Levels of scrutiny increase as Supreme Court rules in favor of 401(k) plan participants

Ensure you are fulfilling your fiduciary responsibilities

The U.S. Supreme Court recently ruled in the case of Tibble v. Edison International, a fiduciary breach lawsuit brought against Edison International by participants in the public utility holding company’s 401(k) plan.

The participants’ claim concerned the ongoing role of benefit plan fiduciaries to monitor plan investments options – and not only the actual investment options but also their share classes and the associated fees. The case challenged the statute of limitations for those investments that were selected more than six years prior to the court case being filed.

In a unanimous decision, the U.S. Supreme Court ruled in favor of the plan participants, stating that fiduciaries have a continuous duty to monitor investments and to remove imprudent ones.

Fiduciaries can be held liable for breach of fiduciary duties under the Employee Retirement Income Security Act (ERISA) and one of the duties of fiduciaries is prudent plan investments.

The takeaway?

The level of scrutiny on the management of Americans’ retirement investments continues to increase. The selection of prudent investment options is just one of many fiduciary duties required under ERISA. It is more important than ever to mitigate your risks and evaluate your plan’s fiduciary process and ensure the performance of your fiduciary duties is well documented.

Read Robert Powell’s comprehensive article for USA Today for more details about the ruling and its implications for your organization.