401(k) Plan Lawsuit Settlement

As you may be aware, NRECA has been the target of a lawsuit related to costs associated with administering the NRECA-sponsored 401(k) Pension Plan. Both parties presented a settlement agreement to the U.S. District Court for the Eastern District of Virginia on July 31, 2020. Court action on this matter will most likely not be finalized until late 2020. If approved by the court, this settlement will resolve the lawsuit.

NRECA disputes these allegations; the settlement does not imply or indicate any wrongdoing in the administration of the 401(k) Plan. The settlement agreement requires participants to release their claims in exchange for the creation of a settlement fund to be allocated among current and former employees who had assets in their account between July 25, 2013 and July 31, 2020. 

In the coming weeks, a court-appointed settlement administrator will send a letter to eligible participants notifying them of the class action settlement and an upcoming hearing to be held on December 17, 2020. This notice is required by law and must be issued before the court decides whether to give final approval to the settlement.

Importantly, the proposed settlement will not have a financial impact on NRECA’s member cooperatives. While we are confident that the court would ultimately have found in our favor, litigation is never without risk and cost. This settlement reflects NRECA’s ongoing commitment to plan participants while eliminating the risks and distractions associated with ongoing litigation.

If any of your co-op’s employees received this letter and have questions, they should be directed to the settlement administrator that’s appointed by the court. By September 10, the settlement administrator will have activated a phone number (833.962.1868) to be answered by its own call center staff as well as a separate website (nreca401kfeesettlement.com) to respond to any questions. NRECA staff will be unable to respond to any inquiries regarding the lawsuit or its proposed settlement, nor should you or your staff attempt to do so.

In the meantime, we are continuing to treat this as a matter of ongoing litigation. NRECA CEO Jim Matheson emailed co-op CEOs and statewide directors earlier today, September 2, to provide them with this information.