Questions and Answers with John Burkhardt

Q: Was there a decision earlier this year by the United States Supreme Court that will now make it easier for individual participants in defined contribution plans such as 401(k) to recover for losses to their individual accounts?

A: Yes. That decision was in LaRue v. DeWolff, Broberg & Associates Inc. which resolved a difference of opinions between federal circuit courts about a fundamental issue under the Employee Retirement Income Security Act ("ERISA”).

Q: Could you explain more about this particular case?

A: Sure. This case arose when James LaRue, a participant in DeWolff, Broberg & Associates Employee Savings Plan (a 401(k)), sued the plan and its administrators for breach of fiduciary duties to him because they allegedly failed to implement changes that Mr. LaRue had directed them to make with respect to the investments in his individual plan account.

Relying on an earlier 1985 Supreme Court decision interpreting ERISA, both the district court and the Fourth Circuit Court of Appeals concluded that ERISA did not allow an individual participant, like Mr. LaRue, to sue to recover for fiduciary breaches that impaired the value of plan assets in a participant's individual account. The Supreme Court, however, disagreed.

The Supreme Court distinguished its earlier decision and concluded that ERISA authorizes individual participants in a defined contribution plan, such as a 401(k), to recover money damages for fiduciary breaches that decrease the value of plan assets in his or her individual account.

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