Plan has no Designated Investment Alternatives, now what?

In the Q&A on the Disclosure rules back in 2012, the DOL said that if a plan had only a brokerage window and no DIAs to avoid the fee disclosure rules, the the trustees may not be living up to their fiduciary responsibilities. (Q 39)

Quote

Nonetheless, in the case of a 401(k) or other individual account plan covered under the regulation, a plan fiduciary's failure to designate investment alternatives, for example, to avoid investment disclosures under the regulation, raises questions under ERISA section 404(a)'s general statutory fiduciary duties of prudence and loyalty.

https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/field-assistance-bulletins/2012-02r

Is there anything else that talks about NOT having any DIAs in the plan and why that's a bad idea?  I seem to remember something like "having too many investments is as bad as having too few" but I cannot locate anything.  Especially about the prudence (or lac thereof) of the former.

16 hours ago, BG5150 said:

I seem to remember something like "having too many investments is as bad as having too few" but I cannot locate anything.

I think that is speculation, perhaps valid, from observers and not from the DOL.  IMO the risks in this area are not from the DOL bringing some kind of enforcement action, but from lawsuits.  And unless the plan has big bucks, that risk is small to nonexistent.  That doesn't at all mean that a sponsor shouldn't care or do their best to follow the rules, but it does mean that when an overzealous consultant or salesperson says "oooh, you can't do XYZ" that they are oversimplifying and perhaps outright lying.

1 hour ago, Bird said:

I think that is speculation, perhaps valid, from observers and not from the DOL.  IMO the risks in this area are not from the DOL bringing some kind of enforcement action, but from lawsuits.  And unless the plan has big bucks, that risk is small to nonexistent.  That doesn't at all mean that a sponsor shouldn't care or do their best to follow the rules, but it does mean that when an overzealous consultant or salesperson says "oooh, you can't do XYZ" that they are oversimplifying and perhaps outright lying.

I don't have time to find a source, but I know the DOL has weighed in on as well.  I don't think it is in the form of actual guidance, but part of the discussions they had when they released guidance on 404a-5 and the changes they made to the brokerage window part.  Even though the participant picks the investment, plan fiduciaries are still supposed to make sure that any investments available are appropriate.  I recall some heated discussions with the DOL and the industry when they said something along the lines of fiduciaries having to monitor ongoing investment elections in brokerage windows because if enough people invest in the same investment at any point in time, it has to be reviewed as a DIA.

2 hours ago, RatherBeGolfing said:

.  I recall some heated discussions with the DOL and the industry when they said something along the lines of fiduciaries having to monitor ongoing investment elections in brokerage windows because if enough people invest in the same investment at any point in time, it has to be reviewed as a DIA.

 

At one point, the DOL said that if 25 people held the same asset in their brokerage accounts, it would be considered a DIA.  However, they backed off that.

17 minutes ago, BG5150 said:

At one point, the DOL said that if 25 people held the same asset in their brokerage accounts, it would be considered a DIA.  However, they backed off that.

Yep, that's the one.  It was quite the outrage until they issued the revised FAB.  

I think FAB 2012-02R, Q39 was the revisioDOL 2012 FAQs for 404a and 408b Updated with Q39.pdfn.