AIG Unit’s 401(k) Plan Surrender Charge Upheld by Fifth Circuit

Variable Annuity Life Insurance Co. defeated an effort Thursday to revive a lawsuit challenging its practice of imposing a surrender charge on 401(k) plans leaving its platform.

“We join the majority of circuits in holding that the collection of a contractually predetermined fixed fee does not constitute a fiduciary act under ERISA,” the US Court of Appeals for the Fifth Circuit said in a unanimous three-judge panel ruling. “We thus affirm the district court’s dismissal of Plaintiffs’ claim for breach of fiduciary duty.”

The proposed class action says VALIC, a unit of AIG, penalizes retirement plans that try to ...