Fall in Love with Section 404(c) All over Again: Mapping Replacement Investments

Some ERISA sections just keep giving. Take Section 404(c). It’s commonly relied on in plans providing for participant-directed investment, like most 401(k) and 403(b) plans. True—following the rules isn’t absolute protection from fiduciary liability, but it provides some protection. Section 404(c)(4) provides a specific safe harbor for “qualified change in investment options” allowing plan administrators to benefit from 404(c) protections where the plan administrator  “maps” participant investment selections in a participant-directed defined contribution plan from an investment option that is going away to another of similar risk/return characteristics—or to a QDIA. This happens where the participant has failed to provide affirmative instruction on how to invest the participant’s account from an investment that is being discontinued.  Blackout notices may be required!

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