Former Caesars Employee Sues Over 401(K) Plan
A former employee of Caesars Entertainment is suing the company and its retirement money manager due to issues involving a 401(K) plan.
As an employee, you are entitled to certain benefits and programs based on where you work. The bigger the employee, the more options you usually have. Many employees rely on 401(K) programs to help with retirement as the company offers to provide a certain portion to that fund as well. For Caesars Entertainment, it seems their plan was not up to par and now they are being sued due to issues surrounding a 401(K) program.
Maggie Thomson is a former employee of Caesars who has decided to sue the company and its retirement money manager, Russell Investments. The lawsuit claims that both companies were in violation of fiduciary responsibilities and employees wee shorted over $100 million in program benefits.
In the lawsuit, it claims that Caesars decided to outsource the management of its retirement program. They brought in the Russell company and the investment firm benefited because it transferred almost all of the investment options to its proprietary funds.
Filed in the US District Court in Nevada, the lawsuit says that the investment firm obtained control of the investment menu of the retirement plan back in 2017. They filled the plan with proprietary funds that were not performing well.
The deal did not have the interest of the Plan’s participants at heart. Yet the Plan was in place and it had a menu of funds that continued to outperform the funds of Russell Investments. The swap by Russell was not a smart decision and it cost those taking part in the Plan $100 million in investment earnings to date.
The investment company does not agree and said the lawsuit is not justified. The firm says it plans to defend itself against the allegations.
No More Employee Matches
With a 401(K) plan, employers often match funds to help employees build on their contributions. The tax-advantage program offers an option of retirement for employees and automatic contributions can be made each pay period.
Investment earnings from this type of plan are not taxed until they are withdrawn by the owner. According to the lawsuit, when Caesars moved its program to Russell back in 2017, the company was emerging from bankruptcy. For Thompson, the plaintiff in the case, her fund was moved automatically to Russell.
She was happy with the returns she received from a fund by State Street, a company that Caesars used to use for its 401(K) plan. The Russell moved Thomson’s money from the State Street fund and placed it in a similar age-based fund it was in charge of.
Three years after filing for bankruptcy, Caesars stopped matching contributions to employee plans. According to the attorney’s representing Thomson, there was no reason as to why Caesars would transfer the contract to Russell as the current program offered low-cost investment funds, including the ones managed by State Street. This program actually had a long track record of success.
Overall, it seems Thomson was not happy with the change as the program was not producing as well as it was with State Street. According to the attorneys for the plaintiff, the changes were unwarranted. Thomson appears to have worked for Caesars from 2014 to 2019 as a marketing analysis.
As it stands now, over 50,000 employees of Caesars takes part in the 401(K) program by Russell. The participants have over $1.6 billion in assets through the program.
It will be interesting to see how this case progresses and if any other former or current employees come forward with problems pertaining to Caesars 401(K) program.