Variable’s 401(k) ‘Ransom’ Spurs SCOTUS Bid on Circuit Split

A retirement plan challenging AIG unit Variable Annuity Life Insurance Co.'s surrender charges on outgoing clients asked the US Supreme Court to address when plan service provider arrangements fall under ERISA’s prohibited transaction rules.

The circuit courts are “splintered” over whether transactions between benefit plans and their service providers qualify as prohibited transactions under the Employee Retirement Income Security Act unless they’re shown to be reasonable and necessary, according to a petition filed by the dental office retirement plan. The Second, Eighth, and Ninth circuits generally take an “expansive” view that sweeps more arrangements under the statute’s rules, ...