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Trial Set To Start Over Whether Boeing Allowed Workers To Be Charged Excessive 401(k) Fees

Nick Ut
/
AP Photo

A class-action lawsuit focused on the retirement accounts for about 190,000 Boeing employees and retirees heads to trial next week. The lawsuit, which was first filed nearly nine years ago, accuses Boeing of offering employees 401(k) retirement plans that charged excessive fees. 

St Louis attorney Jerry Schlichter brought the lawsuit. He has made the issue of excessive 401(k) fees his specialty. Schlichter said for years, Boeing chose investment options for its employees that had unreasonable fees, even though the company should have been able to get a much better deal because of its size.

"Warren Buffett doesn’t pay retail for his investments, and neither should an employee of a large plan such as Boeing’s," Schlichter said. 

Schlichter says it’s not just that Boeing didn’t try hard enough to get low fees from the money managers it hired. He alleges the company put its own interests ahead of its workers’.

"Boeing steered its banker to provide services in the 401(k) plan at excessive fees while Boeing was getting various loans and lines of credit from the same banker," he said.

Two years ago, Schilchter's firm won a $50 million judgment from ABB and Fidelity in a similar, excessive fees lawsuit on behalf of employees and retirees in ABB’s 401(k) plan.

Boeing's Response

In a statement, Boeing said in a statement that it strongly disagrees with the lawsuit’s claims. 

The company "is prepared to show at trial that all plan investment options and fees were carefully monitored, prudent and in line with the best practices in the 401(k) industry," the statement said.

Not many people take the time to figure out what fees and expenses they're being charged in their retirement plans, but lately there's been more public attention to the issue because those fees can eat up a significant chunk of retirement savings over time. 

But retirement plan disclosures can be difficult to interpret. And the complicated "revenue-sharing" agreements among the different parties involved in administering the plans can make the fees even more difficult to understand.

"It's very complicated. It's why such cases haven't been brought before we did this," Schlichter said. "It's impossible for the average person to figure all this out."

Schlichter says Boeing has made some changes since he first brought the case. For example, Boeing shopped around for a better deal that resulted in lower fees for the retirement plan.

Largest Money Payout Ever?

There’s a lot at stake here. Quinn Curtis, who teaches law at the University of Virginia and researches retirement plans, said if Boeing loses, it could be the biggest money payout ever in a case over excessive 401(K) fees.

"Given the size of the class, this is a pretty serious amount of money," Curtis said.

The trial is set to begin next Wednesday in federal court in the Southern District of Illinois. 

In July 2017, Ashley Gross became KNKX's youth and education reporter after years of covering the business and labor beat. She joined the station in May 2012 and previously worked five years at WBEZ in Chicago, where she reported on business and the economy. Her work telling the human side of the mortgage crisis garnered awards from the Illinois Associated Press and the Chicago Headline Club. She's also reported for the Alaska Public Radio Network in Anchorage and for Bloomberg News in San Francisco.