If you’re a plan sponsor reading this, you can sit back, relax, and think, “I’ll never be that guy.” Except the guy in question just might be you. The case of Rick Case Enterprises Inc.—a Florida automotive group that allegedly lost roughly 9% of its 401(k) assets during a recordkeeper conversion—is the textbook cautionary tale of what happens when oversight takes the day off.
Here’s how the horror story went down: The plan switched from one major recordkeeper (Empower Retirement) to another (Principal Financial Group) in late 2022. During that transition, participants were placed in a blackout period—unable to access or change their accounts. When assets arrived at the new recordkeeper in early January 2023, the plaintiffs allege account balances were roughly 9% lower than before. For one participant, invested entirely in a stable value fund (which by design is supposed to preserve principal), that drop was all the more baffling.
Let’s translate that into fiduciary English: 1) You choose a vendor. 2) You execute a transition. 3) You fail to monitor the flow of assets, communications, or blackout procedures. Boom—now you’re looking at possible ERISA breaches, lawsuits, and reputational damage. The complaint alleges not only missing funds but conflicting communications: participants were told a “market value adjustment fee” applied; others were told missing assets would be returned—but then nobody got documentation or reimbursement.
The rubber-meets-the-road takeaway: A recordkeeper switch is not simply a checkbox for “vendor change”. It is one of the highest-risk operational events in a plan lifecycle. Blackout periods must be communicated clearly, participant funds must be accurately transferred, and plan fiduciaries must vigilantly follow every step of the process. If you hand off everything to your provider, and then treat the transition like a lunch meeting that maybe one of your folks attended, you are creating systemic risk.
Another layer: The alleged investment mishandling. Participants had been told their assets would default into age-based target-date funds (the plan’s stated designated default investment alternative), but instead, they claim assets were dumped into a “diversified mix of mutual funds” that didn’t align with the plan’s documented default investment rules. Now you’ve not only got missing money—you’ve got document-noncompliance, messaging mismatches, and possibly a breakdown of your investment governance.
So what should you do (and I mean now)? One: rigorously document your vendor-change plan—including blackout communications, transfer validation, reconciliation procedures, and participant access protocols. Two: audit the results post-conversion—did every dollar move, did every participant end up in the correct vehicle, were communications accurate? And three: treat your plan oversight like you would your house—don’t assume the vendor installed the windows properly and just walk away.
If you ignore these things, you may not get a law firm knocking—yet. But trust me: when the dust settles in your next transition, the legacy you’ll leave isn’t your firm’s reputation—it’s a
googled headline about “automotive group loses 9% of plan assets during switch.” And you’ll wish you’d done the dirty work ahead of time.
Your participants count on you. So act like someone who knows they’re responsible.
