The Associated Press reports that the Supreme Court ruled Wednesday that individual participants in the most common type of retirement plan can sue under a pension protection law to recover their losses. The unanimous decision has implications for 50 million workers with $2.7 trillion invested in 401(k) retirement plans.
According to the wire service, James LaRue of Southlake, Texas, said the value of his stock market holdings plunged $150,000 when administrators at his retirement plan failed to follow his instructions to switch to safer investments. The issue in the LaRue case was whether the Employee Retirement Income Security Act permits an individual account holder to sue plan administrators for breaching their fiduciary duties. Of particular note in the ruling, however, was the language of the law refers to recovering money for the “plan” rather than for an individual, raising the question of whether a participant can sue solely for himself.
Justice Stevens, in his opinion for the court, said that such lawsuits are allowed, according to the AP. “Fiduciary misconduct need not threaten the solvency of the entire plan to reduce benefits below the amount that participants would otherwise receive,” Stevens said.