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September 06, 2023

Plan Fiduciaries Continue to Defeat Blackrock Target Date Fund Class Actions

American Bar Association (ABA)

Benefits and executive compensation partners Monica Novak and Kim Jones and associates Emily Kile-Maxwell and John Fogarty coauthored an article for the ABA that summarizes a string of cases filed against fiduciaries of large 401(k) plans of a financial institution that allegedly breached their fiduciary duties under ERISA.

The authors explain that plaintiffs challenged plan fiduciaries’ selection of the concededly low-cost target-date funds (TDFs), leading many fiduciaries to feel they were between a rock and a hard place in selecting a TDF option for their 401(k) plans. They add that three cases have been dismissed by the district court that held the plaintiffs had failed to allege any facts about the plan fiduciaries’ process for selecting and monitoring the TDFs.

Novak, Jones, Kile-Maxwell and Fogarty noted in all three cases, the district court ultimately dismissed the plaintiffs’ complaint with prejudice, meaning that the plaintiffs were not allowed to amend their complaints in response to the dismissal.

They offer advice for plan fiduciaries to continue to monitor the TDFs and other investment options in their plans and carefully consider the pros and cons of all investment options, including fees and historic investment performance.

The full article is available to ABA members.

Full Article

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