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The DOL Cannot Convince Courts that there is ERISA Fiduciary Liability for 401(k) Service Providers


The Department of Labor is now zero out of three in attempts to convince federal courts that 401(k) service providers are subject to ERISA fiduciary liability. The most recent decision came out of the Eighth Circuit where the court rejected the argument that Principal exercised “discretionary authority” with respect to the plan, which would cause Principal to become an ERISA fiduciary. McCaffree claimed that the Principal exercised discretionary authority by making available the 63 initial investment alternatives. The court reasoned that because McCaffree could have refused to enter into the contract that Principal could not have exercised fiduciary authority or breached any fiduciary duty. The court’s decision in favor of Principal is part of a larger trend in appellate courts of dismissing excessive fee claims against 401(k) service providers by finding that the providers do not qualify as fiduciaries under ERISA.

McCaffree Fin. Corp. v. Principal Life Ins. Co., No. 15-1007 (8th Cir. Jan. 8, 2016)


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