The Department of Labor has held that a transaction prohibited by ERISA section 406(a) will occur when a plan fiduciary causes a plan to release a claim against a person who is a party in interest at the time of the settlement. In the Department’s view, such a settlement involves ‘‘an exchange of property (a chose in action) between such [plan] and parties in interest as described in section 406(a)(1)(A).’’
Click for more: “The Role of the Independent Fiduciary in Litigation Settlements”