On Monday, the Supreme Court ruled on one very important ERISA based lawsuit that has been making its way through the courts over the last several years, Tibble v. Edison. The court spoke loudly when it ruled unanimously in favor of the retirement plan participants who objected that the companies’ investment decisions ate into their retirement savings. The ruling was based on a number of factors, primarily the statute of limitations on plan decisions and the ongoing duty to prudently monitor investment decisions.

The court ruled that the ‘Duty to Monitor’ is, in fact, an ongoing responsibility and statutes of limitations do not apply. As a result, the Supreme Court overturned the lower court decisions reigniting this ongoing lawsuit.

A likely result of this decision, at an industry level, will be to push employers to conduct more frequent reviews of their 401(k) plans, shop around and negotiate for lower rates, and/or replace expensive retail-class funds in their investment line-ups. We, at Unified Trust, believe that the answer can be achieved with prudency and an expert standard of care.

The ‘Prudent Man’ rule suggests that a prudent person should seek out expertise when expertise is otherwise necessary, but absent. A good example is to hire a roofer when there is leak in the ceiling.  In retirement plans, this case illustrates the opposite of prudence. The  committee in this instance was required to be expert in its decision-making, yet they didn’t have the expertise and didn’t seek it out. As a result of this decision we may find that more in-expert plan fiduciaries will be advised to seek out expertise.

At Unified Trust, we believe that the appropriate model for plan management is to have  clients that lack required expertise seek it out and hire it in the form of capable Advisors and in the form of a highly qualified, ERISA expert discretionary fiduciary. In our role as Discretionary Corporate Trustee, we take over the responsibility to prudently select, monitor and replace (if necessary) the investments for the plans we serve in accordance with the plan’s Investment Policy.

About Greg Kasten view all posts

Dr. Gregory W. Kasten serves as Founder and CEO of Unified Trust Company. He has published more than 100 papers on financial planning and investment-related topics in various financial and business journals; written two editions of the book Retirement Success. In 2007-2009, Medical Economics listed Dr. Kasten as one of "The 150 Best Financial Advisers for Doctors" in the country. Dr. Kasten was inducted into the Advisor Hall of Fame by Research Magazine in 2011 and in 2013 was named Retirement Plan Adviser of the Year by Employee Benefit Adviser Magazine. He has more than thirty years of investment experience.