Money Matters: Court Sides with 401(K) Participants

Summary

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FOR years, the courts have disagreed on whether individuals whose 401(k) accounts lose money due to administrative or other misdeeds can sue to recover their losses. Citing a 1985 Supreme Court decision, courts have often thrown out individual claims on the ground that ERISA, the federal statute governing private retirement plans, only allowed the recovery of money damages for actions affecting the plan as a whole.

Last week, the U.S. Supreme Court took a major step toward resolving that long-standing dispute by ruling that a participant has the right to pursue an individual claim. That participant had claimed the plan administrator's failure to implement his investment instructions had reduced his 401(k) account by $150,000.

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Money Matters: Court Sides with 401(K) Participants

Noting the dramatic growth of 401(k) and other defined contribution plans since its earlier decision, when traditional pension pla...

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