February 26, 2020
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In Intel Corp. Investment Policy Committee v. Sulyma, the U.S. Supreme Court stated that the three-year statute of limitations for a violation of ERISA, under Section 1104 for breach of fiduciary duty, only applies where an employee had “actual knowledge” of the violation. There, an employee claimed that his retirement plan was not properly invested, resulting in poor performance. Although he received all of the required plan documents and notices from his employer, he testified that did not know the retirement funds were improperly invested, and he did not recall reading the relevant documents provided by his employer.
The Court stated that employees have “actual knowledge” of improper investment of their retirement plan when they read and understand the information provided in the plan documents and related statements. Even though the employer admittedly fulfilled its duty in providing the required documentation, the Court applied the longer six-year statute of limitations permitted under ERISA Section 413 because the employee did not have “actual knowledge” of the alleged violation.
Employers will now more frequently be exposed to the longer statute of limitations period unless they can show that an employee had actual knowledge of an alleged violation. Employers should be working with their plan providers to document receipt and review of plan notices and documents.
- Implement signed acknowledgments of receipt and review of plan documents.
- Coordinate with plan providers to track actual review of plan documents.
- Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.
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