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Authors

Paul J. Donahue

Abstract

This Article is divided into two parts. In Part I, this Article summarizes the scope of a Plan Sponsor’s fiduciary duty under ERISA and explains why that fiduciary duty extends to the selection of investment options for Participant-directed DC Plans (i.e., 404(c) Plans). In this context, the Article will then examine some of the safe harbor provisions applicable to 404(c) Plans, including the requirement that such Plans offer a low-risk-investment alternative and the requirement that such Plans provide adequate disclosure to Plan Participants about each investment alternative. In Part II, this Article will apply the law explicated in Part I to a particular investment-option selection decision made by all Sponsors of 404(c) Plans; namely: the decision to offer a money market fund versus a stable value fund. In Part II, this Article argues that Plan Sponsors who choose to offer a money market option instead of a stable value option breach their fiduciary duty to Plan Participants.

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