McKinney v. Principal Financial Services Inc et al

On January 23, 2025, the putative class action McKinney v. Principal Financial Services Inc et al was commenced in the U.S. District Court for the Southern District of Iowa. The named plaintiff, a participant in the Principal 401(k) plan, sued Principal Financial Services Inc., Principal Life Insurance Company, and related entities on behalf of a class of plan participants and beneficiaries. The complaint alleges that the defendants breached their fiduciary duties of loyalty and prudence under the Employee Retirement Income Security Act (ERISA) by causing the retirement plan to pay excessive recordkeeping and administrative fees. It further accuses the defendants of engaging in prohibited self-dealing by selecting and retaining poorly performing proprietary investment funds to benefit themselves, thereby eroding the retirement savings of the participants. The lawsuit seeks restitution of losses, disgorgement of profits, and equitable relief. As of June 2026, the court has largely denied the defendants’ motion to dismiss, and the case is proceeding through discovery, with class certification motions pending.

As of June 2026, the case remains ongoing. The court denied the defendants' motion to dismiss in October 2025, and the litigation is currently in the discovery phase, with a class certification determination still pending.

Whether Principal Financial Services and its affiliates breached their ERISA fiduciary duties by charging unreasonably high fees and engaging in self-dealing through proprietary investment options that underperformed.

The case reinforces the heightened scrutiny on 401(k) plan sponsors and service providers regarding hidden fees and conflicts of interest. It has pressured financial institutions to improve fee transparency and prompted employers to re-evaluate their retirement plan vendors and investment lineups to mitigate fiduciary risk.