The Supreme Court heard arguments in an Employee Retirement Income Security Act case that has massive implications for plan sponsors and service providers. Allegations raised against the fiduciaries to two Intel Corp. retirement plans argued that the plan was loaded with expensive, under-performing investment options and fiduciaries failed their obligation to monitor the investments under ERISA. The plaintiff in the Intel case admitted to visiting the company portal that hosted the retirement plan documents, but testified that he did not think he had actually read the plan documents. The Ninth Circuit conceded that Intel had provided all the information necessary for the plaintiff to make informed investment decisions.
"It’s undisputed that the participant had sufficient information," said Attorney William Delany. "In a lot of ways, ERISA is a disclosure statute. The case boils down to whether having constructive knowledge — access to the plan documents — is enough to satisfy the 3-year statute of limitation."
Mr. Delany also weighs in on what it would mean if the Supreme Court were to side with the Ninth Circuit.
"It would mean that it would not be enough to provide plan documents, but sponsors would have to prove participants read them, and perhaps prove that they also understood them. That’s a much harder burden of proof to establish the 3-year limitation period."
READ: Massive Impact for Sponsors, Providers, if SCOTUS Rules Against Intel in Retirement Plan Case (Subscription required)
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