What is a 404 retirement plan?

What is ERISA §404(c)? As a general rule, retirement plans fiduciaries will be liable for all aspects of selection and monitoring of plan investments. It means they’re on the hook for any participant claims for any losses incurred in the plan. Section 404(c) is an exception to that rule, but it’s a limited exception.

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Accordingly, what does 404 C compliance mean?

ERISA section 404(c) relieves plan sponsors and other fiduciaries from liability for losses resulting. from participants’ direction of their investments. This protection applies only to participant- directed investments, and not to investments required under the plan or directed by the plan. sponsor.

In this regard, what is erisa Section 404 C plan? Section 404(c) is a specific part of this law that permits employees to direct the investment of their own retirement accounts. … The section follows a prudent standard of care requirement and offers “safe harbor” for employers or other plan sponsors who allow their employees to direct the investments of their accounts.

Also, which of the following is an example of a defined benefit plan?

A defined benefit plan promises a specified monthly benefit at retirement. The plan may state this promised benefit as an exact dollar amount, such as $100 per month at retirement. … Examples of defined contribution plans include 401(k) plans, 403(b) plans, employee stock ownership plans, and profit-sharing plans.

What is one key advantage to an employer sponsored retirement plan?

One reason is that pretax contributions to an employer’s plan lower taxable income for the year. This means money is saved in taxes when contributing to the plan–a big advantage if one is in a high tax bracket.

What is a functional fiduciary?

By definition, a functional fiduciary is any person or entity that exercises authority and management of a retirement or benefit plan, or that has a responsibility to administer the plan.

What is a qualified default investment alternative?

A 401(k) QDIA (Qualified Default Investment Alternative) is the investment used when an employee contributes to the plan without having specified how the money should be invested. … The employee can leave the money in the QDIA or transfer it to another plan investment.

What are directed trustee services?

Directed trustee means a Trustee who, with respect to the investment of Plan assets, is subject to the direction of the Administrator, the Employer, a properly appointed Investment Manager, a named Fiduciary, or Plan Participant. … Directed trustee means a trustee that is subject to a trust director’s power of direction.

What is a 408 B 2 fee disclosure?

The 408(b)(2) disclosure regulation requires a covered service provider that reasonably expects to be a fiduciary to an ERISA plan to disclose to the responsible plan fiduciary its status as a fiduciary, along with a description of its services and fees.

What is a 401k fee disclosure?

The Department of Labor issued participant fee disclosure rules for participant-directed plans which first became effective in 2012. These fee disclosures are designed to help participants understand how much they are paying for administration of their 401(k) plan.

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