PLANADVISER - September/October 2019 - 17
Issues That Trigger a TDF Lawsuit
Unlike employees, plan sponsors shouldn't 'set it and forget it'
On its website, litigation firm
Cohen Milstein says it is investigating
a number of issues concerning the
selection and offering of TDFs. Below
is what the firm notes it is looking for:
Franklin Templeton of self-dealing in its
401(k) plan requires it to add a nonproprietary
TDF option to its investment
lineup in addition to the plan's qualified
default investment alternative (QDIA)-
the LifeSmart Target Date Funds.
More recently, a lawsuit was filed
alleging that fiduciaries of the Walgreen
Profit-Sharing Retirement Plan selected
and kept in the plan TDFs that underperformed
their benchmarks. Further,
retirement plan fiduciaries at Intel were
accused of failing to properly monitor
and evaluate " unconventional, highrisk
allocation models " adopted within
the company's custom TDFs.
Improper investment strategy. " The
actual investment strategy-e.g.,
the allocation between equities and
bonds-may not be the same as the
fund advertised. The fund may be
pursuing a far riskier investment
strategy than participants and plan
sponsors are led to believe, even as
plan participants near retirement. "
Excessive fees. " The fees charged by a
target-date fund may not be justified
by the performance of the investment.
The fees for target-date funds can vary
significantly, particularly depending on
whether the fund's fees are 'layered' or
TARGET-DATE FUNDS (TDFs) were created,
in part, to be a safe investment in
401(k) plans. But recently, a wave of
lawsuits has crashed against some of
those funds.
A settlement in a lawsuit accusing
the underlying investments of the fund
are actively or passively managed. "
Self-dealing or imprudent selection.
" Many providers offer a wide variety
of target-date funds. The fiduciary of
the plan may have chosen the particular
provider for improper reasons.
For example, where the fiduciary of
the plan or the employer sponsoring
the plan markets a target-date fund, it
improperly chose its own target-date
funds without
considering whether
those funds are most appropriate for its
own 401(k) plan participants. "
Improper default selection. Where a
TDF suite is the plan's QDIA, " the fiduciary
of the plan has an obligation to
ensure that the target-date fund was
prudently, properly and appropriately
selected. " -Rebecca Moore
Art by Marc Rosenthal
planadviser.com September-October 2019 | 17
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PLANADVISER - September/October 2019
Table of Contents for the Digital Edition of PLANADVISER - September/October 2019
Addressing Profitability
2019 PLANADVISER Retirement Plan Adviser Survey
2019 PLANADVISER National Conference
Is Fixed Income Working?
The Health Savings Alphabet
SEC Issues Proxy Guidance
Class Certification
An 'IPS' Sets The Standard
PLANADVISER - September/October 2019 - Cover1
PLANADVISER - September/October 2019 - Cover2
PLANADVISER - September/October 2019 - 1
PLANADVISER - September/October 2019 - 2
PLANADVISER - September/October 2019 - 3
PLANADVISER - September/October 2019 - 4
PLANADVISER - September/October 2019 - 5
PLANADVISER - September/October 2019 - 6
PLANADVISER - September/October 2019 - 7
PLANADVISER - September/October 2019 - 8
PLANADVISER - September/October 2019 - 9
PLANADVISER - September/October 2019 - 10
PLANADVISER - September/October 2019 - 11
PLANADVISER - September/October 2019 - 12
PLANADVISER - September/October 2019 - 13
PLANADVISER - September/October 2019 - 14
PLANADVISER - September/October 2019 - 15
PLANADVISER - September/October 2019 - 16
PLANADVISER - September/October 2019 - 17
PLANADVISER - September/October 2019 - 18
PLANADVISER - September/October 2019 - 19
PLANADVISER - September/October 2019 - Addressing Profitability
PLANADVISER - September/October 2019 - 21
PLANADVISER - September/October 2019 - 22
PLANADVISER - September/October 2019 - 23
PLANADVISER - September/October 2019 - 24
PLANADVISER - September/October 2019 - 25
PLANADVISER - September/October 2019 - 26
PLANADVISER - September/October 2019 - 27
PLANADVISER - September/October 2019 - 2019 PLANADVISER Retirement Plan Adviser Survey
PLANADVISER - September/October 2019 - 29
PLANADVISER - September/October 2019 - 30
PLANADVISER - September/October 2019 - 31
PLANADVISER - September/October 2019 - 32
PLANADVISER - September/October 2019 - 33
PLANADVISER - September/October 2019 - 34
PLANADVISER - September/October 2019 - 35
PLANADVISER - September/October 2019 - 36
PLANADVISER - September/October 2019 - 37
PLANADVISER - September/October 2019 - 38
PLANADVISER - September/October 2019 - 39
PLANADVISER - September/October 2019 - 2019 PLANADVISER National Conference
PLANADVISER - September/October 2019 - 41
PLANADVISER - September/October 2019 - 42
PLANADVISER - September/October 2019 - 43
PLANADVISER - September/October 2019 - 44
PLANADVISER - September/October 2019 - 45
PLANADVISER - September/October 2019 - 46
PLANADVISER - September/October 2019 - 47
PLANADVISER - September/October 2019 - Is Fixed Income Working?
PLANADVISER - September/October 2019 - 49
PLANADVISER - September/October 2019 - The Health Savings Alphabet
PLANADVISER - September/October 2019 - 51
PLANADVISER - September/October 2019 - 52
PLANADVISER - September/October 2019 - 53
PLANADVISER - September/October 2019 - SEC Issues Proxy Guidance
PLANADVISER - September/October 2019 - Class Certification
PLANADVISER - September/October 2019 - An 'IPS' Sets The Standard
PLANADVISER - September/October 2019 - Cover3
PLANADVISER - September/October 2019 - Cover4
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