hockptuey

I certainly understand that in most areas of the function of a 401(k) plan, sponsors have the potential to create a myriad of issues. I wasn't asking whether it's a good or bad idea—just what rule exists. I appreciate you weighing in. A former colleague said a sponsor couldn't attempt to use a prefunded account to see any gains while another colleague told me the fund used is at the sponsor's discretion and I couldn't find anything about the matter online.

I am specifically and only asking about the plan's investment option that a pre-funded contribution sits in and what rules (if any) apply. Irrespective of a fund experiencing a loss, irrespective of whether the sponsor does or doesn't want to do anything else.

Does a plan sponsor have control over the fund(s) used for balances in their pre-funded account? Or is a pre-funded account required to use some sort of conservative capital-preservation type fund?