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ARTICLE · 09 MAY 2006

Seventh Circuit Confirms ERISA "Implied Exception" for Participant-Directed Plans

Sutherland Asbill & Brennan LLP
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The nascent body of case law concerning participant-directed plans recently received a contribution from the Seventh Circuit, which affirmed summary judgment for a plan trustee even though the plan did not satisfy the "safe harbor" of ERISA section 404(c). Jenkins v. Yager, __ F.3d ___ (7 Circuit, April 14th, 2006).

United StatesEmployment and HR

Originally published April 20, 2006

The nascent body of case law concerning participant-directed plans recently received a contribution from the Seventh Circuit, which affirmed summary judgment for a plan trustee even though the plan did not satisfy the "safe harbor" of ERISA section 404(c). Jenkins v. Yager, __ F.3d ___ (7 Circuit, April 14th, 2006).

The plan in question was a small plan (approximately 100 participants) that made available four investment options from the American Funds family. The plan trustee selected and monitored the options, making no changes in the funds from 1991 through at least 2002. The trustee also directed the investment of profit-sharing contributions to the plan. The participants directed the investment of their 401(k) accounts; they could change their investments either once a year (1991 to 2002) or every six months (starting in 2002). The plan trustee did not review the individual investment choices made by participants.

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