All eyes in the retirement plan industry are focused on the U.S. Supreme Court, awaiting a decision that might have wide ramifications for companies that offer their own stock as an investment choice in 401(k) accounts. Arguments will begin in March.
At issue in Fifth Third Bancorp v. Dudenhoeffer is whether the presumption that employers act prudently when offering their own stock will remain a guiding principle. The 6th Circuit Court of Appeals ruled, contrary to other courts, that there is no such presumption.
"The presumption lifts the burden of proof," said Nancy G. Ross, a partner with the Chicago law firm McDermott Will & Emery. "The participant has to prove [an employer's action] wasn't prudent."
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