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New Regulations Provide Safe Harbor for Default Investment Options
10/29/2007

Plan Sponsors Should Issue Notices before November 24, 2007 for Maximum Fiduciary Protection Under Final Qualified Default Investment Alternatives Regulations

The Department of Labor has issued final regulations providing fiduciary relief for plan fiduciaries who have selected default investment options for their 401(k) plans (or other plans in which participants have the opportunity to direct investments). These final regulations implement a safe harbor for default investment elections enacted as part of the Pension Protection Act of 2006, which applies for plan years after 2006.

We strongly recommend that all plans that include a default investment fund be revised to comply with the new safe harbor, in order to protect plan fiduciaries from potential personal liability. In addition, a plan that already uses a qualified default investment fund, or can switch to one by year end, can maximize the protection of its fiduciaries by issuing a notice to participants by November 24, 2007.

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