A ruling by the Supreme Court in the case Tibble vs. Edison International last month makes it clear that plan sponsors have an ongoing fiduciary duty to monitor the investments in 401(k) plans. Although the Supreme Court decision was narrowly focused on the statute of limitations issue, there are broader implications that plan sponsors will need to consider. One of the important implications concerns how investment options are selected and monitored. For example, the plaintiffs in the Tibble case claimed that certain of the investment options in the plan were higher cost retail-class shares of mutual funds rather than identical, lower-cost institutional shares.
In light of this ruling, plan sponsors should evaluate their investment selection and monitoring processes and how these are documented. A review and update of the plan’s Investment Policy Statement should also be considered.
Richard Baker is available to you to discuss any matters of concern or questions that you might have regarding your employee benefit plan.