Supreme Court Ruling on 401k Lawsuit Raises Questions

Legal and financial experts are still reeling from a 401k Supreme Court ruling last month that determined employers have an ongoing responsibility to reevaluate and monitor the investment options provided to their workers.

Based on what was said and left unsaid by the Supreme Court ruling, it is clear that companies entrusted with the financial assets of employees must make sure that the 401k plans they provide are audited regularly. The Court, however, did not determine the criteria that must be used to achieve this.

The questions on the minds of many in the fiduciary field is how often employers must monitor the 401k plans of their workers? And what are the expected activities of a company that should be used in the monitoring process?

Regardless of the questions raised by the 401k Supreme Court ruling, the bottom line is this: Employers cannot make an initial investment decision for their workers and never look at the plan again. This is a huge win for employees across the U.S. as the favorable outcome will make sure 401k plans provided have lower fees, leaving more funds available at retirement.

401k Excessive Fee Lawsuit Overview

The 401k lawsuit was filed by employees of Edison International, a California utility company. The lawsuit alleged that Edison only offered high-cost shares to their employees when a lower-cost 401k plan should have been an option. Edison employees claimed that they were only able to invest in retail funds that were also made available to the public; they believed to have a legal right to a lower-cost 401k plan.

The Tibble v. Edison International excessive fee lawsuit was initially rejected by 9th Circuit Court of Appeals based on the expiration of the six-year statue of limitations. However, the Supreme Court not only overruled the statute of limitations when it comes to fiduciary duty they also ruled in favor of the employees.

This groundbreaking ruling should allow for other employees to file 401k class action lawsuits against employers to make sure their 401k plans have reasonable fees even beyond the six-year limit. It will also help U.S. workers get more of their actual retirement savings with less of their funds going toward 401k fees.

401k Legal Rights Explained

Under the federal Employee Retirement Income Security Act (ERISA), employers are legally required to act in the best interest of their employee by making sure fees attached to 401k plans are fair. Even a small percentage point change in a 401k plan can make a significant difference so when employers fail to provide plans with lower fees it ultimately affects what a worker receives when they retire. A recent 401k study estimated that a two-earner income family who makes about $150,000 a year will end up paying one-third of their retirement investment in 401k fees.

In addition to making sure employers offer 401k plans that have reasonable fees, ERISA also requires that employers select investments that are prudent and appropriately diversified. ERISA also mandates that companies disclose all plan, fee and investment information to their workers.

Join a Free 401K Class Action Lawsuit Investigation

If you believe you have been overcharged for 401k fees by your employer’s retirement plan, or that the investments were otherwise imprudent, you may be eligible for a FREE class action lawsuit investigation and pursue compensation for these violations.

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