Liberty Mutual Agrees to $13.4 Million Class Action Settlement Over 401(k) Retirement Plan Fees

If you worked for Liberty Mutual Group Inc. and saved for retirement through the company’s 401(k) plan over the last decade, you could be owed money from a recent $13.4 million class action settlement. The deal resolves a long-running lawsuit accusing the insurance giant of mismanaging its workplace retirement program, saddling everyday people with inflated administrative costs, and maintaining underperforming funds that ate away at employees’ hard-earned retirement savings.

Understanding the Liberty Mutual 401(k) Excessive Fee Lawsuit

The legal battle began in April 2020 when a group of workers filed a class action lawsuit under the Employee Retirement Income Security Act, a federal law designed to protect workplace retirement assets. The lawsuit, known as Ahmed et al. v. Liberty Mutual Group Inc. et al., took aim at Liberty Mutual and its internal retirement plan administrative committee.

According to the complaint, those running the corporate plan breached their legal duties to act in the sole interest of the workers. Instead of leveraging Liberty Mutual’s massive purchasing power to secure low-cost options, the lawsuit alleges the company allowed the 401(k) plan’s service providers to charge excessive fees for standard recordkeeping and managed account services.

The plaintiffs also contended that the plan’s administrators sat on their hands for years while keeping lackluster investments in the line-up. Specifically, the suit challenged the retention of the Sterling Mid-Cap Value Fund and the Wells Fargo U.S. Government Money Market Fund, arguing that better-performing, lower-cost alternatives were widely available in the market.

What Is the Total Settlement Amount and Fund Breakdown?

To avoid a risky and unpredictable trial that was scheduled to begin in early 2026, Liberty Mutual agreed to create a $13.4 million cash fund to resolve the dispute. The company has not admitted wrongdoing and continues to maintain that it managed the retirement plan prudently and lawfully. However, the multi-million dollar fund will provide direct financial relief to nearly 50,000 class members who saw their accounts impacted by the alleged fees.

Before any money goes out to plan participants, the total $13.4 million fund will be used to pay for specific administrative and legal costs. The lawyers representing the workers can request up to $4,466,666.67 in attorneys’ fees and up to $430,000 for out-of-pocket litigation expenses.

Additionally, the six class representatives who stepped forward to lead the lawsuit on behalf of everyone else can receive service awards of up to $20,000 each, totaling $120,000. Once the court approves these deductions, the remaining portion, known as the net settlement fund, will be fully distributed among the eligible plan participants.

How the Settlement Money Is Divided Across Investments

You might wonder how the administrator determines your individual payout. The court-approved plan of allocation does not just hand everyone an identical check. Instead, it divides the net settlement fund into four distinct pools based on how different fees and funds affected participants between April 10, 2014, and December 31, 2025.

• The Sterling Mid-Cap Value Fund Portion (35%): More than a third of the fund is dedicated to participants who held money in this specific investment between April 10, 2014, and March 1, 2018.

• The Recordkeeping Fee Portion (27.5%): This chunk is distributed broadly across all class members based on their quarter-ending account balances throughout the entire timeframe.

• The Managed Account Portion (27.5%): This money is earmarked specifically for workers who enrolled in and utilized the 401(k) plan’s managed account services during the class period.

• The Wells Fargo Money Market Fund Portion (10%): The final piece goes to individuals who chose to invest in the Wells Fargo U.S. Government Money Market Fund between April 10, 2014, and May 31, 2021.

You May Be Eligible for a Cash Payout If You Meet This Criteria

You do not have to guess whether you are included in this legal victory. The settlement class encompasses anyone who had an account balance in the Liberty Mutual 401(k) plan at any point from April 10, 2014, through December 31, 2025. This includes current employees, former workers, and any beneficiaries or alternate payees who hold a legal right to a benefit under the plan.

The system divides these eligible individuals into two distinct groups based on whether they still have an active profile with the company’s retirement system:

• Current Participants: You fall into this category if you maintained an active account balance in the Liberty Mutual 401(k) plan as of December 31, 2025.

• Former Participants: You fall into this category if you participated in the plan during the decade-long window but no longer held any account balance as of December 31, 2025.

No matter which bucket you land in, the settlement guarantees a minimum payment of $10. If the mathematical formula calculates your individual share to be less than ten dollars, the administrator will automatically bump your payment up to meet that baseline.

How to File a Claim and Secure Your Retirement Payout

The process for collecting your money depends entirely on your status as a current or former plan participant. For current participants, the recovery process requires no work at all. You do not need to fill out a single piece of paper or submit an online form. Your share of the settlement money will be automatically deposited directly back into your active 401(k) plan account by the settlement administrator.

For former participants, the situation is different. Because you no longer have an active plan profile to accept an automatic transfer, you must take action to get paid. Former participants are required to fill out and return a valid Former Participant Claim Form.

You have two options to complete this step: you can quickly fill out the documentation electronically on the official settlement website, or you can print a physical PDF form and return it by mail. If you are a former participant, you can choose to receive your cash payout via a traditional paper check mailed to your house, or you can request to have the money sent as a direct rollover into a current qualified retirement account like an IRA.

Important Settlement Deadlines You Need to Know

If you are a former employee who needs to file a claim, time is of the essence. You must submit your completed claim form online or ensure it is postmarked by August 22, 2026. Failing to hit this date means you will give up your right to receive a cash check or rollover, but you will still be legally bound by the terms of the lawsuit’s resolution.

If you are unhappy with the terms of the settlement, the amount of money requested by the attorneys, or the distribution structure, you have the right to voice your concerns. You can submit a formal written objection to the court and the involved legal teams, which must be postmarked no later than August 3, 2026.

The U.S. District Court for the District of Massachusetts, led by U.S. District Judge Mark Mastroianni, will hold a final fairness hearing on September 2, 2026. During this hearing, the judge will review the deal, listen to any timely objections, and decide whether to grant final approval so the administrator can begin distributing the $13.4 million.