McKinney v. Principal Financial Services Inc et al

On May 8, 2025, plaintiffs John and Michele McKinney filed a proposed class action in the U.S. District Court for the Southern District of Iowa against Principal Financial Services Inc. and Principal Life Insurance Company. The complaint alleges that the defendants, as fiduciaries of their own employee 401(k) retirement plan, violated ERISA by authorizing excessive recordkeeping and administrative fees and by engaging in prohibited transactions with their proprietary investment products. The lawsuit claims the plan's fiduciaries failed to conduct a prudent and loyal process for monitoring service provider compensation, thereby causing millions in losses to retirement savers. The case joins a growing wave of ERISA excessive fee litigation targeting financial services firms that both sponsor and service their own employee retirement plans, highlighting inherent conflicts of interest.

As of the filing date on May 8, 2025, the case is in preliminary stages with the complaint filed; no judgment or settlement has been reached. The matter proceeds as a proposed class action awaiting class certification.

Whether Principal Financial Services breached ERISA fiduciary duties of prudence and loyalty by causing the plan to pay unreasonable recordkeeping fees to itself and by retaining proprietary investment funds without adequate impartial review, constituting prohibited self-dealing.

This lawsuit underscores intensifying scrutiny of financial services companies that manage their own employees' retirement assets, reinforcing the Department of Labor's emphasis on fee transparency. It amplifies the broader industry trend of ERISA class actions targeting internal plan management structures, potentially prompting corporate sponsors to adopt independent fee benchmarking and remove conflicted proprietary funds from their 401(k) lineups to mitigate litigation exposure.