A participant in a 401(k) plan run by New York Life Insurance Co. has sued the company and plan fiduciaries alleging violations of their ERISA responsibilities for two company retirement plans.
"This suit is about corporate self-dealing and the prohibited transfer of employees' retirement assets to defendants at the expense of the retirement savings of company employees and its agents," said the March 2 complaint filed in a U.S. District Court in New York in the case of Stuart Krohnengold vs. New York Life Insurance Co. et al.
Mr. Krohnengold is a participant in the New York Life Insurance Co. Employee Progress-Sharing Investment Plan, and he also is suing, as part of a class action claim, to represent the New York Life Agents Progress-Sharing Investment Plan. The former had assets of $3.51 billion and the latter had assets of $846 million, both as of Dec. 31, 2019, and both according to the latest Form 5500s.
Mr. Krohnengold's complaint also accused the defendants of offering proprietary products "earning New York Life and its affiliates windfall profits at the expense of the retirement savings of New York Life employees and its agents."
The complaint said participants "were invested by default, without their consent and in contravention of applicable regulations, in a New York Life general account insurance fund called the Fixed Dollar Account." Mr. Krohnengold's lawsuit alleged that this fund is "undiversified and not a permissible 'qualified default investment alternative.'"
For those who didn't choose a default investment, "the fiduciary defendants directed the participants' retirement savings into the Fixed Dollar Account … which provided New York Life and its affiliates with enormous profits … while exposing most of the plans' assets to New York Life's credit risk," the complaint said.
Kevin B. Maher, a spokesman for New York Life, wrote in an email that the company will "vigorously defend" the lawsuit. "We have a robust process in place for selecting investment options to include on the platform, including the use of an independent consultant," Mr. Maher wrote. "We are in full compliance with our obligations to our retirement plan participants."