Individual participants in 401(k) retirement plans can sue to recover their losses, the Supreme Court ruled today in a case that created concern within the insurance industry.
The court ruled unanimously in LaRue v. DeWolf, 06-856, that the Employee Retirement Income Security Act does not prevent an individual account holder to sue plan administrators for breaching their fiduciary duties.
The case revolved around language in ERISA referring to recovering money for the retirement plan, rather than to an individual participant in the plan suing solely on his own behalf.
In his lead opinion for the court, Justice John Paul Stevens said that such lawsuits are permissible.
“Fiduciary misconduct need not threaten the solvency of the entire plan to reduce benefits below the amount that participants would otherwise receive,” Stevens said.