Principal Clients Revive Class Suit Over Guaranteed 401(k) Funds

A class action challenging how Principal Life Insurance Co. profits from guaranteed investment products offered in 401(k) plans got a second wind Monday, when the Eighth Circuit held the company could be liable as a fiduciary under federal benefits law.

Principal acts as a fiduciary under the Employee Retirement Income Security Act when it unilaterally sets the interest rate paid to investors who hold its Principal Fixed Income Option, the court determined.

The ruling revives a 41,000-person class action claiming the fees Principal earns off these low-risk 401(k) investments are excessive in violation of ERISA.

Guaranteed investment products are investments ...