On Friday, the U.S. Supreme Court agreed to hear what could be a landmark case involving 401(k) investors. The suit was brought on behalf of employees of Fifth Third Bancorp, a bank-holding company based in Cincinnati. Like a lot of banks, Fifth Third had a terrible time during the recession, when our financial sector almost completely melted down, and its stock at one point lost 74 percent of its value.
The employees charge that they shouldn't have been allowed to continue to fund their 401(k)s with Fifth Third stock. Administrators should have known that it was too risky. The question for the court is whether the employer violated its obligation to run a prudent retirement plan.
The most important lesson here is that a good retirement savings plan should be well-diversified. No matter how much loyalty we feel to our employer, we owe it to ourselves to invest in far more than just our company's stock in saving for retirement. That will remain true no matter how the Supreme Court rules.
No comments:
Post a Comment