Posted on May 28, 2015 by Beth Krasnow

Supreme Court’s Ruling in Tibble v. Edison: Huge Victory for 401(K) Plan Participants

Beth Dworken Krasnow

On May 18, the United States Supreme Court issued its decision in Tibble v. Edison International, ruling that Plan Sponsors have a continuing duty to review investments in Retirement Plans and to decide whether or not to keep or sell them. This decision overruled the lower courts that barred the claim under the statute of limitations.

In its decision, the Supreme Court found that Plan Trustees “have a continuing duty to monitor trust investments and remove imprudent ones. This continuing duty exists separate and apart from the trustee’s duty to exercise prudence in selecting investments at the outset.”

Since Plan Participants aren’t able to select the funds within their Plan offering, they rely on Plan Trustees, and other Plan Fiduciaries, to offer the best available funds at the best available pricing.  For most Americans this is the largest segment of their retirement savings and they look to Plan Fiduciaries to get it right. Continue reading “The Ruling in Tibble v. Edison: Huge Victory for Participants” »

John Manganaro

Feb 20, 2015 — A $62 million settlement between Lockheed Martin and participants in its 401(k) plan brings to rest a nearly decade-old complaint arguing Lockheed failed to adequately negotiate for lower plan fees. —

The settlement also includes a range of non-monetary relief provisions to ensure compliance with the settlement and enhance the 401(k) plan for the benefit of Lockheed Martin employees and retirees. It must be approved by the U.S. District Court for the Southern District of Illinois before taking effect.

Industry practitioners have long followed the case, referred to as Abbott v. Lockheed, due to the large size of the plaintiff class (more than 100,000 participants) and the substantial monetary damages sought by plaintiffs’ attorney, Jerry Schlichter, of Schlichter Bogard and Denton.

In a statement announcing the pending settlement agreement, Schlichter says Lockheed employees and retirees will “benefit significantly from the use of competitive bids for services to their plan, reporting to the court, assuring compliance, a greater degree of transparency, and lower overall costs.” Schlichter also claims the settlement is the largest result for a 401(k) excessive fee claim ever levied against a single employer in the United States.

Continue reading “Long-Running Lockheed Martin Fee Case Settled” »

December 19, 2014

With invigorated provider interest and new guidance from key regulators, 2014 turned out to be an important year for annuities in employer-sponsored retirement plans.

Final rules from the Treasury Department on longevity annuities—aimed at bringing more flexibility to retirement savers using the fixed-income vehicles as a longevity hedge—and additional guidance from the Treasury and the Internal Revenue Service—addressing the use of annuities in target-date funds—both speak to the use of annuities, and the question of income in retirement.

“The decision should definitely help plan sponsors, because obviously one of the primary responsibilities is helping participants to meet retirement readiness,” says Phillip Troyer, an attorney and vice president of compliance at Bukaty Companies Financial Services.

“The DOL’s recognition that annuities can play a role is helpful, because it does then provide a meaningful option for participants who don’t want to take a lot of market risk. They can plan around the money they have set aside. ‘If I buy an annuity, I’m going to have X dollars a month coming in, and I can budget around that,’” he explains.

One gain would be greater protection for plan participants in the event of another financial crisis, Troyer says. “They retire, and lose 40% of the money they set aside.”

Regulators adopted the annuity regulations fairly quickly quickly, observes Joe Connell, director of retirement plan services at Sikich Financial (formerly Retirement Plan Partners).

Continue reading “Regulators Got Real About In-Plan Annuities in 2014” »

The 3rd U.S. Circuit Court of Appeals has upheld a district court ruling dismissing charges that Unisys Corporation and Fidelity Management Trust Company caused participants in Unisys’ retirement savings plan to pay excessive fees.

The appellate court noted the trust agreement between Unisys and Fidelity allows for amendment of the investment options included in the trust agreement by mutual agreement of the parties. Fidelity entities were required to give their consent in order for funds to be added to the group of plan investments it administers. This provision extends Fidelity’s control only over which investments were to be administered by Fidelity and not over which investments were selected for inclusion in the plan as a whole.
Continue reading “Court Upholds Decision in Excessive Fee Case” »