Supreme Court Says 401(k) Participants Can Sue

The Supreme Court ruled February 20 that a participant in a 401(k) plan can sue to recover losses in his 401(k) account when the plan sponsor or other plan fiduciary mishandles his account.

In LaRue v. De Wolff, Boberg & Associates, Inc., the Supreme Court focused on section 502(a)(2) of ERISA, a provision that allows participants and beneficiaries to sue for "appropriate relief under section 409″ of ERISA, according to The Wagner Law Group in Boston. Section 409, in turn, Wagner explains, provides that any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed on fiduciaries by Title I of ERISA "shall be personally liable to make good to such plan any losses to the plan resulting from each such breach …."

In the LaRue case, the decision on which was written by Justice John Paul Stevens, a plan participant sought to use these provisions to recover a loss of $150,000 suffered when the plan administrator failed to properly implement his instructions as to how his account should be invested. The decision overturned a ruling by the 4th U.S. Circuit Court of Appeals in Richmond.