Retirement plan fiduciaries must monitor, remove all imprudent investment options

Retirement plan fiduciaries have a duty to monitor investment options continuously and remove all imprudent ones, a unanimous U.S. Supreme Court (SCOTUS) recently ruled in a much-anticipated decision. In the opinion, the Court made it clear the fiduciaries can’t ignore imprudent investment options in 401(k)s or other retirement plans even if other, prudent choices are available.

SCOTUS rejects participant-choice rationale

Northwestern University offers two defined contribution retirement plans for eligible employees. As with many other similar set-ups, the plans’ fiduciaries select the investment options from which participating employees can choose to invest their retirement plan savings. The litigants alleged the fiduciaries breached their duty of prudence under the Employee Retirement Income Security Act of 1974 (ERISA) by: