MassMutual settled a long running suit with a class of plan sponsors that could impact how all retirement service providers arrange compensation, and disclose compensation to their plan sponsor-clients.
In Golden Star Inc. v. MassMutual Life Insurance Co., the plaintiffs, a Kansas City-based flooring maintenance company and sponsor of two 401(k) plans, alleged that MassMutual, which had been servicing the GSI plans since 1993, breached its fiduciary duties when it received "kickbacks" from third-party mutual fund companies.
MassMutual never denied the revenue-sharing agreements. But the company did deny that it was a fiduciary, and therefore was not beholden to ERISA's prohibited transaction rules.
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