Magazine article HRMagazine

Monitoring 401(k) Plans: Make the Investment

Magazine article HRMagazine

Monitoring 401(k) Plans: Make the Investment

Article excerpt

When it comes to overseeing employees' retirement plans, it's not just about picking good investments-it's also about avoiding bad ones. The U.S. Supreme Court emphasized that point when it recently held that trustees and plan fiduciaries for 401(k) plans have a continuing duty-separate from the duty to exercise prudence in selecting investments-to monitor and remove imprudent ones. The unanimous decision could lead to more litigation in the short run.

High-Priced Mutual Funds

In 2007, several individual beneficiaries of the Edison 401(k) Savings Plan sued the Californiabased public utility Edison International seeking to recover alleged losses suffered by the plan. They claimed Edison violated its fiduciary duty by offering six higher-priced retail-class mutual funds as plan investments when nearly identical lower-priced institutional- class mutual funds were available. The plaintiffs claimed that a large investor with billions of dollars, such as the plan, could obtain identical lower-priced institutional mutual funds that were not available to a retail investor. …

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