One Lawsuit Settled, Another Filed Over Plan Investments in Fidelity TDFs

Both lawsuits argue that the index suit of the target-date funds would have been a better option for plan participants.

The parties in the lawsuit against the fiduciary of a 401(k) plan sponsored by Coca-Cola Consolidated have filed a notice of settlement.

"With the aid of an arbitrator, the parties have reached an agreement in principle to settle all matters of dispute between them," the notice said. The parties asked the court to stay the deadline for all cases till March 7. According to the court document, the court has set the settlement deadline for February 22.

The lawsuit claimed that the continued offering of the actively managed Fidelity Freedom Funds Target-Date Fund (TDF) suite represented an ongoing fiduciary infringement.

"The defendants were responsible for crafting the plan lineup and could choose from any of the target-date families offered by Fidelity, or any other target-date provider," the complaint alleges. “The defendants failed to compare the active and index suites and consider their respective merits and characteristics. A simple weighting of the benefits of the two suites indicates that the index suite is a better option, and consequently a more suitable alternative to the plan .

Last April, the case escaped a motion to dismiss.

Separately, the same law firm that filed suit against Coca-Cola Consolidated also filed a lawsuit against the trustees of the Dish Network Corp. 401(k) plan that includes similar terminology regarding the use of the Fidelity Freedom Funds TDF suit.

The complaint against DISH also alleges a breach of fiduciary duties of their Employee Retirement Income Security Act (ERISA) by allowing participants to "recover unreasonable expenses" for recordkeeping and administrative (RK&A) services.

“The fees paid by the plan for nearly identical services packages are much higher than comparable plans, and in many cases smaller, by participant counts,” the complaint said. "Indeed, based on fees paid by other large plans during the period of the class receiving physically identical RK&A services, it is more than clear and reasonable to infer that the defendants are Failed to follow a prudent procedure to the effect that the scheme was paying only reasonable fees."

DISH Network has yet to respond to a request for comment about the lawsuit.

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