Comments on: Yes, I Can Sue My 401(k) Administrator

By: Weekend Links - Napa Treat Edition

Weekend Links - Napa Treat Edition — Sun, 24 Feb 2008 21:00:17 +0000

[...] found that it is possibly to sue a 401k administrator. I think it only makes sense if you can prove negligence to perform basic tasks of their job (which [...]

By: Leaving My Job And Pursuing My Dreams Too…This Week! @ The Roundup

Leaving My Job And Pursuing My Dreams Too…This Week! @ The Roundup — Sun, 24 Feb 2008 16:01:49 +0000

[...] Sun’s Financial Diary: Under certain circumstances, it seems that you can now take it out on your 401K administrator if your 401K account goes [...]

By: MossySF

MossySF — Fri, 22 Feb 2008 19:39:32 +0000

I do wonder though about how broad “directed plan” covers. I am the trustee for my company’s 401K plan and we use a vendor that does everything online. If the website didn’t work, am I liable for technology failures by our 401K vendor? Or perhaps the user didn’t make any such election, how would I prove they did not? (Can’t prove a negative as they say…)

I will have to ponder this some more.

By: paratrooperJj

paratrooperJj — Fri, 22 Feb 2008 19:15:07 +0000

He directed his plan to make several changes that they failed to do. They should be liable.

By: Tim

Tim — Fri, 22 Feb 2008 09:00:53 +0000

I agree that everyone shouldn’t be jumping up and down about this ruling. The ruling simply allows a person to sue over fiduciary misconduct as listed in teh ERIS, which essentially means that if i say to execute an order and my fund manager doesn’t do it, then i can sue. it doesn’t mean that if my fund tanks without having provided any further instruction that i can sue.

The ruling also isn’t a decision in favor of LaRue’s actual claim against Dewolff. He’ll still have to sue Dewolff again for the losses and prove that the Dewolff had acted out of misconduct.

i think the ruling is pretty narrow and doesn’t open the flood doors for lawsuits if funds start tanking.

By: MossySF

MossySF — Fri, 22 Feb 2008 04:16:26 +0000

Hard to say what the details of the case are. All the articles are rather generic — only that the employer failed to implement to strategy he had selected. I remember reading an article stating LaRue submitted a fund switch request but didn’t check on whether it the plan administrator actually went through with the request until much later after a major loss was realized. The employer’s position was that was up to employees to confirm transactions and they are not responsible for mistakes they make on behalf of employees — only for outright fraud against the plan.