participant direction of nonvested assets?

[Guest MarshaMay]

Can a participant in a 401(k) plan direct the investment of employer contributions that are subject to a vesting schedule? My employer, the plan sponsor and trustee, says no, but I know people who can do this in their plans. Where does it say this is legal?

[E as in ERISA]

It is only available if the sponsor chooses that option. And there are generally specific rules that the sponsor would then comply with (to provide the employees the information needed in order to make informed decisions about selecting the investments). The sponsor may feel that its selected investment advisor will generally do a better job than the employees in investing the assets that it has contributed for employees retirement.

[Guest MarshaMay]

Thank you, Katherine - how would the sponsor choose that option? my summary plan description says that I "may" be able to direct all or a portion of the assets in my account, but it's not real specific, which is why I raised the issue.

[E as in ERISA]

Many plan documents will include "permissive" language that allows an employer to do something at a later date without having to do another plan amendment. But until the employer decides to effect that provision, it doesn't help you. It sounds like they haven't made it effective yet.