Plain-English summary
Court clarifies when retirement savers can sue plan managers for failing to remove bad investments
The Court unanimously vacated and remanded a Seventh Circuit decision, holding that ERISA’s duty of prudence requires a context-specific inquiry into a plan fiduciary’s ongoing duty to monitor and remove imprudent investments in defined-contribution retirement plans. Whether a complaint adequately pleads such a claim depends on facts about the fiduciaries’ monitoring process.
Why this matters
The decision clarifies how courts should evaluate lawsuits by 401(k) participants who claim plan managers kept bad investments in the menu. It affects when retirees and employees may pursue claims seeking damages for alleged mismanagement of defined-contribution plan lineups and how fiduciaries must document and carry out their monitoring processes.
Who may feel it
- Participants in employer-sponsored defined-contribution plans (e.g., 401(k) and 403(b))
- Plan fiduciaries and administrators (employers, plan committees, investment advisers)
- Retirement-plan service providers and recordkeepers
- ERISA litigators and HR teams managing retirement plans
Key questions
- What facts does a plaintiff need to plausibly plead to show a fiduciary breached ERISA’s duty of prudence by failing to monitor and remove imprudent investment options?