Pentegra Lawsuit: From $38M Jury Verdict to $48.5M Settlement

A federal judge gave final approval on December 2, 2025, to the $48.5 million Pentegra lawsuit settlement, ending a class action that accused Pentegra Services, Inc. and the board of its multiple employer 401(k) plan of charging excessive fees and steering plan assets to themselves in violation of ERISA.¹ The payout follows a rare ERISA jury verdict of $38,760,232 returned in April 2025 and covers roughly 58,000 people who participated in the Pentegra Defined Contribution Plan for Financial Institutions between September 15, 2014, and April 30, 2025.²

Who Is in the Class

The settlement class includes all participants and beneficiaries of the Pentegra Defined Contribution Plan for Financial Institutions from September 15, 2014, through April 30, 2025. The named defendants are excluded. There are approximately 58,188 class members spread across the nearly 250 banks and credit unions that used the plan.²

If you worked for a bank or credit union that used Pentegra as its 401(k) recordkeeper at any point in that window, and you had an account balance in the plan, you are almost certainly a class member.

How Much You Get and How It Is Calculated

The $48.5 million went into a qualified settlement fund administered by Analytics Consulting LLC. Before any money reaches participants, the fund pays administrative expenses, taxes, class representative service awards, and roughly $17.5 million in court-approved attorneys’ fees and expenses for class counsel. What remains is the Net Settlement Amount, which is divided among the class.¹³

Individual shares are pro-rata, based on account size over time. The settlement administrator pulls each participant’s end-of-quarter account balances across the class period, averages them, and divides that figure by the total of all class members’ averages. The resulting percentage is your slice of the net fund. Small shares are rounded up: any calculated payment under $10 is bumped to a $10 minimum.²

In practical terms, the longer you were in the plan and the larger your balance while you were there, the bigger your check.

When Payments Arrive

Distributions are expected in early spring 2026, assuming no successful appeals delay the fund.²

What Current Participants Need to Do

Nothing. If you still had an account balance in the Pentegra plan as of April 30, 2025, your share is deposited directly into your plan account. There is no form to file and no claim to submit.⁴

What Former Participants Need to Know

Former participants — those whose account balances had dropped to zero by April 30, 2025 — had to file a claim form to be paid. That deadline was November 16, 2025. If you filed on time, your payment arrives either as a check or as a rollover to a qualified retirement account, according to what you elected on the form.⁴

If you missed the November 16, 2025 deadline, you forfeit your share of the fund. You are still bound by the settlement’s release of claims, meaning you cannot sue Pentegra separately over the conduct covered by the case.⁴

What the Lawsuit Alleged

The case, Khan v. Board of Directors of Pentegra Defined Contribution Plan, was filed on September 15, 2020, in the U.S. District Court for the Southern District of New York before Judge Philip M. Halpern. Plaintiffs Imran Khan and Joan Bullock sued the plan’s board, its individual members, former Pentegra CEO John E. Pinto, and Pentegra Services, Inc. itself.⁵

The core allegation was that recordkeeping and administrative fees were far higher than a plan of this size should have been paying. The complaint said the plan paid Pentegra at least $9.52 million in direct fees in 2014, or about $360 per participant, rising to $10.58 million by 2018, or about $389 per participant. The plaintiffs compared that to other large plans they said charged $14 to $33 per participant.⁶

The complaint also alleged that the plan kept expensive investment share classes when identical cheaper versions existed, that Pentegra used plan assets to fund marketing and sales staff aimed at signing up new employers, and that the board never ran a competitive bidding process for its own services. The plaintiffs also flagged specific expenditures they called improper, including a $7,370 payment to the Ritz Carlton Naples and a $5,015 payment to the New York Palace Hotel.⁵⁶

A separate count alleged prohibited transactions under ERISA, contending that more than $50 million in plan assets flowed to Pentegra Services, Inc. between 2014 and 2018.⁷ Pentegra denied wrongdoing, moved to dismiss on the theory that PSI was not a fiduciary as to its own compensation and that ERISA allows reasonable payments for necessary services, and argued that the fee comparisons to single-employer plans were apples-to-oranges given the plan’s multiple employer structure.⁸ Judge Halpern denied the motion to dismiss on March 23, 2022.

The Jury Verdict and How the Settlement Grew Past It

Trial on the fiduciary breach claims ended April 23, 2025, with a unanimous jury verdict for the plaintiffs. The jury found that the board, John E. Pinto, and Pentegra Services, Inc. had breached their fiduciary duties by causing the plan to pay unreasonable fees to PSI, and that Pinto and PSI knowingly participated in or failed to remedy the breaches. Damages came to $38,760,232.⁹¹⁰

A second count — the prohibited-transactions claim, on which the plaintiffs sought up to $157 million — was set for a bench trial before Judge Halpern.⁹ It never reached judgment. On May 2, 2025, the judge reported the parties had reached a settlement in principle covering both counts.¹¹

The plaintiffs filed for settlement approval on July 2, 2025, at a total of $48.5 million. That figure exceeded both the jury’s $38.76 million damages finding and the $42.49 million in total damages the plaintiffs had requested at trial.¹²¹³ Jerry Schlichter, founding partner of Schlichter Bogard LLC, said the settlement was designed to “fully restore the 401(k) plan participants’ losses” and provide “valuable reform of the 401(k) plan to protect them for many years in the future.”¹⁴

Changes to the Plan Itself

The settlement is not only cash. It also imposes structural changes on how the plan is governed. In a phased transition, the plan’s board must be reconstituted so that no remaining member was involved in the 2013 and 2018 decisions to renew service agreements between the plan and PSI. Overlapping membership between the PSI board and the plan’s board is prohibited going forward.¹⁵

The plan must also run a competitive request for proposals for recordkeeping, administrative, and fiduciary services. That process is overseen by an independent fiduciary and must be conducted within 180 days of that fiduciary’s hiring. Current providers, including Empower and PSI, are allowed to bid.¹⁵

Where to Check on Your Payment

Class members can find claim status information, the notice documents, and the frequently asked questions at the settlement website maintained by the administrator, Analytics Consulting LLC.⁴ Current participants should watch their plan statements in the spring of 2026 for the deposit; former participants who filed a timely claim should watch for a check or rollover confirmation in the same window.

1
Bloomberg Law. Pentegra $48.5 Million Class Settlement Gets Final Approval
2
Pentegra 401(k) Settlement. Former Participant Notice
3
Pentegra 401(k) Settlement. Frequently Asked Questions
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Pentegra 401(k) Settlement. Settlement Homepage
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Plan Sponsor. Khan v. Pentegra Complaint
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ASPPA Net. Schlichter Targets Another MEP
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Schlichter Bogard. Pentegra Cannot Evade ERISA 401(k) Lawsuit
8
NAPA Net. Pentegra Pushes Back MEP Plaintiffs Claims
9
NAPA Net. Jury Slaps Pentegra With $39 Million Damages in Excessive Fee Suit
10
Bloomberg Law. Pentegra Retirement Plan Class Wins 38 Million in Jury Trial
11
BenefitsPro. Pentegra Settles 2nd Claim in $38M Multiemployer 401(k) Excessive Fees Case
12
Plan Sponsor. Pentegra Pays $48.5M Settlement in Fiduciary Breach Case
13
PSCA. MEP Lawsuit Settles for $48.5M
14
Business Wire. Schlichter Bogard Obtains Final Approval of $48.5 Million Settlement
15
NAPA Net. Schlichter, Pentegra Settle MEP Fiduciary Breach Suit for $48.5 Million