TriNet sued over MEPs

Human resources outsourcing firm TriNet is among the latest companies to be targeted over the multiple-employer plans it sponsors, having been sued last week by several participants.

The Sept. 29 class-action complaint was brought by law firm Capozzi Adler, which this year has filed by far the most new 401(k) excessive-fee lawsuits. The case against TriNet is different, however, because it involves MEPs rather than a single-employer 401(k) plan.

As a professional employer organization, TriNet provides MEPs to its clients, including InvestmentNews. Other MEP providers, including Pentegra and ADP, have similarly been targeted in class-action lawsuits this year.

The TriNet 401(k) represented more than $2.9 billion in assets among more than 162,000 plan participants as of the end of 2018, data from the Department of Labor show. The separate TriNet Select 401(k) plan had more than 19,000 participants and $1.1 billion at that time, according to the DOL.

A TriNet spokesperson said in an email that the company is reviewing the complaint and could not comment extensively.

“TriNet is committed to transparency with all fees charged on its 401(k) plans and works with an independent investment advisor to conduct ongoing benchmarking of plan fees and investment fees,” the spokesperson wrote.

TriNet allegedly breached its fiduciary duty to participants by selecting mutual funds for the plans’ investment menus that had higher fees than others available, according to the complaint filed in U.S. District Court in the Middle District of Florida. The plaintiffs also argue that investment management fees were higher than necessary because the plan didn’t include passively managed funds for several asset classes and didn’t include the lowest-cost share class available.

“There is no good-faith explanation for utilizing high-cost share classes when nearly identical funds were available,” the lawsuit read.

The plaintiffs point to a handful of the roughly 30 investment options available within each MEP.

The complaint also alleges higher-than-necessary record-keeping fees. Participants in the larger MEP paid about $100 annually for administrative costs between 2014 and 2018, while those in the smaller MEP paid $329 in 2014 and $147 in 2018, according to the lawsuit. A comparable average for similarly sized plans is about $35 per year, Capozzi Adler wrote in the complaint.