Employers Must Continually Monitor 401(k) and Other Benefit Plans
It is not just your home and car that need to be continually monitored for defects and needed repairs. A recent U.S. Supreme Court case, Tibble v. Edison International, 135 S.Ct. 1823 (2015), highlights in a unanimous decision that employers who sponsor 401(k) and other employee benefit plans need to continually monitor these plans for compliance with applicable fiduciary standards under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
In light of less than unanimous decisions of the Supreme Court in recent high-profile cases dealing with the Affordable Care Act and the granting of tax subsidies for health insurance purchased on a federal exchange, King v. Burwell, 576 U.S. ______ (2015), and same-sex marriage, Obergefell v. Hodges, 576 U.S. ______ (2015), the Tibble decision certainly leaves no doubt under ERISA’s fiduciary requirements that employee benefit plan fiduciaries must make prudent decisions regarding initial acquisition and also continuing retention of plan investments.
Bottom line, Tibble makes it clear that plan fiduciaries, such as 401(k) trustees and plan investment committees, must continually monitor plan investments for compliance with ERISA’s prudence and diversification requirements.