Transamerica Corp., Cedar Rapids, Iowa, reached a $5.4 million settlement in a class-action lawsuit brought by current and former participants in the firm's 401(k) plan, which alleged company and plan fiducaries breached their duties under ERISA by failing to remove underperforming proprietary investments.
A memorandum in support of preliminary approval of a class-action settlement was filed Wednesday in U.S. District Court in Cedar Rapids, Iowa.
The lawsuit, Karg et al. vs. Transamerica Corp et al., was originally filed in December 2018 and alleged the company and plan fiduciaries "saddled the plan's participants with substandard investment portfolios" that were managed by Transamerica Asset Management and "should have been aware of the portfolios' poor annual investment performance on a real-time basis," said the complaint, citing six Transamerica products.
Transamerica will pay $5.4 million into a settlement fund, which will be allocated among class members in the 401(k) plan, and has agreed to continue providing fiduciary training to plan trustees and retaining an outside investment consultant, according to the memorandum.
Hank Williams, Transamerica spokesman, confirmed Tuesday that the firm removed six Transamerica-managed equity and fixed-income separate accounts as investment options of the 401(k) plan during 2020. The separate accounts had a total of $820 million in assets in the plan as of Dec. 31, 2019, according to the company's 11-K filing last year.
As of Dec. 31, the Transamerica 401(k) Retirement Savings Plan had $2.3 billion in assets, according to its latest 11-K filing Tuesday with the SEC.