BlogsHow Tibble vs. Edison Impacts Your Business
July 13, 2015, by Matt Hanson
How Tibble vs. Edison Impacts Your Business
Retirement: It’s something we work for our entire lives—literally. At some point we hope to stop working, but to make that a reality, it requires financial planning now. Offering 401(k) options is a great benefit employers provide to help employees save today so they can enjoy their retirement years stress free. But some changes have recently come to light regarding the management of 401(k) plans.
What is Tibble vs. Edison?
Tibble v. Edison is the recent decision made by the U.S. Supreme Court that all employers need to monitor the 401(k) plans of their employees and make sure no high management fees are implemented.
Employees of the Edison energy company sued their employer, saying they were violating their fiduciary duty by increasing the investment funds and charging more than they needed to.
The court voted unanimously that employees have the ability to now sue employers if they do not monitor their 401(k) accounts and, as a result, lose a significant amount of money. For example, a seemingly simple 1% fee on an account worth $100,000 would take over $30,000 more from the employee than an account with only a .25% fee. This means $30,000 less after retirement, which could be almost an entire year.
What does this mean?
For employers, this means keeping a much closer eye on the 401(k) plans. Gone are the days of letting plans sit on autopilot while employees wait for retirement; employers now must actively manage these accounts to watch for increasing fees.
It can be seen as a way to select the best investments for their employees. Make sure all fees are reasonable and not too high. Even once they are implemented, there needs to be someone overseeing all plans to keep new, high fees from being added.
At Centennial, we offer a wide array of 401(k) plans. Give us a call today to learn more about how the Tibble v. Edison verdict will affect you and your business.