Wal-Mart 401k

A lawsuit seeking class action status has been filed against one of the nations largest companies; Wal-Mart. The suit alleges Wal-Mart, the country’s largest employer, with nearly 1.4 million employees, breached its duties as a fiduciary by allowing its 401(k) plan participants to be charged “unreasonably expensive” fees. The complaint alleges the retail giant’s fees were too high because Wal-Mart’s $9.5 billion 401(k) plan offered participants retail mutual funds, as opposed to less expensive institutional funds.

And further claims, if the Wal-Mart 401(k) had been invested in passively managed Vanguard funds it would have been worth an estimated $140 million more for the six years ended Jan. 31, 2007. The lawsuit is seeking at least $60 million for the allegedly excessive fees participants paid during that time. According to a recent survey of large corporations, Wal-Mart is not alone in offering 401(k) participants retail mutual funds, about half of defined-contribution plans with more than $5 billion in assets offer retail funds to plan participants. That figure is down from about 62% since 2005, largely attributed to the vulnerability of companies to such litigation.

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