404(c) of ERISA

Section 404(c) of ERISA:

"c) Control over assets by participant or beneficiary

(1) In the case of a pension plan which provides for individual accounts and permits a participant or beneficiary to exercise control over the assets in his account, if a participant or beneficiary exercises control over the assets in his account (as determined under regulations of the Secretary)—

(A) such participant or beneficiary shall not be deemed to be a fiduciary by reason of such exercise, and

 

(B) no person who is otherwise a fiduciary shall be liable under this part for any loss, or by reason of any breach, which results from such participant’s or beneficiary’s exercise of control.

(2) In the case of a simple retirement account established pursuant to a qualified salary reduction arrangement under section 408(p) of title 26, a participant or beneficiary shall, for purposes of paragraph (1), be treated as exercising control over the assets in the account upon the earliest of—

(A) an affirmative election among investment options with respect to the initial investment of any contribution,

 

(B) a rollover to any other simple retirement account or individual retirement plan, or

 

(C) one year after the simple retirement account is established.

No reports, other than those required under section 1021(g) of this title, shall be required with respect to a simple retirement account established pursuant to such a qualified salary reduction arrangement.

 

(3) In the case of a pension plan which makes a transfer to an individual retirement account or annuity of a designated trustee or issuer under section 401(a)(31)(B) of title 26, the participant or beneficiary shall, for purposes of paragraph (1), be treated as exercising control over the assets in the account or annuity upon—

(A) the earlier of—

(i) a rollover of all or a portion of the amount to another individual retirement account or annuity; or

 

(ii) one year after the transfer is made; or

(B) a transfer that is made in a manner consistent with guidance provided by the Secretary.

DOL Guidance:

29 CFR 2550.404c-1

29 CFR 2550.404c-5

29 CFR Part 2550.404c-5 - Default Investment Alternatives Under Participant Directed Individual Account Plans   [4/30/2008]

Advisory Opinion 2003-11A

Advisory Opinion 96-02A

Case Law:

Appellate Court Decisions:

• Langbecker v. Electronic Data Systems Corp (interesting commentary on this case here - read the comment section as well)

• Hecker v. Deere

  • DOL Amicus Brief (filed in support of the petition for panel rehearing and rehearing en banc)

  • Brief of Amici Curae Law Professors (filed in support of panel rehearing)

  • Petition for Rehearing Denied

District Court Decisions:

• In re Tyco International. Ltd. Multidistrict Litigation (2009, DNH)

• Lingis v. Motorala (2009 D.N.Ill.)