Fiduciary and Compliance Mistakes in 403(b) Plans
Earlier this year, the U.S. Supreme Court heard arguments in the case of Tibble v. Edison International, a lawsuit that centered on an alleged breach of fiduciary duty by a 401(k) plan sponsor. On May 18th, the Supreme Court issued its unanimous opinion on Tibble.
UPDATE: The Supreme Court issued its unanimous opinion in Tibble on Monday, May 18. The Court ruled in favor of the 401(k) participants and held that ERISA’s fiduciary duty requires a continuing duty, “separate and apart from the duty to exercise prudence in selecting investments at the outset,” to monitor plan investments. Significantly, participants will be able to bring a claim of breach of the continuing duty of prudence so long as the alleged breach occurred within six years of the suit. Employers, therefore, must undertake consistent quarterly or annual reviews of investments, and must systematically consider the prudence of each investment at that time. Read the Court’s opinion here.
As plan sponsor, it is part of your fiduciary duty to select the most advantageous broker for your employee benefits. While you are likely familiar with just how involved - and sometimes cumbersome - the process of vetting and selecting a broker can be, the actual appointment of the broker is much simpler. The execution of a broker of record letter is all it takes to establish the relationship between you and the broker, and its simplicity grants you total flexibility, as you can use the letter to select a different broker who will better serve the needs of your plan at any time, for any reason.