Default Investments

[Gary]

There are several types of investments that satisfy the QDIA requirements.

However, one investment that would not be a QDIA is if a Plan used a money market account as a permanent (more than 120 days) investment.

If we are in agreement with my above comment, then does this mean that using a money market account as a permanent default would not receive liability protection and thus an employee can sue an employer for such a default investment?

Thanks.

[John Feldt ERPA CPC QPA]

I believe so. They would argue that the fiduciary was not prudent in their selection of the investment. I think the difficulty would be to determine the amount that the participant is now able to "recover" if they were to win the suit.