Pentegra charged exorbitant, uncapped fees—over $350 per participant—to the more than 27,000 members of its retirement plan, despite similar-sized plans charging as little as $20 to $30. Plaintiffs claimed the company’s fee structure violated the Employee Retirement Income Security Act (ERISA) and cost participants millions in avoidable losses.
U.S. District Judge Philip M. Halpern, overseeing the case in the Southern District of New York, issued an order pausing all deadlines to allow both sides time to finalize the agreement. The parties have until May 16 to seek preliminary approval or provide a status update.
The lawsuit, filed in September 2020 by plan participants Imran Khan, Joan Bullock, and Pamela Joy Wood, accused Pentegra and its board of enriching themselves at the expense of retirement savers. The jury’s April 23 verdict followed a seven-day trial and marked a major victory for the class, which had been certified in 2023.
The case, Khan et al. v. Board of Directors of Pentegra Defined Contribution Plan et al., highlights growing scrutiny over fee practices in large retirement plans.
Legal representation for the class was provided by Schlichter Bogard LLC, while Groom Law Group Chtd. represented Pentegra. Terms of the settlement remain confidential pending court approval.
This development adds to national attention on Retirement Co. 401(k) $38.8M verdict cases and their broader implications for fiduciary accountability in employer-sponsored plans.
