There have been several recent legal developments which plan sponsors should be aware.
Putnam investments has asked the Supreme Court to weigh in on who is responsible for bearing the burden of proof whether investment losses resulted in losses to 401(k) plan participants. Certain circuit courts have ruled that it is the legal responsibility of the plaintiffs (participants) to prove the fiduciaries of the Plan did not take proper action, establishing a higher hurdle for a case to proceed. However, other circuit courts have ruled it is the responsibility of the defendants (plan sponsors) to prove they did prudently fulfill their fiduciary responsibilities, making it easier for plaintiff’s cases to proceed. With the circuits divided, it looks like the Supreme Court may take up the case. Please see the article from Benefits Pro, “Still waiting word on Putnam’s request for review in 401(k) case. “
The Supreme Court recently refused to take up a ruling against USC which was seeking to force arbitration of those individuals claiming that its 403(b) plan has excessive fees and avoid class-action exposure. Please see the article from Benefits Pro, “SCOTUS will not review USC 403(b) Case.”
