Transamerica sued over 401(k) plan investment options

Current and former participants in the Transamerica Corp.’s 401(k) plan have sued the company and plan fiduciaries, alleging they breached their duties under ERISA by failing to remove underperforming proprietary investments.

The defendants “saddled the plan’s participants with substandard investment portfolios that were managed by a Transamerica affiliate,” said the complaint, filed Dec. 28 in the case of Karg et al. vs. Transamerica Corp et al.

“Year after year, Transamerica selected and retained poor-performing proprietary investment portfolios for the plan when superior investment options were readily available,” said the complaint, which was filed in U.S. District Court in Cedar Rapids, Iowa.

The participants argued the Transamerica affiliate and investment adviser, Transamerica Asset Management, “was or should have been aware of the portfolios’ poor annual investment performance on a real-time basis,” said the complaint, citing six Transamerica products.

“Any reasonable, disinterested investor monitoring their investments would have viewed these portfolios as imprudent investments and removed them from the plan,” said the complaint, which seeks class-action status. “Instead, Transamerica continued to offer proprietary portfolios when their rates of return were lower than meaningful benchmarks. Transamerica therefore neglected its duty to monitor the plan’s investments and remove imprudent ones.”

A company spokeswoman said: “The allegations of wrongdoing against Transamerica in the recently filed lawsuit — which focuses on six ‘proprietary investment portfolios’ in the plan — are false and we will vigorously oppose the case.”

The Transamerica 401(k) Retirement Savings Plan, Cedar Rapids, had assets of $1.91 billion as of Dec. 31, 2017, according to the latest Form 5500 filing.

5 simple ways to get smarter about your 401(k) in 2019

It’s never too early, or too late, to start getting your finances in order. And that starts with your retirement accounts.

Many Americans, especially younger millennials and members of Gen Z who may be just now entering the workforce, don’t understand one of the most basic and popular retirement accounts: a 401(k).

“It sounds so foreign, so they don’t inquire about it and they figure they’ll get to it at some point,” says Carrie Schwab-Pomerantz, a financial adviser, board chair and president of the Charles Schwab Foundation. But that’s a mistake.

If you have access to one, this account is a crucial workplace benefit. In fact, one of the biggest errors that people make when it comes to retirement is failing to take full advantage of tax-advantaged company-sponsored plans, such as 401(k)s, Schwab-Pomerantz says.

That can lead to a lot of uncertainty and stress about the future. Almost eight out of 10 Americans say they’re concerned about not having enough money for retirement, according to Northwestern Mutual’s 2018 Planning & Progress Study.

But it’s not hard to get on, or back on, track, especially if your job can help you out. Here are five easy ways to make smart 401(k) choices in 2019.

Enroll in a plan

Find out what your company offers to help you plan your retirement and, if you can, opt in. “At the very least, make sure you’re signed up for your 401(k),” Schwab-Pomerantz says. Almost 60 percent of millennials have access to an employer-sponsored retirement plan, according to data analyzed by The Pew Charitable Trusts.

If you’re unsure about your options, talk to your HR department or your manager. And if your company doesn’t offer a 401(k) or you’re self-employed, look into an individual retirement account (IRA). There are several options that may work for you.