Adding New Funds; Eliminating Others

[Guest Kennedy]

My organization administers approximately 500 401(k) plans with participant directed investments. We are planning to change the investment options on 4-1-2000. New options will be added and some will be eliminated. Can anyone offer suggestions on the timeline for notification and the types of notices that should be provided to our participants?

I know that this must be a fairly common practice, but I have been unable to locate any authoritative written guidance. Any references would be very much appreciated.

[Guest Chuck Miller]

While there aren't any regulations that directly relate to your situation, there are some practical communication considerations to consider:

You will need sufficent time to produce communications on why the changes are being made, what the changes are, and why those funds were chosen. And this can't be all in one brochure. A separate set of communications will be necessary to explain how the a participant can reallowcate their investment election if they want to make changes before new funds go live, and if there is any blackout periods when participants can't go in or out of a fund.

Participants should be given this information is small chunks so they can digest the information. I'd suggest you start the process sooner rather than later, at least 90 days before the new funds go live.

Please contact me directly if I can be of more help: cemlksre@ameritech.net