401k Retirement Plan Sponsors 

As a sponsor of a 401k plan (or other defined contribution plan), you have important responsibilities. The Employee Retirement Income Security Act of 1974 (ERISA) holds you accountable for the initial selection of investment alternatives made available to plan participants, for monitoring the performance of those investments and — normally — for the allocation of investments to 401k retirement plan participant accounts.

By complying with Section 404c of ERISA, you can transfer investment allocation responsibilities to plan participants to help reduce your fiduciary liability.

To be eligible for the fiduciary relief offered by 404c, 401k retirement plan sponsors may follow guidelines set by the U.S. Department of Labor (DOL). While compliance is voluntary, adhering to the guidelines provides you with a safeguard against liability for investment decisions made by plan participants.

While providing investment “information” under 404c may help reduce fiduciary liability, retirement plan sponsors must not offer investment “advice” which may, in fact, subject them to the fiduciary liability they are trying to avoid. What type of information crosses the line into investment advice? The DOL has promulgated these guidelines on how the information may be conveyed.

Plan information on the benefits of contributions, impact of withdrawals, and other information usually found in a retirement plan ’s Summary Plan Description.

General financial and investment information covering such things as risk and return, investment diversification and historic differences in rates of return.

Asset allocation models, such as hypothetical investment scenarios. Interactive investment education tools that allow participants to estimate future retirement needs.