Five former Dell Technologies employees have filed a lawsuit against the company, alleging that poor oversight of its 401(k) retirement plan led to massive losses for workers. The complaint, filed on Jan. 28 in federal court in Austin, Texas, claims Dell failed to properly manage the plan and cost participants more than $318 million.
According to the proposed class action, Dell violated the Employee Retirement Income Security Act by continuing to offer investment funds that consistently underperformed, even as stronger and less expensive alternatives were available. The plaintiffs argue that this prolonged inaction put employees’ retirement savings at risk and eroded long term returns.
In the lawsuit, the plaintiffs Allison Lowbruck, Adam Moss, Eric Rodgers, Michael Schwartz, and John Vedamanikam argue that Dell repeatedly favored its own in-house investment products.
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They claim funds such as the Dell Pre Mixed Portfolio Target Date Series and the Dell Core Funds lagged behind comparable market options over long periods, leaving employees with weaker returns on their retirement savings.
The complaint goes a step further, alleging Dell kept tight control over every part of the process. It claims the company designed the funds, selected the managers, decided how assets were allocated, and then earned fees tied to those choices.
According to the plaintiffs, that setup created a built-in conflict of interest that runs afoul of federal rules governing retirement plans.
Dell’s 401(k) plan is a massive one, covering about 63,000 workers and holding roughly $14.6 billion in assets as of 2024. The lawsuit claims nearly a third of that money was parked in funds that consistently underperformed.
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Dell has declined to comment on the case, citing pending litigation, according to The Times of India. The former employees are seeking to recover losses on behalf of all plan participants, along with a return of fees they say the company earned through self-dealing. They are also calling for changes to how the retirement plan is managed going forward.
Cases like this are not unusual. Large employers often choose to settle rather than fight lengthy court battles. UnitedHealth, for example, paid $69 million in 2015 to resolve a similar lawsuit, while Boeing agreed to a $57 million settlement that same year after nearly nine years of litigation.
The Dell case could stretch on for years. For now, thousands of current and former employees are left waiting to see whether any portion of the alleged $318 million in losses will be recovered.