|
|
|
| Issue: |
Your company would like to provide investment education to employees who participate in your 401(k) plan. In doing so, your company wants to avoid becoming subject to the fiduciary duties that arise from providing investment advice. What types of investment information may your company provide without incurring such fiduciary liability?
|
 |
|
|
Answer: |
There are several types of information and materials that can be provided to participants without giving investment advice under ERISA. These include:
- Plan information—information about plan participation, the benefits of increasing plan contributions, the impact of pre-retirement withdrawals on retirement income, the terms and operation of the plan, investment alternatives, such as a description of investment objectives and philosophies, risk and return characteristics, historical return information, and investment prospectuses.
- General financial and investment information—information about general financial and investment concepts, historic differences in rates of return between different asset classes, effects of inflation, estimating future retirement income needs, determining investment time horizons, and assessing risk tolerance.
- Asset allocation models—information and materials, such as pie charts, graphs, or case studies that provide models of asset allocation portfolios for hypothetical individuals with different time horizons and risk profiles.
- Interactive investment materials—questionnaires, worksheets, software, and similar materials that provide a participant or beneficiary with the means to estimate future retirement income needs and assess the impact of different asset allocations on retirement income.
Tax-free retirement planning services. Employers sponsoring qualified plans also may provide qualified retirement planning services to employees and their spouses as a tax-free fringe benefit. Qualified retirement planning services include advice and information regarding retirement income planning, but do not encompass tax preparation, accounting, legal, or brokerage services.
Source: CCH U.S. Master Pension Guide
|
|
|
