Considering changes in the investment options of our 404(c) compliant

[Guest Kennedy]

My firm handles marketing and administration of 401(k) plans, currently offering a selection of nine funds to our participants. The funds are not publicly traded (I believe the term is "Class C.") We are considering the addition of some publicly traded mutual funds. Can anyone offer some guidance on the different areas we should concern ourselves with during the planning phase? Of course, I understand that we will now have to comply with requirements regarding prospectus availability, but what about required certifications for any of our staff? Also, if we replace an existing bond fund with a new bond fund, what kind of notification and disclosure requirements are we looking at? Are there compliance issues that I should consider when eliminating a fund option and moving all assets from the eliminated fund into a newly selected, similiar, but not identical, fund. Any references suggested would be extremely appreciated.

[Jon Chambers]

You have asked a question with an enormous number of issues. Rather than attempt to address all the issues (which would take way too much time), I suggest you review the Department of Labor's "Frost" Advisory Opinion 97-15A and "Aetna" Advisory Opinion 97-16A. If you are affiliated with the funds that you offer, and aren't familiar with the PTCE, you should also review PTCE (Prohibited Transaction Class Exemption) 84-24.

Hope this helps.

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