Litigation over Variable Annuity Life Insurance Co.'s practice of imposing a surrender charge on 401(k) plans leaving its platform is heating up in the Fifth Circuit, which received briefs arguing that the AIG subsidiary can’t be liable under ERISA.
The theory of the case—that VALIC’s surrender charge is a fiduciary breach and a prohibited transaction under the Employee Retirement Income Security Act—would “dramatically expand” the circumstances in which retirement plan service providers are subject to liability under the statute, the American Council of Life Insurers said. It’s well accepted that providers like VALIC don’t act as ERISA fiduciaries or interested ... fusing unit
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