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March 11, 2008

Supreme Court: Participant Can Sue for Breach of Fiduciary Duty

Individual account plan officials should take note of a recent Supreme Court opinion.  In the case of LaRuev . DeWolff, Boberg & Assocs., Inc., No. 06-856, 2008 WL 440748 (Feb. 20, 2008), the Supreme Court unanimously granted a plan participant the right to bring an action on his own behalf for the failure of the plan officials to follow his investment instructions.  The important of this Opinion lies in the facts that the participant could bring an action due to the failure, specific to his own account, and not to the plan at large. 

In the facts of the case, the plan participant gave investment instructions to the plan officials; and the investment instructions were not followed.  As a result of failure to follow the participant’s investment instructions, the participant’s account value was depleted. 

All plan officials should take note and make certain to be scrupulous in crossing all T’s and dotting all I’s when it comes to plan administration.

 

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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