MassMutual Sued for Breach of Fiduciary Duty
Participants in a 401(k) plan sponsored by The Massachusetts Mutual Life Insurance Company (MassMutual) have sued the sponsor for breach of fiduciary duty to the plan. The plaintiffs claim that by offering MassMutual’s own proprietary funds for the plan, the sponsor put its own interest ahead of plan participants. They argue that almost no similarly sized plan sponsors offer those funds, and that there were identical investments with cheaper share classes available that the sponsor should have selected instead.
They also argue that the sponsor improperly retained Empower as the recordkeeper. MassMutual had been a recordkeeper and conducted all recordkeeping for the plan in house. It sold its recordkeeping business to Empower effective Jan. 1, 2021.
After the sale, the sponsor elected to hire Empower as the recordkeeper, and kept it in that position until May 2022, when it hired a less expensive recordkeeper. The plaintiffs contend that MassMutual improperly offered Empower the right to serve as recordkeeper of the plan as an inducement to the sale.