Individuals in 401(k) plans can now sue plan administrators for failing to follow an individual’s investment instructions, according to the latest ruling from the U.S. Supreme Court.In Justice John Paul Stevens’ written decision, the Employee Retirement Income Security Act (ERISA) “does authorize recovery for fiduciary breaches that impair the value of plan assets in a participant’s individual account.”This was not always the case. In LaRue v. DeWolff, for example, a former DeWolff employee sued the company and its 401(k) plan in 2004, alleging that DeWolff did not make the investment changes that were requested—resulting in a $150,000 loss in the employee’s account. In 2006, the U.S. Court of Appeals in Richmond, Va., rejected the suit.But with the new ERISA ruling, could more 401(k) suits follow? It’s possible. But Lynn Dudley, senior vice-president, policy, American Benefits Council, Washington, said that although they do want to correct accounts, they don’t want the lawsuit door so wide open that companies are afraid to maintain these plans out of fear of liability.

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