Communicating Changes to Investment Options in a 404c Compliant Plan

[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. We are considering the addition of some publicly traded mutual funds. Can anyone offer some guidance on a timeline for participant notification? Also, if we replace an existing bond fund with a new bond fund, are there special notification and disclosure requirements? We enjoy the protection of Erisa 404c and would not want to do anything to jeopardize this. I'm having trouble finding anything that references communication responsibilities during investment option changesand would love to be pointed towards a reliable source?

Part 2 (Not really related to communication)

Are there certification or licensing requirements for any of our staffwhen we move into publicly traded funds?

[MoJo]

I'm a little concerned that say that you enjoy the protections of 404©.... ERISA section 404© protects on a transactional basis, and isn't design based. For you to believe that what you offer complies would be incorrect. Second, offering of nine funds (even if diverse) may not provide protection - the requirement is that the fund line up provide participants with the ability to create a portfolio with risk/return characteristics within the normal range of risk/return characteristic for participants of that type. i.e. the fund line up must be tailored to the participants.... I'd give lots of notice on any changes....

[Guest Chuck Miller]

I'd notify participants within 30 days after the decision to change funds is made by a plan sponsor. It's an educated guess based upon the disclosure requirement in ERISA 502c1b.

And I do think your representatives will need NASD registration and have to pass Series 6 and 63 NASD exams when you offer publicly traded funds.

Please feel free to contact me at my web address if you'd like to further discuss your communications situation.

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[This message has been edited by Chuck Miller (edited 08-11-1999).]

[Guest Kennedy]

Thanks for your input, MoJo. But to refocus my question, I did not mean to imply that our plans were 404c compliant based only on design. I have reviewed 404c and believe that we are following all guidance. However, since I cold find no guidance in 404c regarding the exercise of fiduciary responsibility involving the periodic review and replacement of available investment options, I was concerned that we might endanger our 404c compliance through oversight of specific notice requirements (timeframe, format, etc.). The message boards are such a tremendous resource for those of us venturing into new areas of benefits administration. I am grateful for your input and that of other communication veterans, as my experience lies in other areas.