U.S. Supreme Court Holds That 401(K) Participants Can Sue Plan Fiduciaries Under ERISA
The United States Supreme Court ruled yesterday that 401(k) plan participants may sue plan fiduciaries under Section 502(a)(2) of the ERISA statutes to recover for breach of fiduciary duty that impairs the value of the 401(k) assets in a participant’s individual account. James LaRue v. DeWolff, Boberg & Associates, Inc., et al., No. 06-856, U.S. Sup.; See December 2007, Page 5. This decision reversed a Fourth Circuit decision and opened the door to many more potential lawsuits of this nature in the future.
The Court stated that the statutory duties imposed on fiduciaries by the ERISA statutes “relate to the proper management, administration, and investment of fund assets,” ensuring that “the benefits authorized by the plan are ultimately paid to participants and beneficiaries.”
Prior to this ruling, the Supreme Court had ruled that ERISA “provides remedies only for entire plans, not for individuals.” Massachusetts Mut. Life Ins. Co. v.Russell (473 U.S. 134 (1985). Yesterday, the Court limited the Russellcase to defined benefit plans, not defined contribution plans that have individual accounts, such as 401(k) accounts. In making this distinction, the Court held that the allocation of a plan’s assets to individual accounts for bookkeeping purposes does not change the fact that all of the assets in a plan remain “plan assets.”
For more information, please feel free to contact any of our ERISA litigation attorneys.