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September 21, 2023

Claims 401(k) Plan Violated ERISA by Selecting Poorly Performing Funds Due to Low Cost Can Proceed

In the first of multiple cases containing similar allegations, a federal district court has concluded that 401(k) participant may litigate their claims that their employer, Genworth Financial, Inc., violated the Employee Retirement Income Security Act (“ERISA”) by making low-cost BlackRock LifePath Index Funds date funds their default investment options, despite allegedly low performance.
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Home » News » Claims 401(k) Plan Violated ERISA by Selecting Poorly Performing Funds Due to Low Cost Can Proceed

Megan K. Mechak
Thu, 09/21/2023

In the first of multiple cases containing similar allegations, a federal district court has concluded that 401(k) participant may litigate their claims that their employer, Genworth Financial, Inc., violated the Employee Retirement Income Security Act (“ERISA”) by making low-cost BlackRock LifePath Index Funds date funds their default investment options, despite allegedly low performance. Similar cases are pending against Citigroup, Inc., Marsh & McLennan Cos., and CMFG Life Insurance Company.

ERISA imposes a fiduciary duty on 401(k) plan sponsors, like Genworth, to act solely for the benefit of plan participants and beneficiaries. The plaintiffs allege that the plan selected the BlackRock target date funds based on their low cost, without regard to their allegedly poor performance.

The case is Trauernicht v. Genworth Financial, Inc., Case No. 3:22cv532, and is pending in the Eastern District of Virginia.

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