Ford Accused of Improper Use of Employees’ 401(k) Savings
Ford retirement plan fiduciaries allegedly used participant assets, rather than company funds, to pay administrative expenses.
Participants in two Ford Motor Co. retirement plans sued the company in a proposed class action lawsuit accusing Ford of violating the Employee Retirement Income Security Act by improperly using employees’ 401(k) savings to pay millions of dollars in plan administrative expenses and to pay excessive service-provider fees.
Fuller et al. v. Ford Motor Co. et al., filed in U.S. District Court for the Eastern District of Michigan, alleges Ford breached its fiduciary duties under ERISA in the management of two retirement plans covering salaried and hourly employees. The plans collectively held more than $25 billion in assets and covered nearly 140,000 active participants as of the end of 2024.
The complaints’ key allegation is that Ford violated the terms of its own retirement plans by using participant retirement assets, rather than company funds or forfeited matching contributions, to pay administrative expenses such as recordkeeping, legal, trustee and audit fees. The suit cites plan documents stating those costs “shall be paid by the company” or from forfeited plan assets.
According to the filing, Ford’s plans paid more than $100 million in administrative expenses between 2020 and 2024, including roughly $70.4 million to Financial Engines for managed account services and approximately $21 million to recordkeeper Alight Solutions.
The plaintiffs allege the plans’ forfeiture accounts did not contain enough money to cover those expenses, meaning participant retirement savings were improperly tapped to make up the difference. The complaint estimates that, when lost investment growth in participant accounts is included, plan losses now exceed $100 million.
The complaint also accuses Ford fiduciaries of allowing Alight Solutions to receive excessive compensation through both direct recordkeeping fees and indirect payments tied to Financial Engines’ managed account program. The plaintiffs contend Alight’s total compensation rose to as much as $57 per participant annually—nearly triple the plan’s contracted $20-per-participant fee.
The complaint argues that Ford failed to adequately monitor service provider compensation or conduct sufficient competitive bidding processes when hiring providers, despite ERISA requirements that fiduciaries act prudently and solely in the interest of plan participants.
The plaintiffs are seeking repayment of alleged losses to the retirement plans, restoration of any profits improperly obtained through the use of plan assets, injunctive relief and other equitable remedies under ERISA.
The complaint differs from most recent retirement plan litigation, since the majority of recent ERISA disputes concerning improper use of retirement fees center on alleged misuses of forfeiture funds. Those cases typically accuse the plan sponsor of improperly using the funds to offset future contributions, rather than pay down plan costs.
Schlichter Bogard LLC and the Sharp Firm represent the plaintiffs; the defendants’ attorneys are not yet listed, according to court filings.
The Ford Motor Company Savings and Stock Investment Plan for Salaried Employees had more than $17 billion in assets with more than 52,000 plan participants at the end of 2024, according to its most recent Form 5500 filing. The Ford Motor Company Tax-Efficient Savings Plan for Hourly Employees had more than $8 billion in assets with 86,150 plan participants in the same period.
Ford declined to comment.