KPMG Reaches 401(k) ERISA Settlement Covering Nine Years of Plan Participants

Nearly 50,000 current and former KPMG employees stood to share a $650,000 settlement after a federal judge in New Jersey granted final approval to a class action challenging the firm's 401(k) investment choices, with attorneys walking away with nearly $275,000 of that total.

Magistrate Judge Michael A. Hammer signed off on the deal on July 23, 2024, resolving claims filed under case Chong, et al. v. KPMG, LLP, et al. (Civil Action No. 2:21-cv-19330-MEF-MAH). The suit alleged that KPMG chose expensive share classes for the KPMG 401(k) Capital Accumulation Plan, a plan that also encompasses predecessor and successor plans. The class period runs from October 26, 2015, through March 4, 2024, meaning any participant who held a balance during those roughly eight and a half years is potentially covered.

The settlement amount is modest relative to what plaintiffs thought they could win at trial. According to the plaintiffs' own settlement motion, the $650,000 figure represents about 17% of the employees' "best-case outcome" in the litigation. That ratio is not unusual in ERISA fee cases, where proving damages with precision is difficult and litigation risk runs high, but it does mean participants should not expect meaningful individual payments.

The math underscores that point. After Hammer awarded class counsel nearly $275,000 in attorneys' fees and expenses, and after approving $10,000 case contribution awards to each of the three named plaintiffs, the net amount left to distribute across approximately 50,000 class members is considerably less than the headline settlement figure.

Distribution works differently depending on whether a participant is still with KPMG. Current participants with a positive account balance in the Plan will have their proportional share of the net settlement amount deposited directly into their Plan account. Former participants who are no longer in the Plan will receive direct payment from the Settlement Administrator. The settlement notice does not specify per-participant payment estimates, and the precise allocation formula is contained in the Settlement Agreement itself.

The objection deadline passed on June 21, 2024, roughly a month before the final approval order. The settlement website for Chong et al. instructs class members to direct any questions to Class Counsel rather than to the court, KPMG, or defense counsel, noting plainly that those parties will not be able to answer questions.

The case is part of a broader wave of ERISA litigation that has targeted large employers over 401(k) plan administration, with law firms regularly scrutinizing whether plan sponsors selected higher-cost investment share classes when cheaper institutional equivalents were available. For KPMG specifically, a firm that sells audit and advisory services to corporate clients partly on the strength of its governance credibility, the underlying allegations carry a reputational edge beyond the dollar amount. The firm has not issued a public statement on the settlement's terms.

Participants who believe they fall within the October 26, 2015 through March 4, 2024 class period and have not already received distribution information should review the Settlement Agreement for the precise terms governing their share.