Best Shot at Satisfying 404(c)?

[Guest bobolink]

I am aware of the generally inconsistent treatment of fiduciary protection via 404© compliance, but I was wondering if there is any consensus as to how to draft so as to have the best shot at compliance. I have always been rather detailed in the investment direction section of the plan, even describing the then fund offerings. Lately I have been reviewing plans that are so skimpy they basically just state the intention to comply with 404©.

What's your experience?

[jpod]

I believe the better practice is that neither the plan document nor the trust agreement (if there is a separate trust agreement) should take a position on the intention vis a vis 404c compliance. The disclosures pertinent to 404c should be made via a separate doc or set of docs.

[K2retire]

Interesting. The Corbel prototype makes that selection part of the adoption agreement.

[Guest Sieve]

The devil's in the details. Corbel's AA only indicates the intent of the Plan to meet ERISA 404©, but whether or not there is 404© compliance will come down to administrative operation. I don't think the statement in the document or SPD is of much consequence, except to cause employees to think that they are ultimately responsible for their investments--which, of course, may not be the case--and therefore they ought to be very careful and subsequently diligent when making investment decisions

My experience is that very few, if any, of the plans that say they are 404© compliant actually are.

[J Simmons]

I am aware of the generally inconsistent treatment of fiduciary protection via 404© compliance, but I was wondering if there is any consensus as to how to draft so as to have the best shot at compliance. I have always been rather detailed in the investment direction section of the plan, even describing the then fund offerings. Lately I have been reviewing plans that are so skimpy they basically just state the intention to comply with 404©.

What's your experience?

Given that when the question would ever be litigated the operational facts will then have occurred, I would prefer to defend a document (in light of whatever operational facts may or may not be) that is vague (merely states the intent is 404c compliance) than a document that detailed out how that compliance was intended. If the operational facts are at odds with a detailed 404c document, that could give the court an extra reason to find that the plan fiduciaries are not entitled to 404c relief. And there's also the problem that a discrepancy between operational facts and a detailed document could lead to an ERISA violation by the fiduciaries failing to operate the plan as written.