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1 1 (January 31, 2022)

handle is hein.crs/govefxw0001 and id is 1 raw text is: Congressional_______ ~ Research Service Supreme Court Rules on Retirement Plan Fiduciary Duty in Hughes v. Northwestern University Updated January 31, 2022 Among Congress's policy priorities is safeguarding retirement income security for working Americans, retirees, and their families. In January 2022, the Supreme Court issued its decision in Hughes v. Northwestern University, a case concerning a plan fiduciary's duty to control retirement plan fees and manage a plan's investment lineup under the Employee Retirement Income Security Act (ERISA), and the circumstances under which participants and others may sue fiduciaries for a breach of these duties. In Hughes, the Court emphasized that as part of these duties, plan fiduciaries must continuously monitor plan investments and remove imprudent investments from the plan, even if the plan offers an extensive range of investments. This Legal Sidebar provides background on ERISA's requirements for retirement plans and plan fiduciaries; discusses the Court's decision in Hughes; and concludes with select considerations for Congress. Background ERISA provides a comprehensive federal scheme for regulating private-sector employee benefit plans. The Act governs roughly 733,000 retirement plans that contain more than $10 trillion in plan assets. ERISA does not require employers to offer retirement benefits, but those that do must comply with the Act's requirements. The Hughes case involved a so-called 403(b) plan, a 401(k)-like defined contribution plan used by certain educational institutions and tax-exempt organizations. As part of this retirement plan type, each participant has an individual account containing an amount based on employer and employee contributions and investment gains or losses to the account, minus fees or other plan expenses. Defined contribution plans do not provide a guaranteed benefit amount, and participants' account balances generally fluctuate over time. Plan fiduciaries typically compile a menu of investment choices, and plan participants select investments from this menu. One of ERISA's central goals is to protect . . . the interests of participants and . .. beneficiaries of employee benefit plans. To this end, ERISA imposes certain obligations on plan fiduciaries-persons who Congressional Research Service https://crsreports.congress.gov LSB10636 CRS Legal Sidebar Prepared for Members and Committees of Congress

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