404(c) compliance

Many plan fiduciaries fail to secure the statutory liability protection of ERISA 404(c) because they, or their advisors, either have a genuine misunderstanding of the requirements of 404(c), or have the inability to distinguish among service providers as to their actual capability to help the plan fulfill critical operational requirements.

Few plan fiduciaries have read ERISA, let alone the Department of Labor's various Regulations, Interpretative Bulletins or Field Assistance Bulletins. This is perfectly understandable given that the study of ERISA should not be their area of expertise or focus. Sadly, this lack of study is also true for many plan consultants. Most consultants have only read commentaries about ERISA rules and regulations. It is all too common to see mistakes in such commentaries. Consequently, many plan fiduciaries and their advisors operate under misconceptions that only result in personal liability to the plan fiduciary.

NWCM implements a process for review and documentation of all decisions made on behalf of the plan. This process is vital to ensuring compliance with ERISA, including compliance with 404(c). NWCM, in consultation with the client, prepares the agenda and materials for the regular trustee meetings that focus on investment-related fiduciary review matters. Our Fiduciary Reports focus on the critical areas of supervision required of trustees regarding the investment alternatives offered to participants and on the investment alternative disclosures required under ERISA 404(c).

The Final Regulations Regarding Participant Directed Individual Account Plans (ERISA Section 404(c) Plans) is an absolute "must read" for a plan fiduciary and its advisors. Many books that publish the code language neglect to include the originally-published Preamble. Plan fiduciaries will achieve a significantly greater understanding of the code for having read the Preamble.

All such Rules and Regulations of all Federal Agencies are disseminated through publication in the Federal Register. The DOL's 404(c) Regulations were published in 1992. Unfortunately, Internet access to the Federal Register includes only issues published in 1994 and after. However, a copy of this Rule can be secured from a Federal Depository Library.

To locate the nearest Federal Depository Library, link to: http://www.gpoaccess.gov/libraries.html

When requesting a copy, request 57 Federal Register, page 46906, published on 10/13/1992.