U.S. Supreme Court Says  401(k) Plan Participants Can Sue

On February 20, 2008, the U.S. Supreme Court issued its decision in LaRue v. DeWolff, Boberg & Associates, Inc., et al., which clarifies that individual participants in 401(k) and other retirement plans subject to federal pension laws (known as ERISA) can sue plan fiduciaries to recover investment losses from their accounts. The participant in LaRue alleged that the plan fiduciaries failed to follow his investment directions, which resulted in a decrease in his account balance of approximately $150,000. The Court overturned prior case law that had limited individuals from recovering for losses that did not affect the entire plan as a whole.  As a result of this decision, we anticipate a significant increase in lawsuits filed on behalf of participants in 401(k) plans alleging breaches of fiduciary duties and the seeking recovery of investment losses.  The case further emphasizes the need of plan administrators to carefully administer participant investment elections.

Read more about the Court's decision on fiduciary responsiblities.