Removal of One Fund/Xfer Balance to Another Fund

[Bruddah Kimo]

I have a 401k plan that is removing a poorly performing fund from their investment line-up. They wish to transfer all existing balances in this fund and move the investment directions to a fund which currently exists in the plan's investment line-up.

1) Other than fiduciary responsibilty, is there a required notification to be made and if so, what is the timing for the notice prior to the fund change?

Thank you!

[Lou S.]

Unless it is going to create a balckout period of more than 3 days, I'm not aware of any legaly required notices.

That said, it is probably best practices to notify particpiants before the change and give them "adaquate" time to move their funds to a different investment than the one the trustee has chosen if they are not happy with the new investment. What represents "adaquate time" would probably vary with the size of plan and sophistication of the participants but I'd think 30 days would be a good guideline though if the trustee thinks the fund is really bad they might want to do it quicker to avoid large losses. Something like a suspected "Madoff type fund".

[Bruddah Kimo]

Thanks Lou! Just wanted to be sure