Fiduciary indemnification

[Guest jim williams]

Is a 401k plan sponsor in compliance with Sec. 404© if they allow participants to choose self-directed brokerage accounts outside of the investments being offered by the plan? Is an indemnification clause valid if added to a participant enrollment form if a participant so elects to invest outside of the investments choosen by the Trustees?

[Jon Chambers]

Is a 401k plan sponsor in compliance with Sec. 404© if they allow participants to choose self-directed brokerage accounts outside of the investments being offered by the plan? Is an indemnification clause valid if added to a participant enrollment form if a participant so elects to invest outside of the investments choosen by the Trustees?

It's possible to get 404© protection when an SDBA is one of the plan's options. Of course, there are still many requirements that must be met before 404© protection is available. I've seen the indemnification clauses on numerous election forms, don't believe they are valid or enforceable, and have spoken with numerous attorneys that share this opinion.

Best regards,

Jon

[QDROphile]

For a brokerage account, how do you comply with section 2550.404c-1(b)(2)(i)(B)(1)(v)?