The default option has to be a money market-type investment
Many Plans specify the Default Option as a Money Market or other incredibly, risk-adverse investment approach.
Would a fiduciary managing a Trustee-directed portfolio invest 100% of the Plan's assets in a money market-type investment? Under very rare circumstances could that approach be considered prudent and diversified investment oversight.
The Default Option is a trustee-directed portfolio in its purest form. The Plan Fiduciary must manage these assets in the same manner in which he would manage all of the Plan assets if participant-direction were not permitted.
Plan Fiduciaries are personally liable for losses that result from violations of fiduciary responsibility.
A loss is not defined as a decline in the value of a participant's account. A loss can be the difference between what the participant earned and what he should have earned. The account still may have earned a positive investment return, but not as much as it could have been had prudent decisions been made!