Fund Mapping

[Nassau]

My client would like to close the US Growth Fund and and map assets and allocations to the LifeStrategy Moderate Growth Fund. The client does not have a QDIA

Questions:

Can someone tell me what information I should be providing the client with such as: requirements with respect to communications, etc.

Can you provide me with the Code or Regulations regarding fund mapping?

[Guest jims]

Remember fund "mapping" is just a generic term the industry uses as you'll never find that word in regulations. You'll want to concentrate on blackout rules and rules regarding participants' rights to direct their investments. Are you a 404© plan? That may be your starting point.

[Peter Gulia]

ERISA 404© relieves a fiduciary from a loss that resulted because a participant exercised control in directing investment of his or her plan account.

ERISA 404©(4) provides that a "qualified change in investment options" does not cause a participant not to have exercised control.

ERISA 404©(4)©(i) states what information must be in the written notice that is one of the conditions for a "qualified change in investment options".

Before getting into the content and timing requirements for the written-notice condition, the plan fiduciary will want its lawyer's advice about how likely it is that a court would agree with the fiduciary's finding that the replacement fund is "reasonably similar" to the replaced fund.

As with any kind of ERISA 404© relief, ERISA 404©(4) does not relieve a responsibility for anything other than the "qualified change in investment options".

A fiduciary will want its lawyer's advice about whether the plan and its administration meet the conditions for ERISA 404© generally and ERISA 404©(4) particularly.

[K2retire]

ERISA 404© relieves a fiduciary from a loss that resulted because a participant exercised control in directing investment of his or her plan account.

ERISA 404©(4) provides that a "qualified change in investment options" does not cause a participant not to have exercised control.

ERISA 404©(4)©(i) states what information must be in the written notice that is one of the conditions for a "qualified change in investment options".

Before getting into the content and timing requirements for the written-notice condition, the plan fiduciary will want its lawyer's advice about how likely it is that a court would agree with the fiduciary's finding that the replacement fund is "reasonably similar" to the replaced fund.

As with any kind of ERISA 404© relief, ERISA 404©(4) does not relieve a responsibility for anything other than the "qualified change in investment options".

A fiduciary will want its lawyer's advice about whether the plan and its administration meet the conditions for ERISA 404© generally and ERISA 404©(4) particularly.

In a perfect world that would be true. Where I work, the fiduciary usually wants its financial adviser and/or TPA to tell them what to do so that they don't have to develop a relationship with an ERISA attorney. After all "that's what we pay you for".

[Peter Gulia]

With 27 years' experience (including coaching nonlawyer financial-services people about how they meet the customer expectations K2retire describes), it's no surprise to me that many plan fiduciaries get almost all of their advice from nonlawyers. And I don't seek to change that.

But because this bulletin board is public, I try to avoid stating a conclusion (even about a hypothetical set of facts). I don't want a reader to be able to allege (at least not credibly) that he or she relied on what I wrote in a public place. While I might choose to help practitioners toward the answers, I don't want the risk of burning time and money to get rid of a lawsuit.

[K2retire]

With 27 years' experience (including coaching nonlawyer financial-services people about how they meet the customer expectations K2retire describes), it's no surprise to me that many plan fiduciaries get almost all of their advice from nonlawyers. And I don't seek to change that.

But because this bulletin board is public, I try to avoid stating a conclusion (even about a hypothetical set of facts). I don't want a reader to be able to allege (at least not credibly) that he or she relied on what I wrote in a public place. While I might choose to help practitioners toward the answers, I don't want the risk of burning time and money to get rid of a lawsuit.

And I did not mean to suggest that you should do otherwise or that I disagree with what you said!