A unanimous Supreme Court has ruled that employers can be sued by employees if the 401(k) company retirement plans they sponsor are shown to have charged excessive fees.
The ruling affirms that employers have a “continuing duty to monitor” 401(k) accounts for fees and other possible financial overages.
The ruling stems from a 2007 employee lawsuit against Edison International, the energy giant in California, alleging that the company’s 401(k) plan offered only six higher-priced retail class mutual funds when the same funds were available at lower cost as institutional shares. The lawsuit was brought under the Employee Retirement Income Security Act (ERISA).
The ruling represents a double whammy for financial planners and others dealing in retirement products. Earlier this spring, the Department of Labor (DOL) proposed a robust new fiduciary rule that would require more openness when offering investment products to clients.
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