Investors Win in Supreme Court 401(k) Decision

[Sherman A1]

http://blog.aarp.org/2015/05/22/investors-win-in-supreme-court-401k-decision/?sf38331640=1

The U.S. Supreme Court this week sent a strong message to employers offering 401(k)s: You can’t just pick investments for the plan and then forget about them.

This unanimous decision is expected to provide greater protection for 401(k) participants who increasingly rely on these plans to fund their retirement. And it may also trigger more lawsuits by workers unhappy with their investment options and the fees charged, legal experts say.

“Participants over the long term should benefit from all of this,” says Rick Meigs, president of 401khelpcenter.com. “It will drive plan sponsors or brokers to try to deliver funds that they can legally defend” for being in the plans.

The case, Tibble v. Edison, was originally filed in 2007. Employees of Edison International, a California-based utility, claimed that the company failed in its fiduciary duty to workers when selecting six mutual funds in the 401(k) plan. Funds can have a variety of share classes with different fees. The workers argued Edison breached its duty by choosing more expensive retail-class mutual funds when nearly identical and cheaper institutional-class funds were available.

[mahatmakanejeeves]

1. Thanks. I was just about to start a thread on this.

What the Supreme Court 401(k) ruling means for you

By Dean Starkman
@deanstarkman

May 19, 2015, 8:23 AM

The U.S. Supreme Court broadened protections of workers' retirements with an important decision that increased the responsibilities of the overseers of corporate 401(k)s, particularly regarding fees charged by mutual fund companies. The court opened the door for employees to sue plan administrators who place retirement funds in high-fee products when cheaper alternatives are readily available.

The decision in Tibble vs. Edison International comes on the heels of a proposal by the Labor Department that would require investment advisors to put clients' interests first across a broad swath of retirement-related transactions, particularly those involving individual retirement accounts, which differ from 401(k)s in that the personal accounts don't involve employers. IRAs and 401(k)s together make up about half of the nation's retirement assets.

What did the Supreme Court say in its decision?

In a unanimous ruling, the court said company administrators have a “continuing duty” to monitor investment decisions and improve “imprudent” ones, even long after the initial investments have been made.

What does the Supreme Court ruling mean to my 401k?

The decision, which specifically dealt with high-fee mutual funds, expands the responsibility of plan administrators to offer competitively priced mutual funds and other financial products to their workers, potentially lowering their costs and increasing the performance of retirement portfolios.

[Sherman A1]

3. No reason not to cross post it

in other forums.

[mahatmakanejeeves]

5. No need. You got it right the first time.

The Economy Forum is the place for this to be.

I've got a thread about DOL's proposed rule regarding financial advisors, but I couldn't find it earlier this morning. I'll try again.

Three minutes later: I found it:

Obama backs new rules for retirement advice

[elleng]

2. Very good news,

and what we should have expected all along, imo.

[Sherman A1]

4. Precisely

I completely agree.....