Pension Protection Act Guide - January 2009 - (Page 18)

Pension Protection Act Guide – Defined Contribution (DC) Plans SpEcIfIc poINtS INvEStmENtS Default Investment options ERISA 404(c) Relief December 24, 2007 DoL Section 404(c) regulations do not provide fiduciary protection from participants who fail to make an affirmative investment election. Section 404(c) protection is offered to plan sponsors for participants who fail to make an affirmative election if the contributions are invested in a default investment option which meets the DoL’s Safe harbor guidelines and participants are notified initially and annually of their rights to the different investment options. These rules apply to plans subject to ERISA and exclude non-ERISA 403(b), governmental plans and non-electing church plans. • This provides previously lacking statutory relief for plan fiduciaries on defaulted retirement funds. • You may wish to evaluate current default investment options. EffEctIvE DatE currENt Law pENSIoN protEctIoN act what It mEaNS to you Investment Advice for plan years beginning on or after January 1, 2007 Plan sponsors with investment advisers must prudently select and continually monitor them. Plan sponsors could be held liable for the fiduciary breaches of these advisers. Provides a prohibited transaction exemption for advice from a fiduciary adviser to DC plan participants under an “eligible investment advice arrangement.” A fiduciary adviser may be: • Registered investment adviser • Bank • Insurance company • Broker dealer • Employees, agents, or registered representatives and affiliates of the above. An eligible investment arrangement must: • Provide that the fees received by the fiduciary adviser do not vary in accordance with the investment options chosen; or • use a computer model meeting specified conditions; and • Compensation for the advice must be reasonable; and • fees and affiliations must be disclosed prior to the time the advice is provided; and • Advisers must obtain an annual exemption compliance audit from an independent auditor. • Provides a statutory framework for a fiduciary-advisor to provide personalized investment advice to participants. • Beginning in 2007, you are given some relief from the consequences of the specific advice provided by a fiduciary-advisor provided specified requirements are met. • In 2008, the Dol issued a proposed regulation and a prohibited transaction class exemption which offered additional guidance for fiduciaryadvisors who wish to provide participant investment advice. We continue to offer investment advisory services for retirement plan participants through the Principal Managed Account ProgramSM (the Program), which is powered by Ibbotson Associates as independent financial expert and offered through Princor® financial Services Corporation. The Program is our method of choice for delivering advice to participants whose plan sponsors adopt the Program. Princor Registered Representatives are prohibited from giving investment advice on ERISA covered assets. 18

Table of Contents Feed for the Digital Edition of Pension Protection Act Guide - January 2009

Pension Protection Act Guide - January 2009 Contents Multiple Plan Types Defined Benefit (DB) Plans Defined Contribution (DC) Plans Employer Securities Nonqualified Individual Investors

Pension Protection Act Guide - January 2009

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.