New Supreme Court Ruling on 401k Plans
Retirement Plan Supreme Court Ruling
A recent Supreme Court case received a lot of attention due to the judicial precedent it set in the retirement plan industry. In the case Tibble v. Edison, investors in Edison International’s 401(k) offerings claimed the company violated its fiduciary duties by buying more expensive mutual funds when nearly identical but less expensive products were available. The court ruled that company administrators have an ongoing responsibility to offer and monitor competitive plan investments in order to save their employees more money. Additionally, this could potentially lower their costs.
This ruling puts fiduciaries on notice that they have a continuing duty to monitor plan investments and remove uncompetitive ones. Fiduciaries must not only evaluate investments while selecting them, but continue to regularly monitor these systematically.
If employers don’t abide by the standard set from this ruling, they can expose themselves to potential litigation for offering imprudent investments. This gives employees and retirees more control over their 401K and savings. But, it’s up to the employees to make the best decision for their retirement.
At Assurance, we believe it’s not just about lowest fees and costs; rather, it’s important to evaluate the balance of cost to features and services provided. If you’d like to know the impact this ruling has on the way you offer your benefits to employees, contact an ‘A’ Team member today.
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