Final Regulations Issued Regarding Qualified Default Investment Alternatives

Overview

The U.S. Department of Labor (the "DOL") recently finalized a regulation (the "Final Regulation") regarding a safe harbor under the Employee Retirement Income Security Act of 1974, as amended ("ERISA") for the investment of plan assets and certain default investment options that qualify as "qualified default investment alternatives ("QDIAs"). The safe harbor protects the plan fiduciary from fiduciary liability when selecting an investment for a plan participant or beneficiary who fails to choose his or her own investment under a defined contribution plan, such as a 401(k) plan, provided that the conditions set forth in the Final Regulation, as discussed below, are satisfied.

Significantly, plan fiduciaries remain responsible for the prudent selection and monitoring of the QDIA. The Final Regulation is effective December 24, 2007. However, any plan fiduciaries who wish to take advantage of the protections provided in the Final Regulation, must take action as soon as