Are Plan Participants Given the Right to Make Investment Decisions?
In general, if a participant in an individual account plan is given the opportunity to direct the investment of the assets in his or her account to at least three diverse investment alternatives, the employer (and any other plan fiduciary) will not be liable for any losses caused by the participant’s investment selections, if the employer (or other fiduciary) has satisfied the requirements of Section 404(c) of ERISA. Although Section 404(c) of ERISA can provide protection to employers, employers should not assume that its requirements are easily satisfied. Many of the formalistic requirements are easy to overlook. For example, employees must receive written notice of: (i) the fact that the plan is intended to constitute an ERISA Section 404(c) plan, (ii) the names of the investment managers, (iii) historic information regarding fund performance, and (iv) a description of transaction fees and expenses that are charged against accounts. Upon the request of a participant, detailed disclos
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