1. This case involves an important, recurring issue about the proper interpretation of Section 406(a) of the Employee Retirement Income Security Act of 1974 (ERISA)—whether that section bars employee-benefit plans from entering any contract for services, even when those services are necessary to administer the plan and are procured in an arms-length transaction.

2. ERISA requires plan fiduciaries—like employers who sponsor 401(k) plans for their employees—to act prudently, including with respect to fees paid to third-party service providers like recordkeepers or financial advisers. 29 U.S.C. § 1104(a). Section 406(a) of ERISA, codified at 29 U.S.C. § 1106(a)(1), also categorically prohibits (subject to statutory exemptions) certain types of transactions between plans and third parties, including the "furnishing of goods, services, or facilities between the plan and a party in interest." ERISA defines a "party in interest" to include "a person providing services to such plan." Id. § 1002(14)(B).

3. As this Court explained in Lockheed Corp. v. Spink, "Congress enacted § 406 'to bar categorically a transaction that [is] likely to injure the pension plan.'" 517 U.S. 882, 888 (1996). But Congress didn't mean to proscribe literally any transaction for services with plans—only transactions "in the sense that Congress used that term in § 406(a)." Id. at 893. Congress's particular concern was with "commercial bargains that present a special risk of plan underfunding because they are struck with plan insiders, presumably not at arm's length." Ibid. So the sort of "transactions" Section 406(a) targets "generally involve uses of plan assets that are potentially harmful to the plan." Ibid.

Whether Section 406(a) of ERISA prohibits employee benefit plans from entering into arms-length service contracts with third-party providers that are necessary for plan administration