404(c) Plan

[Guest Sieve]

Based on the assistance required to be given to certain foreign-speaking participants in the SPD regs, do you think there is some comparable obligation with respect to maintaining a 404© plan so that it removes fiduciary responsibility from the plan sponsor, trustee, etc.? In other words, how can a Spanish-only speaker exercise independent control over assets in his/her account without some assistance?

Without such assistance, do you think the plan loses 404© protection as to those foreign speakers?

[Peter Gulia]

While I’m unaware of any court decision on your query under ERISA § 404©, here’s two quick thoughts that might help you prepare to get your lawyer’s advice about whether a participant’s lack of a language ability might unravel an otherwise good ERISA § 404© defense.

The general rule on when a summary must mention foreign-language assistance turns on whether a plan covers a particular number of participants who “are literate only in the same non-English language[.]” Whether information about ERISA § 404© and investment alternatives is included in, or furnished apart from, a summary, what matters is whether the directing person reads a language, not whether he or she speaks the language.

Many people speak, but don’t read, English. If U.S. laws treated as ineffective a written warning or disclosure in English given to a person who doesn’t read any language, what would an employer do to deliver an effective warning or disclosure? Did Congress in 1974 intend that a plan fiduciary should be unable to get relief from a participant’s claim because the participant doesn’t read any language?

Despite those observations, a plan fiduciary might consider carefully what non-English language assistance is prudent and reasonable to provide.

Among other steps, a plan fiduciary might consider a notice and some assistance in the non-English language if the plan administrator knows or has reason to believe that a significant number of participants are literate only or primarily in the same non-English language.