New York Life settles 401(k) lawsuit for $3 million

New York Life Insurance Co. has agreed to settle a lawsuit alleging the firm engaged in self-dealing in its 401(k) plans for the sum of $3 million.

Plaintiffs brought the excessive-fee suit against New York Life in July 2016, seeking relief for alleged damages caused by fiduciary breach in two company retirement plans.

New York Life neither admitted nor denied wrongdoing as part of the settlement agreement, filed Feb. 14 in New York district court.

“While we believe we have acted in full compliance with the duties owed to our plan participants, we have decided that the best use of resources is to fund a settlement rather than litigation,” New York Life spokesman Jason Weinzimer said.

The case concerned a proprietary investment fund, a MainStay-branded S&P 500 index mutual fund. The plan fiduciaries allegedly retained the fund out of financial self-interest, causing participants to save less money than they otherwise could have by investing in cheaper non-proprietary funds.

The MainStay brand of funds is owned and operated by New York Life and subsidiaries.

Plaintiffs had estimated the amount of the excessive fees paid by the class members in the lawsuit was roughly $3.9 million.

New York Life’s was one of several lawsuits filed against financial services companies for 401(k) self-dealing within the past year. T. Rowe Price, which was sued Feb. 14, was the most recent target.

Massachusetts Mutual Life Insurance Co. and Transamerica Corp. settled separate self-dealing suits last year, for $31 million and $3.8 million, respectively.

Fidelity Investments and Ameriprise Financial have also paid out multimillion-dollar settlements in prior years — $12 million and $27.5 million, respectively.