MassMutual’s actions in the lawsuit Golden Star Inc. v. MassMutual Life Insurance Co. were never in dispute. The financial giant oversaw variable annuity investments in the plaintiff’s plan and received both direct compensation from plan participants and indirect compensation – in the form of revenue sharing – from other mutual fund companies. These revenue sharing payments were not disclosed to the plan sponsor.

The key issue was whether MassMutual was a “functional fiduciary” as defined by ERISA. If they are not a fiduciary, as MassMutual contended, there is no breach of standards. If deemed a fiduciary, receiving the undisclosed compensation creates a prohibited transaction under ERISA, and potentially large liability.

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