March 3, 2008 issue

By Linda Stern

Individual workers can sue their bosses for mismanaging their 401(k) plans, the Supreme Court said last week. But that doesn’t mean the millions of employees who are watching their nest eggs shrink this year should race to the courthouse. They are more likely victims of a fickle stock market than financial malfeasance. And, because most workers make their own investment decisions, they can’t blame their companies for those losses.

But employers can misuse 401(k) plans, says Rebecca Davis of the Pension Rights Center (pensionrights.org), a Washington advocacy group. They can stuff a plan with poorly performing company stock, or with mutual funds that charge excessive fees. They can delay making investments or depositing money into the account. When that happens, employees should first take their complaints to their employers and then, if they aren’t satisfied, to the Labor Department (dol.gov/ebsa), which regulates retirement plans. And as for those red-inked statements of 2008, just sit tight, says David Wray of the Profit Sharing 401k Council of America (psca.org). With stock-market prices down, your monthly contributions are simply buying more shares cheaply, and that’s not bad.