ERISA Compliance

As a retirement plan sponsor, you are making the commitment to protect your most important resource: your employees. Now it is time to protect yourself. By complying with new 404(c) regulations under the Employees Retirement Income Security Act (ERISA), you can limit your fiduciary liability when you pass investment-selection control to your employees. The key to 404(c) is informing your employees that they have control over their investments and providing them with the following:

CHOICE -- A Broad Range of Investment Alternatives
A plan must offer participants the opportunity to exercise control over investments that materially affect the potential return on assets. It must allow participants to choose from at least three investment alternatives, each of which is diversified and has materially different risk and return characteristics.

CHANGE -- Ability to Modify Investment Direction
Regulations allow reasonable restrictions on the frequency with which participants may give investment instructions to the plan administrator. To be considered reasonable, the restrictions must offer participants the right to give investment instructions with appropriate frequency considering the market volatility of the investment. For the three core investments, which are intended to constitute a broad range of investment alternatives, participants must be allowed to give investment instructions at least quarterly.

COMMUNICATION -- Sufficient Education and Information So Participants Can Make Informed Investment Decisions
Participants are considered to be exercising control only if they are provided with enough information about the plan and available investment alternatives to be able to make informed investment decisions.

At SMITH HAYES, we work to help you understand and meet these provisions. Each year we document your efforts as a plan sponsor in complying with 404(c). We will meet with you to continually improve the efficiency and success of your retirement plan.