What Does 404(c) Compliance Look Like and Why is it Important for Your Employee Retirement Plan?
As a fiduciary for your company’s employee retirement plan, you are subject to a great deal of liability on behalf of the retirement plan. There are strict ERISA guidelines in place that you must comply with to fulfill your legal obligation as a plan fiduciary and ensure the investment of your plan participants is protected.
However, there are instances in which you are not held liable for underperforming funds or losses in your employee retirement plan. One of these instances is when losses are due to participant-directed investments independent of any investments required under the plan or directed by the retirement plan sponsor.
ERISA section 404(c) relieves plan sponsors and other fiduciaries from liability for these losses resulting from participants’ direction of their investments. This protection applies only to investments directed by the participant, not investments required under the plan or required by the plan sponsor.
Sometimes, it’s best for your plan to allow participants autonomy in case they want to allocate their investments to different funds from those required by the retirement plan. While this is great for participants who seek to select allocations that are best for them, you want to ensure that you are protected from liability as a plan fiduciary if the funds they choose are risky or underperforming.
If you are a fiduciary for an employee retirement plan and are concerned about plan performance or protecting yourself from personal liability, I can help. I specialize in evaluating retirement plans, adding 99% value, and protecting fiduciaries from legal repercussions due to noncompliance with ERISA guidelines. Contact me today if you’re ready to get the most value from your company’s retirement plan and protect yourself from ERISA violations as a fiduciary.
If you are a fiduciary for your company’s employee retirement plan and are concerned about your current investment options, I can help. My specialty is reviewing and adding 99% value to employee retirement plans. Contact me today if you’re ready to get the most value from your company’s retirement plan and protect yourself from personal liability as a fiduciary.