Truth 40. Suing plan administrators

It is rare for the justices of the Supreme Court to agree on anything, but in 2008 they unanimously agreed that workers had the right to sue the administrators of their company 401(k) plan for losses in their individual 401(k) accounts due to the negligence of the plan administrators.

Federal law requires the administrators of 401(k) plans to manage the funds as “prudent experts” on behalf of the participants in the plan. What it means to be a prudent expert is constantly open to interpretation, but lawsuits have been filed for a number of reasons, including providing poor investment choices, charging unreasonably high management fees, or in the case of James LaRue, the plaintiff in the Supreme ...

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