401(k) ERISA Section 404(c) Relief

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Most 401(k) plans permit participants to direct how their accounts under the plan are invested. Many employers take advantage of rules under Section 404(c) of ERISA which relieve them of fiduciary liability in relation to these participant-directed accounts. These types of plans are referred to as “404(c) plans.”

To take advantage of the rules under ERISA Section 404(c), certain information has to be provided to participants which is sufficient to enable the participant to make informed investment decisions. The list of information which must be provided is very lengthy and detailed, and it includes:

  1. an explanation that the plan is intended to be a 404(c) plan;
  2. an explanation that the fiduciaries may be relieved of liability; and
  3. a description of each investment alternative available under the plan.

There is also a list of information which must be provided to the participant on request. Many of the disclosure requirements for relief under Section 404(c) of ERISA are addressed in the disclosure that must be provided under the participant fee disclosure rules which became effective in 2012.