Voting Stock In 401(k) Accounts?

[Guest Fourohonekay]

Generally, do participants get to vote the stock in their accounts?

Does it matter whether or not the stock is "employer stock"?

Does it matter whether or not the stock is publicly traded?

Thanks.

[Harwood]

In a Corbel adoption agreement, there is a question: "will voting rights in Employer Stock as Designated Investment Alternatives be passed through to Participants?" [Answer must be yes if the plan wants to comply with ERISA 404©].

[four01kman]

Certainly a fiduciary questions. If employer stock and the employer want to make employees feel as owners, pass through voting generally occurs. Obviously, it is much easier in a public company than a closely held one.

For non-employer stock or mutual funds, the putative owner is the Trust. The Trustees have the obligation to vote. The Trustees can, if allowed by the Trust, pass the voting through to plan participants. My experience is not only are the votes not passed through, in many cases the Trustee does not vote either.

[QDROphile]

The ERISA 404© regulations require disclosure to participants if they do not get to exercise shareholder rights such as voting. The requirement applies to all stock not covered by the special rules applicable to employer securities. Most mutual funds are included under this requirement.

The Department of Labor maintains that it is a breach of fiduciary duty for a fiduciary who has voting power to fail to vote in the best interests of plan participants.