Mutual of Omaha Insurance Company and its subsidiary United of Omaha agreed in September 2020 to pay $6.7 million to settle a class action alleging that the fiduciaries of the company’s own 401(k) plans loaded them with affiliated investment products that charged unnecessary fees. The Mutual of Omaha 401(k) lawsuit settlement, filed as Lechner v. Mutual of Omaha Insurance Co. in the U.S. District Court for the District of Nebraska, covered roughly 6,000 current and former employees whose retirement savings sat in two plans holding about $500 million in combined assets.1ASPPA Net. Mutual of Omaha Strikes $6.7 Million Deal
What the Lawsuit Claimed
Named plaintiff Tamera S. Lechner filed the complaint in early 2018 (Case No. 8:18-cv-00022), arguing that plan fiduciaries violated ERISA by choosing investments that funneled fees back to the company instead of picking the best options for employees.2Berger Montague. Mutual of Omaha 401(k) Lawsuit The complaint estimated that the arrangement let Mutual of Omaha “pocket more than $1 million per year at the expense of workers.”3Bloomberg Law. Mutual of Omaha Sued Over Affiliated Funds in 401(k) Plan
The specific practices the complaint targeted:
- Fiduciaries picked United of Omaha-branded funds whose only holdings were shares of publicly available third-party funds. Participants paid a United of Omaha fee on top of the underlying manager’s fee, even though the plan could have offered the underlying funds directly.4PlanAdviser. Mutual of Omaha Faces Self-Dealing Suit
- Even for investments not branded by United of Omaha, an additional fee layer was allegedly added beyond what the fund managers charged.4PlanAdviser. Mutual of Omaha Faces Self-Dealing Suit
- The “Mutual GlidePath” target-date funds allegedly charged plan participants higher fees than investors outside the plan paid for the same funds.4PlanAdviser. Mutual of Omaha Faces Self-Dealing Suit
- “Mutual Directions” asset-allocation funds carried additional United of Omaha fees on top of underlying fund costs.4PlanAdviser. Mutual of Omaha Faces Self-Dealing Suit
- A capital preservation product called the “Guaranteed Account,” managed by United of Omaha, was included despite better alternatives on the market because it generated significant fees for the company.5PlanAdviser. Fiduciaries of Mutual of Omaha 401(k) Plan Agree to Pay $6.7M to Settle Suit
Before mediation, plaintiffs’ counsel reviewed about 4,000 documents totaling roughly 30,000 pages, including fiduciary meeting minutes, fee disclosures, and investment performance data. The parties then spent about eight months in discovery before agreeing to settle, partly because the Guaranteed Account raised difficult questions about whether it qualified as a “guaranteed benefit policy” under ERISA.1ASPPA Net. Mutual of Omaha Strikes $6.7 Million Deal
Who Is Covered and How the Money Is Divided
The settlement class consists of current and former participants in the Mutual of Omaha 401(k) Plan and the Mutual of Omaha 401(k) Long-Term Savings Plan. The $6.7 million gross settlement fund is used to compensate the class after deductions for administrative costs, taxes, service awards, and attorneys’ fees.5PlanAdviser. Fiduciaries of Mutual of Omaha 401(k) Plan Agree to Pay $6.7M to Settle Suit
Plaintiffs’ counsel requested $10,000 service awards for each named plaintiff and asked the court to cap attorneys’ fees and costs at one-third of the gross settlement, or roughly $2.2 million.6InvestmentNews. Mutual of Omaha Settles ERISA Lawsuit for $6.7 Million The deal also called for the appointment of an independent fiduciary; the public filings summarized in the available reporting did not spell out additional non-monetary governance changes.1ASPPA Net. Mutual of Omaha Strikes $6.7 Million Deal
The Lawyers
Plaintiffs were represented by co-lead counsel Schneider Wallace Cottrell Konecky Wotkyns LLP and Berger Montague, with Todd S. Collins and Ellen T. Noteware of Berger Montague among those leading the case.2Berger Montague. Mutual of Omaha 401(k) Lawsuit Mutual of Omaha was represented by Morgan Lewis & Bockius.6InvestmentNews. Mutual of Omaha Settles ERISA Lawsuit for $6.7 Million
How the Case Fits the Broader ERISA Fee Wave
The Lechner suit was one of many class actions attacking the use of proprietary or affiliated funds in employer-sponsored retirement plans. By the time the complaint was filed in 2018, Bloomberg Law reported that nearly 30 companies had faced similar suits since 2015.3Bloomberg Law. Mutual of Omaha Sued Over Affiliated Funds in 401(k) Plan Filings have continued to climb; 51 excessive-fee suits were filed through October 2025 alone, and since 2023 more than 120 class settlements in this space have totaled over $665 million. Median settlement size has moved the other direction, falling from $3.0 million in 2023 to $1.6 million in 2025.
The legal ground under these cases shifted again in April 2025, when the U.S. Supreme Court ruled unanimously in Cunningham v. Cornell University that plaintiffs bringing prohibited-transaction claims under ERISA do not have to anticipate and disprove exemptions in the complaint. Those exemptions are affirmative defenses the employer must raise and prove.7U.S. Supreme Court. Cunningham et al. v. Cornell University et al. That lowered the pleading bar, though courts retain tools to weed out thin claims before trial.