Northern Trust Must Face Suit Over 401(k) Plan’s In-House Funds

Investors in Northern Trust Co.'s $2.7 billion 401(k) plan advanced a lawsuit challenging the plan’s recordkeeping fees and its decision to offer proprietary target date funds as the default investment option, according to an Illinois federal court ruling.

The investors can move forward with claims for fiduciary imprudence under the Employee Retirement Income Security Act, because they adequately alleged that the Northern Trust Focus Target Retirement Trusts chronically underperformed comparable alternatives, Judge Charles R. Norgle Sr. said.

Norgle also greenlighted claims of fiduciary disloyalty.

“The Focus Funds—the only target date funds offered in the Plan and the default fund option ...