The landmark decision of the Supreme Court in LaRue v. DeWolff, Boberg & Associates, Inc., No. 06-856 February 20, 2008 (“LaRue”) will be referenced in employee benefits law text books for years to come.

James LaRue filed a suit, alleging that by failing to execute his investment direction DeWolff and the Plan breached their fiduciary duties. As a consequence under ERISA section 502(a)(2), he sought to recover the amount he lost due to that failure. As a result of the Court ruling in his favor, any single participant in a defined contribution plan now has a cause of action under ERISA if fiduciary misconduct causes a loss to his or her account. This brings to light the need for greater care to be taken in the manner in which plan assets are invested and administered.

Missing participants present a risk for potential fiduciary liability that was overlooked prior to the ruling. Three important areas have been identified for consideration. First, communication requirements pose a threat because failure to properly communicate required information to missing participants will result in a fiduciary liability if the account balance is adversely affected. Second, valid investment election must always be in effect. The third dictates that plan administrators are obligated to determine the beneficiary of the deceased participant to make a proper distribution of the participants’ account.

For information on how RCP Solutions can help your retirement plan with missing participant issues, contact us at 267-607-4120 or click here.

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