Supreme Court Rules On Landmark 401(K) Fee Suit

Posted on February 1st, 2022 at 1:01 PM
Supreme Court Rules On Landmark 401(K) Fee Suit

From the Desk of Jim Eccleston at Eccleston Law: 

The U.S. Supreme Court has reversed an appellate court’s decision involving Northwestern University, which may impact numerous other pending lawsuits that target retirement plans with underperforming investments and excessive fees.

The Supreme Court unanimously decided to vacate an appellate court’s decision, which previously had dismissed a lawsuit filed by university employees contesting the institution’s retirement account fees and investment options. The Supreme Court determined that plan fiduciaries are obligated to conduct their own independent research to decide which investments are most suitable for the plan’s array of options. 

The reversal comes after a 2020 decision by the U.S. Court of Appeals for the Seventh Circuit, which dismissed the suit employees had filed against Northwestern University pursuant to the Employee Retirement Income Security Act (ERISA). The Seventh Circuit determined that a plan fiduciary would not face liability under ERISA for offering unsuitable or expensive funds if the plan additionally offers prudent, inexpensive options. The Supreme Court contended that the appellate court erred in relying on the employees’ autonomy over their investments to forgive poor decision-making by the plan sponsor. The Supreme Court has subsequently remanded the case to the Seventh Circuit for reconsideration of the allegations and whether the university violated its duty as a fiduciary. 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

 

Tags: eccleston, eccleston law, 401k, supreme court

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That is just fantastic! Thank you very much!

Julie N.

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