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ERISA Excessive Fee Self-Dealing Suit Targets Pentegra MEP

"Comparing Pentegra's plan to another large MEP, the complaint notes that the other plan uses an outside recordkeeper and paid an average of $80 per participant. 'Pentegra's 2018 average per participant fee of approximately $388 for similar 'contract administrator' services was 485% higher,' the complaint states." [Khan v. Bd. of Dir. of Pentegra Defined Contrib. Plan, No. 20-7561 (S.D.N.Y. complaint filed Sep. 15, 2020)]

Schlichter, Pentegra Settle MEP Fiduciary Breach Suit for $48.5 Million

"Additionally, the settlement calls for: the phased removal of certain Board members[iii], and A competitive bidding process[iv] for the Plan's recordkeeping and administrative services overseen by an independent fiduciary." [(Khan v. Bd. of Directors of Pentegra Defined Contribution Plan, No. 20-7561 (SDNY order and settlement agreement Jul. 2, 2025)]

Pentegra 401(k) Jury Verdict Provides a Roadmap for ERISA Plaintiffs

"The verdict comes as courts within the Second Circuit grapple with whether plaintiffs are entitled to jury trials in fiduciary breach cases arising under [ERISA]. It's the first jury outcome in an exclusively ERISA-based case to award plaintiffs monetary damages, establishing an early model for workers and retirees suing their employers to bypass a bench trial and take their claims to citizen adjudicators." [Khan v. Bd. of Dir. of Pentegra Defined Contrib. Plan, No. 20-7561 (S.D.N.Y. complaint filed Sep. 15, 2020; jury trial completed Apr. 23, 2025)]

Pentegra MEP Plan Participants Win $38M in Jury Trial

"[A] jury has found that fiduciaries of Pentegra's more than $2 billion Multiple Employer Defined Contribution Plan for Financial Institutions breached their fiduciary duties by paying unreasonable recordkeeping and administrative fees.... There are still allegations pending related to prohibited transactions, and those will be heard and decided by the court, not a jury." [Khan v. Bd. of Dir. of Pentegra Defined Contrib. Plan, No. 20-7561 (S.D.N.Y. complaint filed Sep. 15, 2020)]

Pentegra Pushes Back on MEP Plaintiffs' Claims

" '[T]he defendants state that the 'plaintiffs offer no basis for their assumption that these plans are 'the same or similar' to the Plan ... and they are not. Each of these is a single-employer plan. Although a key benefit of a MEP is the possibility of gaining some economy of scale as compared to that achieved by each individual employer, a MEP does not enjoy the same economy of scale as a single-employer plan with the same amount of assets.' " [Khan v. Bd. of Directors of Pentegra Defined Contribution Plan, No. 20-07561 (S.D.N.Y. memo. in support of motion to dismiss, filed Apr. 1, 2021)]

Multiple Employer Plans: Fiduciary Litigation Risk

"[U]nlike typical 401(k) fiduciary litigation, Khan is a suit against the multiple employer plan provider (Pentegra), not against the plan's adopting employers, and there is an issue about the comparability of the Pentegra (multiple employer plan) fees to single employer plan fees." [Khan v. Bd. of Dir. of Pentegra Defined Contrib. Plan, No. 20-7561 (S.D.N.Y. complaint filed Sep. 15, 2020; memo. in support of motion to dismiss, Apr. 1, 2021)]

The Benefits of Outsourcing 3(16) Plan Administrator Fiduciary Duties to a Professional (PDF)

17 pages. "As key stakeholders in retirement plan oversight, financial advisors often serve as the first line of defense, guiding clients through administrative challenges, mitigating compliance risks, and ensuring adherence to fiduciary best practices. By proactively addressing these complexities with the help of a 3(16) fiduciary, advisors play a critical role in safeguarding plan integrity and optimizing outcomes for both sponsors and participants."

Advisor Attitudes Toward 3(16) Fiduciary Outsourcing (PDF)

10 pages. "Nearly 70% [of advisors surveyed] cite administrative burdens and fiduciary risk as chief concerns among clients in managing their retirement plans.... Advisors cite lack of sponsor knowledge of fiduciary responsibilities and retirement plan regulations as the greatest obstacles to retirement plan success.... More than 80% of advisors view 3(16) fiduciary outsourcing as a retirement plan best practice.... Less than half of clients outsource 3(16) fiduciary responsibilities today, representing an opportunity to offer a value-added service."

Plan Sponsor Attitudes Toward Retirement Plan Management and Fiduciary Outsourcing (PDF)

18 pages. "More than 70% of plan sponsors say they find managing the details of their retirement plan a distraction from their core business ... Legislative compliance and fiduciary responsibilities rank high among chief retirement plan challenges ... More than 50% of plan sponsors use a professional fiduciary to outsource plan governance and oversight ... Plan sponsors judge retirement plan success by assessing participant success ... Nearly 40% of plan sponsors ensure plan success by using professional fiduciary resources ... More than 50% of plan sponsors employ a total benefits outsourcing approach."

Defined Benefit Plans Are Making a Comeback: Here's Why (PDF)

"[D]ue to rising interest rates, beneficial regulatory pension relief, COVID induced changes in our work environment and the hiring challenges many employers face -- the defined benefit plan can and will become, a game changer for many employers."