Employers act as trustees for their employees' 401k plans offered to them through their employment. Does this include a duty for the employers to monitor the funds and act reasonably to assure that the employees' 401k accounts are invested in the funds with the lowest fees? If an employee can get the same return in a fun that charges him or her a lower fee, does the employer have a duty to switch the employee's 401k account to the lower-cost fund?
These issues were all before the Supreme Court last week in Tibble v Edison International, and it appears that the Court will rule quickly that employers, as trustees of their employees' 401k accounts, have a duty to continually monitor the fees charged by the funds in which the accounts are invested to assure that the employees are getting the best deal possible. The Los Angeles Times, Supreme Court Poised to Protect Employees' from High Fees in 401k Plans, and at SCOTUSblog, Employer All But Concedes In Dispute About ERISA Monitoring.
This case is really pretty straight-forward -- trustees have a continuing duty to look out for those under their trust -- and it is a little puzzling why and how the case got to the Supreme Court. The real test and question will be what can the employees' do if the employer fails to properly monitor the funds? How far back will they will be able to reach?
Lexington, Kentucky employment lawyer Robert Abell represents individuals and employees with regard to employee and retirement benefit cases; contact him at 859-254-7076.