Proxy voting

[Scuba 401]

When employer stock is offered as an investment choice in a 401(k) plan, what is the procedure for voting the proxies. Does the investment manager/fiduciary vote them on behalf of the participants or does he distribute them to the actual participants and let them vote?

[KJohnson]

I know that if you want to be 404© compliant they must be passed to participants. 2550.404c-1(d)(ii)(2)(E)(2)(vii).

Although I haven't done the research it seems that since voting proxies is a fiduciary function, if your trustee is an officer of the corporation there could be 406(B) prohibited transaction problems if he votes the stock in a manner for which he or the corporation would benefit.

[Scuba 401]

We have stock that is an investment election and stock that is employer matching and profit sharing. Do the 404© rules apply to the profit sharing and the match also or just to the deferral money?

[KJohnson]

404© compliance is discretionary and applies to any "portion" of the Plan that has participant direction.

If you have employer stock in the match and the profit sharing portion, you must pass on proxies to be 404© compliant.