More Legal Rights for 401(k) Members

Trial attorneys have been suing 401(k) plans in recent years for not giving participants good deals. The Supreme Court handed another defeat to the 401(k) plans, finding that the statute of limitations is renewed each time the plan’s board reviews investment choices. And a plan can be sued for a high-cost or high-risk investment option even if there are better options also available.

In Tibble, the high court reversed a Ninth Circuit Court of Appeals decision that held the statute of limitations within the Employment Retirement Income Security Act began running when trustees selected an investment, not each time the trustees reviewed investment policy.  Plaintiff lawyers sued over mutual funds that were still in the plan even though lower-cost institutional shares of the same funds were available.

In today’s decision, the court said the “breach or violation” triggering the statute of limitations under ERISA can occur whenever a trustee violatess his or her fiduciary duty. That is a “continuing duty,” the court said, “separate and apart from the trustee’s duty to exercise prudence in selecting investments at the outset.”