David Wray, President, Profit Sharing/401k Council of America

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the little guy. The Supreme Court recently ruled that participants in 401(k) plans can sue for losses related to their accounts. Lawmakers originally penned the legislation, called ERISA, for traditional pension plans that invest money collectively. So the legal rights regarding individual accounts including some 50 million people with $3 trillion in 401(k)s were a little fuzzy. David Wray, president of a nonprofit association of 401(k) plan sponsors, talked us through the implications of the court's decision.

1. What does the decision mean for 401(k) investors?

It clarifies that individuals have a right to sue over problems with their 401(k) plan. The decision refers to something that affects only you in your plan. For example, you wanted to save 6 percent of your salary, and only 3 percent was saved. Or you find out 18 months after you start working for a company that they even have a 401(k) plan. For the more collective issues, like fees, it was always clear that you could bring an action and get remedies.

2. How does this affect the industry?

It's a reminder that the decision makers in the plan are accountable for making sure that everything is done right. The concern is at the smaller-company level; we don't want small companies to think they shouldn't have a plan because they will get sued.

3. That sounds negative. Isn't this a positive development?

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It's positive. The 401(k) system exists because of credibility. We are asking employees to take the money they earn and put it into this system. It's critical we make it clear that if something goes wrong, they have a place to go for redress. That's the message we want people to understand.

Also See:

• 5 Things You Should Know About Your 401(k)

• The SmartMoney 401(k) Planner

• Got a 401(k) Question?