National Rural Electric Cooperative Association (NRECA) is a national service organization that represents more than 1,000 rural electric cooperatives around the United States. NRECA sponsors a 401(k) multiple employer plan (MEP) and is a target of a class-action lawsuit.
The court made a big decision and expectations should be high for a settlement. U.S. District Judge Liam O’Grady of the Eastern District of Virginia has found that the complaint alleging prohibited transactions against fiduciaries of the plan “contains sufficient well-pleaded facts to survive a motion to dismiss.”
I read the complaint and I find it troubling. The whole purpose of a MEP is low cost. The plan has almost 70,000 participants and $10 billion in assets. The complaint alleges that the plan’s administrative costs have increased each year since 2013, and the 2017 rate of $404 per participant is a 50% surge from the 2013 rate. That is eye-popping and a review of the Form 5500 shows a lot of providers involved for one single plan.