UnitedHealth Agrees To $69M Settlement In Lawsuit Over ‘low-performing’ 401(k) Funds

UnitedHealth Settles Lawsuit Over 401(k) Funds

UnitedHealth Group, a major healthcare company, has agreed to a $69 million settlement to resolve a lawsuit alleging that the company offered “low-performing” 401(k) investment options to its employees.

The lawsuit, filed in 2019, claimed that UnitedHealth breached its fiduciary duty by offering employees investment options with high fees and poor performance, ultimately harming their retirement savings.

• Key Arguments of the Lawsuit

The lawsuit argued that UnitedHealth:

Offered expensive investment options: The suit alleged that the company included high-cost mutual funds and annuities in its 401(k) plan, which eroded employees’ retirement savings through excessive fees.

• Failed to adequately monitor plan performance: The lawsuit claimed that UnitedHealth did not adequately monitor the performance of the investment options offered in its 401(k) plan, allowing employees to invest in underperforming funds.
• Breached its fiduciary duty: The lawsuit alleged that UnitedHealth breached its fiduciary duty to act in the best interests of its employees by offering these subpar investment options.
• Terms of the Settlement

The $69 million settlement will be distributed to eligible employees who participated in the UnitedHealth 401(k) plan during the relevant period. The specific terms of the settlement, including eligibility criteria and the distribution process, will be detailed in a separate court-approved plan.

• Significance of the Settlement

This settlement is significant for several reasons:

It highlights the importance of 401(k) plan oversight: The lawsuit serves as a reminder to employers of their fiduciary duty to act in the best interests of their employees regarding 401(k) plans.

• It underscores the potential consequences of offering subpar investment options: This settlement demonstrates the potential legal and financial consequences for companies that fail to adequately monitor and manage their 401(k) plans.
• It may encourage employers to review their 401(k) plans: This lawsuit may prompt other employers to review their 401(k) plans to ensure they are offering appropriate and cost-effective investment options to their employees.
• Conclusion

The settlement reached in this lawsuit serves as a cautionary tale for employers regarding their responsibilities in managing 401(k) plans. By ensuring that employees have access to a diverse range of high-quality and cost-effective investment options, employers can help their employees build secure retirements.

• FAQs

What is a 401(k) plan?

A 401(k) plan is a retirement savings plan sponsored by an employer. Employees can contribute a portion of their pre-tax income to the plan, and many employers also offer matching contributions.

What is a fiduciary duty?

A fiduciary duty is a legal obligation to act in the best interests of another party. In the context of 401(k) plans, employers have a fiduciary duty to act in the best interests of their employees.

What are the potential consequences of breaching a fiduciary duty?

Breaching a fiduciary duty can have significant legal and financial consequences, including lawsuits, fines, and even imprisonment.

What steps can employers take to ensure they are fulfilling their fiduciary duties regarding 401(k) plans?

Employers can take several steps to fulfill their fiduciary duties, including:

Conducting regular reviews of plan performance

• Offering a diverse range of investment options
• Monitoring plan fees
• Providing employees with appropriate education and resources

What are the benefits of a well-managed 401(k) plan for employees?

A well-managed 401(k) plan can provide significant benefits for employees, including:

The opportunity to save for retirement

• Access to tax-advantaged savings
• The potential for employer matching contributions
• Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice.
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