unrestricted investment options

[Guest jmlumpkin]

has anyone come across any fiduciary issues associated with allowing participants to select their own investments?

particularly, to what extent can the plan sponsor be held liable for losses resulting from participants having access to stocks and bonds outside of a traditional mutual fund investment menu? am i correct in assuming that this sort of arrangement would eliminate 404© protection?

[Erik Read]

Search for comments from Fred Reish on this topic - or visit his site - he's spent a lot of time lately on the topic.

Short answer is that even with perceved 404© protection - you probably don't have it - so your on the hook. If your going to offer the brokerage account option to allow for all sorts of investments, you'll probably need to provide more investment advice than you want to.....

Read Fred's materials, then see what you think.

[Guest jmlumpkin]

thank you e.

[QDROphile]

Not everyone agrees with Mr. Reish on all points, and despite his claims that the DOL agrees with him, that is uncertain.

[mbozek]

EREAD: Do you have any authority for your statement the the plan is "on the hook"? What investment advice are you refering to? See examples under the 404c regs specificaly example 5. Reg 2550. 404c-1(d) states that no other person who is a fiduciary will be liable for any loss to participant's account which results from the exercise of control by a participant over his account. A participant cannot be a fiduciary.