UWM faces class-action lawsuit over alleged misuse of 401(k) plan assets

United Wholesale Mortgage (UWM) is facing a class-action lawsuit alleging misuse and misallocation of assets within its 401(k) retirement plan. The company has called the suit a “baseless claim.”

Filed Monday in a Michigan district court, the lawsuit accuses UWM of violating the Employee Retirement Income Security Act (ERISA) by using plan assets to reduce future employer contributions rather than reducing the plan expenses. The complaint alleges breaches of fiduciary duties of loyalty and prudence, as well as violations of ERISA’s prohibited transaction rules. The case was first reported by Bloomberg.

In a statement to HousingWire, a UWM spokesperson wrote that the company is “one of many publicly traded companies that have been sued by the plaintiffs’ bar challenging a long-standing practice of 401(k) plan sponsors.” 

According to the lawsuit, UWM’s 401(k) plan had 7,231 participants and $149.4 million in assets under management as of December 31, 2023—placing it in the top 1% of more than 730,000 retirement plans nationwide in terms of assets and participation.

In 2023, UWM matched 50% of the first 3% of a participant’s eligible compensation deferred, up to $2,500. Employees are fully vested in employer contributions after five years of service. The plaintiffs claim that UWM improperly used plan forfeitures—nonvested funds forfeited when employees leave the company—to offset employer contributions rather than covering plan expenses.

“The allegations do not concern the compensation received by the plan’s service providers and investment advisors or that the plan Committee selected imprudent plan investments,” the court filing clarifies.   

The plaintiffs estimate the plan sustained cumulative losses of $1.3 million between 2019 and 2023 as a result of the alleged mismanagement. 

The complaint was brought by three former UWM senior account executives—Kristopher Lapko, Alan Tucsok, and Becky Forbush—on behalf of themselves and other plan participants. They allege that UWM failed to act prudently, improperly used forfeitures for its own benefit, and did not adequately monitor those responsible for administering the plan.

“These injuries diminished the savings in Plaintiffs’ retirement accounts in the plan and reduced, dollar for dollar (and more when compounded) plaintiffs’ retirement savings,” the court document states.

A spokesperson for UWM wrote, “Our plan administration is consistent with decades of regulatory guidance that was reaffirmed as recently as 2023. We plan to vigorously defend this baseless claim.” 
The plaintiffs have filed five claims, including breach of fiduciary duties of loyalty and prudence. They are seeking restoration of plan losses, disgorgement of profits allegedly earned through the misuse of plan assets, and other relief.