Background
Richard Kelly maintained a 401(k) account in Altria’s Deferred Profit-Sharing Plan after leaving the company. Anticipating a stock-market increase after the 2020 presidential election, he asked Fidelity, the plan’s recordkeeper, to liquidate certain holdings and transfer his assets to Goldman Sachs while preserving favorable tax treatment for non-Altria stock. The transaction required a cash rollover and an in-kind distribution, which Fidelity completed on November 12, 2020.
Kelly contended that Fidelity had misled him about when the cash would become available and that the delay prevented him from taking advantage of the expected market increase. After Altria denied his benefits claim, he sued Altria, the plan, and Fidelity under ERISA. He also alleged breach of fiduciary duty and sought statutory penalties because Altria refused to provide the Administrative Services Agreement between Altria and Fidelity. The district court granted summary judgment to the defendants and later awarded them attorney’s fees.
The Court’s Holding
The Fourth Circuit affirmed the rejection of Kelly’s benefits claim. Because the plan granted its administrator discretionary authority, the court applied abuse-of-discretion review and concluded that Altria’s decision was reasonable, resulted from a deliberate process, and was supported by substantial evidence. Fidelity completed the transactions within the estimated timeframes considered by the plan’s management committee.
The court also affirmed judgment on the fiduciary-duty claim. Fidelity performed ministerial recordkeeping and administrative tasks rather than discretionary plan functions, so it was not a functional fiduciary in these circumstances. Even assuming fiduciary status, the court held that Fidelity breached no duty: its representatives gave timing estimates rather than guarantees, and one potentially confusing comment did not overcome the repeated statements that the transaction could take seven to ten business days.
The court reversed on the document-disclosure claim. It held that the Administrative Services Agreement was an instrument “under which the plan is established or operated” within 29 U.S.C. § 1024(b)(4) because it governed services that helped the plan function, even though those services were ministerial. Kelly therefore was entitled to the agreement. The court remanded for the district court to decide whether statutory penalties were appropriate and otherwise affirmed, including the attorney’s-fee awards.
Key Takeaways
- A discretionary ERISA benefits determination survives review when it reflects a reasoned process and is supported by substantial evidence, even if a court might have reached a different result.
- A recordkeeper does not become an ERISA fiduciary merely by providing standard information needed to implement a participant’s previously made transfer decision.
- An administrative-services agreement must be disclosed under § 1024(b)(4) when its terms govern processes through which the plan operates, even if the contractor’s duties are ministerial.
Why It Matters
The decision clarifies that ERISA’s document-disclosure requirement reaches beyond instruments defining participant benefits. Service agreements allocating operational responsibilities may also qualify when they govern how a plan performs its work.
At the same time, the ruling preserves a distinction between fiduciary discretion and routine recordkeeping. Service providers that communicate standard transaction information and carry out participant instructions do not necessarily assume fiduciary status, although plan administrators may still have to disclose the contracts defining those services.