401k retirement plans avoid employer liability with 404(c)

401(k) retirement plans may use 404(c) to avoid self directed retirement plan employees, at a later date, holding the company or the employer responsible for investment results. To avoid liability, the employer must follow a number of ERISA requirements.

401k plans with 404(c), what is required to avoid employer liability?

1. Full disclosure of all fees and expenses. Insurance and brokerage plans often do not disclose all fees and expenses, sometimes not even to the employer.
2. Employee investment education. If an employer provides advice on investments they may be held liable for the results. The safe approach is to have an investment professional like Kensington Management provide the advice.
3. Other 404(c) "rules" that require investment expertise:
   - The ability to change investments should be commensurate with the risks of the    investments.
   - The investments offered should be a broad mix of options with varying risk/reward   characteristics
   - Disclosure via formal notice, that the Plan is a 404 (c) or "self-directed Plan."
   - Adequate reporting
   - Fiduciary liability insurance
   - Adherence to the "Prudent man rule"

Don't let anyone convince you that fiduciary liability isn't real. Ask your insurance or investment broker if they are a fiduciary with you and if they say yes, get it in writing from their legal department!

A Sucessful 401(k) Retierement Plan
401(k) Retirement Plan Advantages
What Is Required To Avoid Liability
Kensington Makes Compliance Easy