Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Portfolio > Investment VIPs

General Dynamics Announces Settlement of 401(k) Fiduciary Lawsuit

Your article was successfully shared with the contacts you provided.

General Dynamics and its 401(k) plan sponsor have reached a tentative settlement of a lawsuit filed by current and former employees in a class action involving the fees and management of two General Dynamics 401(k) plans. The plans have approximately 85,000 participants and combined assets worth approximately $6 billion.

The ruling comes two years after a landmark Supreme Court ruling in LaRue v. DeWolff, Boberg & Associates, which allows individual plan participants, as well as groups, to sue plan sponsors over investment losses.

In the current case, Will, et al. v. General Dynamics Corp., General Dynamics and FAMCO maintain that they have complied with the Employee Retirement Income Security Act of 1974 (ERISA), which governs the plans.

However, the parties determined that it is in their best interest, and General Dynamics has determined that it is also in the best interest of General Dynamics’ employees, 401(k) plan participants and shareholders, to resolve the lawsuit by settlement. General Dynamics will not contribute to the settlement fund. Rather, a $15.15 million settlement fund will be created by General Dynamics’ insurers, and FAMCO’s insurers and other sources.

Under the settlement, the parties also will implement certain practices designed to maximize the returns plan participants receive from their 401(k) plan investments by continuing to keep the costs of those investments low, including the use of an outside consultant to review certain aspects of the 401(k) plans and report to General Dynamics and an independent fiduciary, and enhanced disclosures to participants regarding fees and expense associated with their investments.

In addition:

? The settlement provides that General Dynamics will continue its long-standing practices of paying for the plans’ record-keeping services on a per-participant, rather than an asset, basis, and not providing subsidies to other benefit plans through the 401(k) plans.

? General Dynamics also will provide credit to the 401(k) plans for volume discounts from investment managers who also provide services to other General Dynamics benefit plans.

? Finally, the settlement precludes FAMCO from recommending itself as investment manager or recommending the allocation of money to investment accounts it manages.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.