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What the Supreme Court’s 401(k) ruling means for your retirement




401K on Chalkboard
401K on Chalkboard
GotCredit.com via Flickr

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The Supreme Court unanimously ruled in a class-action lawsuit against the Rosemead-based Edison International this week to add new protections for investors in 401(k) retirement plans.

Edison, one of several large companies sued over high fees paid on mutual funds held by employees investing in company retirement accounts, contended a six-year statute of limitations had run out for employees to sue. The court disagreed.

The court’s ruling states that plan administrators must continue “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.”

The case was based on 401(k) investors at California energy holding company Edison International who claimed the company violated its trustee duties by buying retail mutual funds when nearly identical products were available through less-expensive institutional-class funds.

While this ruling offers new protections to retirees, how will it be put into practice? What are the implications for employers offering 401(k) plans?

Guest:

Margaret (Peggy) Collins, personal finance and investing reporter at Bloomberg News and Businessweek in New York