"The gap between a well-priced plan and a poorly priced one is real at scale. A fund with a 1% annual expense ratio carries meaningfully higher costs than an index fund with a 0.1% expense ratio, starting from the same balance."
"ERISA Section 404(c) is the provision most participants never hear about. When an employer structures a plan to comply with 404(c), they are largely shielded from liability for investment losses resulting from participant decisions."
"The plan must notify participants that it is intended to comply with 404(c) and that fiduciaries may be relieved of liability for losses from participant decisions."
Under ERISA Section 404(a)(5), plan administrators must provide annual fee disclosures detailing investment options and associated fees. The difference in expense ratios can significantly impact retirement savings. ERISA Section 404(c) offers employers protection from liability for investment losses due to participant choices, but it requires plans to provide diversified options and sufficient information. Many participants are unaware of these provisions, which can affect their investment decisions and overall retirement outcomes.
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