Supreme Court weighs 401(k) case about private funds, underperformance
The Supreme Court is hearing a case regarding Intel's 401(k) plan, which centers on whether employees must provide a 'meaningful benchmark' to prove fiduciary breach in retirement fund underperformance claims. The outcome could significantly impact how employers structure investment menus and their willingness to include alternative assets.
Why it matters
This ruling will set a legal precedent for how retirement plan sponsors are held accountable for investment performance, potentially reshaping the $7 trillion 401(k) market.
The Supreme Court heard a major case this week concerning an Intel retirement plan which could result in a decision that influences employers' appetite for private investments in 401(k)s.
Many plan sponsors are in limbo, awaiting the Supreme Court decision and finalized Labor Department rules covering alternative investments before changing their 401(k) menu, even as the asset management industry is gearing up with new products.
"I think companies want to know what's going to happen with the proposal and what's going to happen with the Supreme Court case before they go rushing in to change their investment strategies," said Elizabeth Hopkins, principal at Hopkins ERISA Law and a former senior trial attorney with the Labor Department, who filed an amicus brief in the Supreme Court case on behalf of former high-ranking DOL officials.
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