Adding Managed Accounts to Plan

[khn]

Is adding a Managed Account option to a Plan a fiduciary decision or a settlor function? 
This would be giving participants the option to enroll in a managed account feature for a fee; they would not be autoenrolled.  A company wants to add the option but we think the fidcuiary committee would need to vote on it. Thoughts?

[Alonzo Church]

Generally, a selection of a broad range of investment alternatives is a fiduciary requirement. So evaluating the advisability of adding a managed account would seem to be a fiduciary decision.  I don't know that there is bright line guidance of this and, when faced with that kind of decision, my own instinct is to ask if there is any real harm by having the fiduciary committee weigh in. In terms of liability -- the fiduciaries would be named in any lawsuit involving the managed account.

[MWeddell]

Yes, this is a fiduciary, not a settlor, decision.

[QDROphile]

Please clarify “a selection of a broad range of investment alternatives is a fiduciary requirement.”  Investment of plan assets is a fiduciary responsibility. That means that the fiduciary chooses how plan assets are to be invested. Having a selection of investment alternatives is not a requirement, although it is nearly universal to hide behind ERISA 404(c).

[Alonzo Church]

QDROphile -- I assumed that the plan was making use of the 404(c) exception. Otherwise, all investment decisions are fiduciary and we would not be having this conversation.