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Mar 4
ERISA SECTION 404(c)

The following is not mean to be legal advice.

 

 

ERISA Section 404(c) provides relief to ERISA fiduciaries for liability associated with carrying out participant investment instructions, but does not extend to the selection and continued retention of a plan’s investment options.

 

 

ERISA fiduciaries must review investment performance periodically against standard market indicies and the performance of peers.  ERISA fiduciaries must conduct investment fund reviews as often as necessary given market volatility, but good business practice dictates a review at least annually.  Good business practice also dictates a written investment policy statement that guides allocation of fiduciary duties among the named fiduciaries such as the investment committee of a company offering the 401(k) plan and the investment advisor, and providing investment objectives.  The written policy should provide a process for selecting, monitoring, replacing investment fund options. 

 

 

ERISA fiduciaries should hold periodic meetings to discuss the level of participation in the plan, the plan operations, the service provider activity, any government reports such as Form 5500 and Summary Plan Description.  There should be minutes taken for the meetings to demonstrate that the fiduciaries acted prudently by showing the steps taken to reach a decision, including consulting with advisors.

Retirement


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