The fiduciaries of Memorial Hermann Health System’s retirement plans kept underperforming JPMorgan Chase target-date funds in the 401(k) and 403(b) lineups for years, an ERISA lawsuit alleges, and a proposed settlement of those claims now sits before a federal judge in Houston. The $1.025 million settlement was filed September 1, 2026, would cover more than 33,000 plan participants, and still needs a judge’s approval before any money moves. At the center of the underlying complaint sits a type of fund most workers never actively picked: the target-date fund that lands in an employee’s account by default.
A Target-Date Fund as the Plan’s Automatic Default
A target-date fund holds a mix of stocks, bonds, and cash that shifts automatically as a worker ages, without the worker having to rebalance anything by hand. The underlying class-action complaint that preceded the settlement identifies the specific series at issue: the JPMorgan SmartRetirement R6 funds, spanning target years from 2025 through 2060 in five-year increments, so a fund names itself after the year an employee expects to retire, such as 2025, 2035, or 2045.
Plans lean on these funds because federal rules let them serve as a plan’s qualified default investment alternative, meaning a worker’s contributions can land in one automatically if that worker never files an election. The Department of Labor’s Employee Benefits Security Administration tells plan fiduciaries that choosing a default this consequential carries real obligations: establish an objective process for comparing and selecting a target-date series, then review it periodically rather than leaving it alone once it is added to the plan’s investment lineup.
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The Glide Path: Reaching the Most Conservative Mix Before or After 65
The gradual shift from stocks toward bonds inside a target-date fund is called its glide path, and it matters more than the year printed on the fund’s label. The Department of Labor draws a specific distinction for fiduciaries: a “to” glide path reduces stock exposure until it hits its most conservative point at the target date itself, while a “through” glide path keeps easing the mix for years, sometimes decades, after that date arrives. Its investor bulletin illustrates how differently that can play out even among funds sharing one target year — one example fund still holds 60% in stocks at the target date and does not reach its final 30% stock allocation until 25 years later, while another example fund holds just 25% in stocks at the target date and settles at 20% five years afterward.
That spread means a household relying on the year in a fund’s name to judge its own risk has no way to know, from the name alone, how much stock exposure it is still carrying at 65. The Department of Labor’s guidance for fiduciaries makes the same point from the plan’s side: understanding “when the fund will reach its most conservative asset allocation and whether that will occur at or after the target date” is one of the specific questions a fiduciary is supposed to be able to answer about every target-date series it offers, according to the agency’s investor bulletin.
Why the Complaint Turns on Process, Not Just Returns
An ERISA fiduciary’s job is not to guarantee winning investments; it is to run a prudent process for picking and monitoring them. The U.S. Supreme Court reinforced that a fiduciary carries “a continuing duty of some kind to monitor investments and remove imprudent ones,” a standard the underlying complaint against Memorial Hermann’s plan fiduciaries invokes directly. Building on that standard, the complaint does not simply allege that the JPMorgan SmartRetirement R6 Series lost money — every target-date fund can lose money. It alleges the series “greatly underperformed its peers and relevant benchmarks” across multiple target-date vintages, including the 2025, 2035, and 2045 funds and an income-focused version, and that the plans’ fiduciaries kept steering new contributions into the same underperforming series rather than replacing it or moving participants to a comparable, better-performing option.
That comparison to peers and benchmarks is the legal hinge. A single bad year rarely proves imprudence on its own; a fund that trails its own peer group and benchmark index year after year, while fiduciaries keep it in place without documented review, is what the underlying class-action complaint frames as the breach. These remain allegations tied to a proposed settlement, not findings a court has adjudicated on the merits.
Same Target Year, Different Fund, and No Guarantee at the Finish Line
Two target-date funds can carry an identical year in their names and still behave nothing alike. The Department of Labor warns investors plainly that funds “may have very different investment strategies and risks” even when they share a target date, and that a target-date fund carries no guarantee of sufficient retirement income at the target date — a participant can still lose money in one, including after retiring. Fees compound that gap: a target-date fund often invests in other underlying funds, so both layers of cost matter, and even a fraction of a percentage point in extra fees can meaningfully shrink a balance built up over decades.
The Memorial Hermann case shows how that cost layer can shift even inside the same fund family. Around August 2020, the 401(k) plan moved its JPMorgan SmartRetirement 2025 holding from the R6 mutual fund share class into a lower-cost collective investment trust version of the same strategy, according to the complaint, a reminder that the underlying investment strategy and the fee a participant pays for it are two separate questions a plan is supposed to keep reviewing. For now, the broader dispute over the JPMorgan series and the plans’ recordkeeping costs sits in a settlement awaiting a judge’s approval, filed September 1, 2026, with no funds yet distributed to the more than 33,000 participants the deal is meant to cover, according to the settlement summary.
This article was produced with the assistance of AI and reviewed by The Financial Wire editorial team.
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David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
