Retirement Retirement Planning

New Lawsuit Highlights The Dangers of 'Set It and Forget It' 401(k) Strategy

Your 401(k) funds may be underperforming.

By Catherine Collins , Edited by Kristy DeSmit

Updated April 21, 2026

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When companies offer 401(k) retirement plans to employees, they choose which 401(k) provider to use and which investments will be available. Then, employees consider the available options and invest in what they believe will help them reach their retirement goals.

However, a recent lawsuit raises many questions about who is responsible for underperforming funds. Is it the company that selects the funds to offer in 401(k) plans, or are employees responsible for choosing them? Here is more information about the lawsuit against Bloomberg and metrics that 401(k) plan holders should check annually.

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The $70 million ERISA class action lawsuit

In January, the law firm Sanford Heisler Sharp McKnight filed an ERISA complaint against Bloomberg. The $70 million class action lawsuit claims that Bloomberg did not follow a fiduciary duty and kept two underperforming funds available in its 401(k) plan.

The lawsuit alleges that keeping these funds in the plan potentially costs employees who chose them millions in lost retirement savings. There are 20,000 plan participants with $5 billion in assets who may be affected by Bloomberg's asset choices.

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What this lawsuit means for employers in the future

This lawsuit is not the first ERISA complaint regarding 401(k) plans. A case last year against UnitedHealth, alleging mismanagement of retirement assets, resulted in a $69 million settlement.

This means that companies, especially large ones with thousands of 401(k) plan participants, will be under closer scrutiny. Many of these lawsuits highlight the employer's fiduciary responsibility to manage its 401(k) plans in a way that is in the best interest of plan participants.

The costly habit many 401(k) plan holders have

Although these lawsuits show that employers have a responsibility to act as fiduciaries for their employees, plan holders also make costly mistakes. The biggest mistake is adopting a set-it-and-forget-it mentality with respect to their 401(k) plans.

According to a CNBC survey, 46% of 401(k) plan participants don't know what investments they have. This is common because many plan participants are auto-enrolled in target date funds, and many employees don't rebalance after making their initial investment choices. Because so many 401(k) plan choices are now automated, many people do not review their portfolios regularly enough.

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The metrics that 401(k) plan holders should check annually

Although many employers automatically enroll their employees in 401(k) plans, participants should still check their plan performance. Employees can regularly log in to their accounts, review the expense ratios of their assets, and monitor the fees they incur.

Additionally, plan participants can review their asset allocation as they near retirement and ensure they are invested in a portfolio that matches their risk tolerance for their current phase of life.

Employees should also keep in mind that there's no shame in asking questions about investments or retirement strategies. Investment policies and 401(k) plans can be challenging to understand, even for experienced investors.

How often employees should check their 401(k)s

FINRA advises that employees check their 401(k) accounts annually. That includes paying close attention to your plan fees and updating beneficiary designations. Updating your beneficiaries is especially important if you got married, divorced, had a child, or had a beneficiary pass away.

It's also a good idea to review your 401(k) plan carefully if you change jobs and need to make decisions about what to do with your old 401(k) plan. Although it can be challenging to manage 401(k) paperwork, it's important for your retirement goals to regularly review it.

Who's responsible for 401(k) plan performance?

It is an employer's duty to monitor a 401(k) plan and choose the assets that will be available to employees. It is also their duty to take note of which funds may be performing or underperforming and make changes as needed.

Employees, however, have their own individual responsibility to look out for their own retirement futures. Employees are responsible for researching assets and seeking financial advice from a financial advisor if they need help planning for retirement.

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Where to get 401(k) help if you're overwhelmed

Investing in a 401(k) can be overwhelming. First, see if your employer offers help through your Human Resources department. Some employers also offer financial coaching or meetings with a financial planner as part of their benefits package.

If they don't, you can always seek the advice of a financial planner on your own, who can help you determine whether or not you're on the right path to retirement.

Bottom line

Most employees work hard their entire lives to have a stress-free retirement one day. However, if they invest in underperforming assets, it could delay their retirement goals.

There are law firms that file class-action lawsuits against large employers, alleging that they are not fulfilling their fiduciary duties to their employees when they keep underperforming funds in their 401(k)s. However, employees should also monitor their own 401(k) account regularly to ensure it's performing.

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