What Is ERISA Section 404(c) for a 401(k) Plan?

ERISA Section 404(c) can limit fiduciary liability when a participant independently directs an investment and the loss is the direct and necessary result of that decision. It does not turn a participant-directed 401(k) into a liability-free zone. The fiduciary still owns the menu, the service-provider choices, the disclosure process and every decision that was not actually caused by the participant's direction.^[1][2][6]

That is the useful way to read the rule.

Not:

participant clicked the button → fiduciary protected.

The plan structure matters.

The particular transaction matters.

Causation matters.

404(c) Is a Liability Rule, Not a Plan Certification

There is no federal certificate that transforms a 401(k) into:

"an approved 404(c) plan."

The federal rule describes:

• what an ERISA Section 404(c) plan must provide
• when a participant has exercised independent control
• what relief follows from that control.^[2]

Its own text says the standards determine both:

1. whether the plan satisfies the 404(c) structure
2. whether a particular transaction receives relief.^[2]

That second point is often missed.

Plan-Level Compliance Does Not Decide Every Transaction

Suppose the plan generally has:

• adequate investment choice
• required participant information
• reasonable transaction rights.

Participant A independently directs an investment.

Participant B is pressured by a senior executive to remain in employer stock.

The plan's general design does not make both transactions equivalent.

404(c) asks whether the participant exercised:

independent control in fact

over the transaction for which relief is claimed.^[2]

The defense has to fit the loss.

What the Statute Actually Protects

For a qualifying individual account plan, ERISA Section 404(c)(1) provides two connected rules.^[1]

When the participant or beneficiary exercises control:

Participant

The participant does not become an ERISA fiduciary merely by exercising that investment control.

Other fiduciaries

They are not liable under ERISA Part 4 for a loss or breach that results from that exercise of control, subject to the statutory and regulatory limits.^[1][2]

The provision reallocates responsibility for a participant's own investment choice.

It does not remove fiduciary standards from the plan.

The Causation Language Is Narrower Than "Participant Chose It"

Relief reaches only a loss or breach that follows directly and necessarily from the participant's exercise of control.^[2]

That creates a causation test.

Ask:

What decision actually produced the loss?

If the answer is:

participant allocated 100% of the account to Investment A

404(c) can matter.

If the answer is:

fiduciary selected an imprudent Investment A for the plan menu

that is a separate fiduciary decision.

Example: Participant Concentrates the Account

A compliant plan offers diversified choices.

Participant directs:

• 100% of account
• into one volatile stock option.

The stock falls:

55%.

If that allocation was independently made and the other conditions are satisfied, the resulting concentration loss is the kind of participant-directed outcome the rule can address.^[2]

The plan fiduciary does not necessarily have to save the participant from the participant's own allocation decision.

Now Change One Fact

Suppose the participant invests 100% in a fund that:

• has become materially overpriced
• has serious operational problems
• remained on the menu because fiduciaries stopped monitoring it.

The participant made the allocation.

The fiduciaries made the:

menu-retention decision.

Current regulation expressly states that 404(c) does not relieve the duty to prudently select and monitor:

• designated investment alternatives
• service providers.^[2]

Participant choice does not erase that upstream duty.

The Participant Chooses From a Fiduciary-Built Environment

In a typical 401(k):

Fiduciary decides

• menu
• recordkeeper
• investment platform
• transaction rules
• fees
• QDIA
• blackout implementation.

Participant decides

• allocation among permitted choices
• transfers
• rebalancing
• investment manager selection where the plan permits it.

404(c) can shift responsibility for the second category.

It does not automatically shift the first.

INV-130 explains the investment-selection process.

First Plan-Level Requirement: Real Investment Direction

A participant must have a reasonable opportunity to give investment instructions to an:

identified plan fiduciary

who is generally obligated to follow those instructions, subject to permitted exceptions.^[2]

Modern recordkeeping may make the process look like:

participant → website → trade engine.

Legally, the plan still needs an instruction structure under which valid participant directions are carried out.

The website is the interface.

The plan terms create the right.

Written Confirmation Must Be Available

The regulation allows instructions to be given:

• in writing
• or otherwise

provided there is an opportunity to obtain written confirmation.^[2]

Electronic transaction records usually make this easy operationally.

For a disputed trade, preserve:

• election
• timestamp
• confirmation
• effective date
• price or valuation information where relevant.

The stronger the transaction record, the easier it is to identify who made the decision.

Reasonable Restrictions Are Allowed

Participant control does not require unrestricted trading.

The plan can impose reasonable limits on investment instructions.^[2]

Examples can include:

• reasonable transfer limits
• fund-specific trading restrictions
• reasonable transaction expenses.

The question is whether participants still have a genuine opportunity to exercise control consistent with the regulation.

Trading Frequency Depends on the Investment

The rule does not say:

every option must permit daily trading.

It requires instruction frequency appropriate to the market volatility reasonably expected for the investment.^[2]

There is also a regulatory floor for the core diversified choices.

At least three qualifying alternatives that create the required broad range must permit investment instructions:

no less frequently than once within any three-month period.^[2]

More volatile or more frequently tradable options can require a corresponding route into qualifying alternatives or an appropriate low-risk liquid vehicle under the regulation's detailed transfer rules.^[2]

Quarterly Is a Floor for the Core—Not a Universal Answer

A stable-value-type option and a highly volatile market-traded option do not necessarily present the same control problem.

The regulation expressly connects transaction frequency to:

market volatility.^[2]

A plan should therefore document why its restrictions are reasonable for the investments offered.

"Quarterly is always enough" is not the rule.

Second Plan-Level Requirement: A Broad Range of Investments

A 404(c) plan must give participants an opportunity to choose from a:

broad range of investment alternatives.^[2]

The regulation turns that phrase into an actual test.

The alternatives must allow a participant to meaningfully affect:

• potential return
• investment risk

and diversify the controlled portion of the account to reduce the risk of large losses.^[2]

At Least Three Diversified Alternatives Are Central

At the center of the broad-range requirement are at least:

three investment alternatives

that each:^[2]

• are diversified
• have materially different risk and return characteristics.

Together, those choices must permit portfolio risk/return combinations across a range normally appropriate for participants and support diversification across the alternatives.^[2]

Three funds with different names are not automatically enough.

Example: Three Funds That Do Not Create a Broad Range

Plan offers:

• U.S. large-cap growth fund
• U.S. technology growth fund
• U.S. aggressive growth fund.

Three options exist.

They may still fail to create the regulatory breadth intended by the rule if their risk and return characteristics are not materially different enough to permit meaningful diversification.

Count products only after examining what they actually do.

More Than Three Does Not Automatically Improve Compliance

A plan with:

25 overlapping equity funds

is not necessarily more diversified than a plan with:

12 deliberately selected options.

The broad-range standard is functional.

It asks whether participants can create materially different risk/return exposures and diversify the account.

Product count is not the objective.

Information Is Part of Control

A participant cannot meaningfully control an account if the plan supplies investment buttons without enough information to make an informed decision.

The 404(c) regulation expressly requires sufficient information.^[2]

The modern rule ties that requirement to the participant-disclosure regulation:

29 CFR 2550.404a-5.^[2][3]

That makes INV-073 part of the 404(c) compliance file.

The Plan Must Say It Intends to Use 404(c)

The information package must explain that the plan intends to operate under ERISA Section 404(c) and 29 CFR 2550.404c-1, and that fiduciaries may receive limited relief for losses directly caused by participant investment instructions.^[2]

This notice matters.

It does not create relief by itself.

A sentence in the SPD cannot cure a defective control structure.

404a-5 Supplies the Modern Disclosure Framework

The participant-disclosure regulation requires plan-related information on or before the date a participant can first direct investments and at least annually thereafter, including:^[3]

• circumstances for giving investment instructions
• limitations on those instructions
• designated investment alternatives
• designated investment managers
• brokerage windows or similar arrangements.

It also requires information about:

• administrative expenses
• individual expenses
• investment performance
• benchmarks
• fees
• restrictions.^[3]

The disclosure framework helps make investment control informed rather than nominal.

Actual Fees Charged Appear Quarterly

404a-5 also generally requires quarterly statements showing specified administrative and individual expenses actually charged to the participant's account during the preceding quarter.^[3]

That information is not merely a consumer feature.

It can become part of the evidence that participants received meaningful information about the economics of the account.

Investment Information Has to Be Comparable

For designated investment alternatives, the regulation requires a comparative format designed to facilitate comparison.^[3]

Depending on the investment, required information includes items such as:

• category
• performance
• benchmark
• shareholder-type fees
• operating expenses
• restrictions
• website information.^[3]

A data dump is not the regulatory goal.

The participant needs usable comparison information.

Independent Control Is a Separate Test

Even a well-designed plan only receives 404(c) relief for a transaction if the participant exercised:

independent control in fact.^[2]

The rule identifies circumstances where independence fails.

That is why a click alone is not decisive.

Improper Influence Can Defeat Independent Control

Participant control is not independent if the participant is subjected to improper influence by:

• plan fiduciary
• plan sponsor.^[2]

Example:

CEO tells employees:

"Anyone who sells company stock should not expect to be viewed as committed to the business."

A participant technically retains the website ability to sell.

The pressure can undermine the premise that the participant's resulting decision was independent.

Control has to be practical, not ceremonial.

Concealing Material Nonpublic Facts Can Also Defeat It

The rule also addresses a fiduciary's concealment of:

material nonpublic facts

about an investment, unless disclosure would violate applicable federal law or non-preempted state law.^[2]

This is especially relevant where:

• employer securities
• sponsor-controlled investments
• affiliated investment arrangements

are involved.

A fiduciary should not assume participant direction cures an information asymmetry the fiduciary improperly created.

Known Legal Incompetence Is Another Limit

Control also fails the independence test when the responsible fiduciary knowingly accepts directions from a legally incompetent participant or beneficiary.^[2]

The rule is narrow.

It is not a license for fiduciaries to second-guess ordinary participants' financial judgment.

Poor investment judgment is not legal incompetence.

There Is No General Duty to Give Individualized Investment Advice

Under the rule, a fiduciary has no general ERISA Part 4 obligation to provide individualized investment advice to a participant or beneficiary in this setting.^[2]

That rule should be read carefully.

It means the fiduciary does not have to tell a participant:

"Put 70% in Fund A and 30% in Fund B."

It does not eliminate duties to:

• provide required information
• administer instructions correctly
• select prudent menu options
• avoid misleading communications
• monitor providers.

Information and advice are different.

Example: Participant Makes a Bad Allocation

Participant age:

28

Allocation:

100% money market fund

for 25 years.

The fiduciary may believe the allocation is overly conservative.

The participant-control rule does not generally create a duty to give individualized investment advice merely because the participant's decision appears suboptimal.^[2]

The plan still needs a prudent menu and required disclosures.

A Participant Direction Does Not Protect a Separate Fiduciary Decision

The regulatory examples make causation concrete.

Suppose participant tells the plan:

buy Stock X.

The fiduciary independently chooses to buy Stock X from an improper party in interest.

The participant chose:

Stock X.

The fiduciary chose:

the counterparty.

The counterparty choice is the fiduciary's own act, not a necessary consequence of the participant's instruction.^[2]

The participant-control rule does not turn independent fiduciary choices into participant choices.

This Matters for Prohibited Transactions

Section 404(c) relief applies to ERISA Part 4 liability within its scope.^[2]

The regulation separately states that it does not relieve a disqualified person from Internal Revenue Code:

Section 4975

excise taxes when those taxes otherwise apply.^[2]

So a participant-directed transaction can still create tax exposure for another person.

INV-127 covers Form 5330 and Section 4975.

Participant Selection of an Investment Manager Has Its Own Causation Logic

The federal examples also address participant-selected investment managers.^[2]

If the plan designates a group of investment managers and a participant selects one:

• participant selected the manager
• manager later makes imprudent investment decisions.

The manager's later imprudence is a separate fiduciary act rather than an inevitable consequence of the participant's selection.^[2]

The manager remains responsible for the manager's fiduciary conduct.

The Plan Can Still Have a Monitoring Duty Over Designated Managers

When the plan itself designates investment managers for participant selection, the regulation's example says the plan fiduciary must monitor the manager's performance to determine whether continued designation remains suitable.^[2]

Again:

participant chooses from a fiduciary-created set.

The participant's selection does not freeze the plan's designation forever.

Brokerage Windows Do Not Create Automatic 404(c) Status

Participant disclosure rules distinguish:

• designated investment alternatives
• brokerage windows/self-directed brokerage accounts.^[3]

A brokerage window can expand participant choice.

It does not answer all 404(c) questions by itself.

The plan still has to satisfy the applicable participant-control structure, disclosure obligations and fiduciary duties regarding service-provider selection and monitoring.^[2][3]

"Self-directed" is an operational label.

It is not blanket fiduciary immunity.

Blackouts Expose the Limit of the Participant-Control Theory

A blackout period can temporarily suspend or restrict a participant's ability to:

• direct investments
• diversify
• obtain loans
• obtain distributions.^[5]

ERISA's statute expressly says ordinary Section 404(c)(1)(A)(ii) participant-control relief does not apply during a blackout period when the sponsor or fiduciary suspends the participant's ability to direct account investments.^[1]

That makes sense.

The participant cannot control what the plan has temporarily made uncontrollable.

A Blackout Does Not Automatically Create Fiduciary Liability Either

The statute also provides a separate protection.

If the fiduciary satisfies ERISA's requirements in:

• authorizing
• implementing

the blackout period, the fiduciary is not liable under the statute for loss occurring during that period on the terms provided by Section 404(c)(1)(B).^[1]

The legal theory changes.

It is no longer:

participant controlled the transaction.

It becomes:

fiduciary handled the blackout prudently and lawfully.

Blackout Notice Timing Is Usually 30–60 Days

The blackout regulation generally requires notice to affected participants and beneficiaries:

at least 30 days but not more than 60 days

before the last date on which they can exercise the affected rights immediately before the blackout begins.^[5]

Exceptions apply for circumstances such as:

• fiduciary determination that delay would violate ERISA prudence/loyalty duties
• unforeseeable events or circumstances beyond reasonable administrator control
• specified merger/acquisition/divestiture situations.^[5]

Where an exception applies, notice generally must be furnished as soon as reasonably possible.^[5]

Example: Recordkeeper Conversion

Plan changes recordkeepers.

Trading will be unavailable for:

12 days.

The plan should treat the blackout as more than an IT project.

Fiduciary questions include:

• Is the blackout duration reasonably necessary?
• Were participant rights identified?
• Was notice timely?
• Can the transition be shortened?
• Are participants given usable information before the cutoff?
• Are plan assets safeguarded throughout the conversion?

404(c) cannot substitute for that analysis during the period when participant direction is suspended.

Investment Mapping Has a Special Statutory Rule

Plans sometimes replace investment options.

Example:

old S&P 500 index fund → new S&P 500 index fund.

If participants do nothing, their balances can be mapped to the replacement.

That looks different from affirmative participant direction.

Congress created a specific rule for a:

qualified change in investment options.^[1]

The Replacement Must Be Reasonably Similar

For the statutory mapping treatment, the new or remaining investment option must have stated characteristics—such as:

• risk
• rate of return

that are reasonably similar to the old option immediately before the change.^[1]

Mapping:

large-cap index → materially similar large-cap index

is easier to analyze than:

stable value → aggressive small-cap equity.

The statute is designed around continuity, not arbitrary reassignment.

The Notice Window Is 30–60 Days

A qualified investment-option change generally requires written notice:

at least 30 days and no more than 60 days before the effective date.^[1]

The notice must explain:

• the change
• comparison of existing and new options
• that the account will be mapped absent contrary participant direction.^[1]

Participants must have a real chance to say:

no.

Prior Investment Must Have Come From Participant Control

The statutory mapping rule also requires the pre-change investments to have been the product of the participant's prior exercise of control.^[1]

That creates continuity:

participant selected old option → plan makes qualifying replacement → participant receives advance notice → participant does not give contrary instruction → mapped position can retain participant-control treatment under the statute.

Do not apply that logic casually to money that was never participant-directed in the first place.

QDIA Is a Different Route to Similar Liability Relief

A qualified default investment alternative deals with a different fact pattern.

General 404(c)

Participant affirmatively directs investment.

QDIA

Participant had an opportunity to direct but did not, and plan defaults assets into a qualifying investment under the QDIA regulation.^[4][9]

Congress treats qualifying defaulted assets as participant-controlled for the limited statutory purpose.

INV-074 covers QDIA in depth.

A Plan Need Not Be a Full 404(c)-1 Plan to Use QDIA Relief

The QDIA regulation states that, except for requirements it specifically incorporates, a plan need not satisfy all the requirements of an ERISA 404(c) plan under:

29 CFR 2550.404c-1

to obtain QDIA relief under:

29 CFR 2550.404c-5.^[4]

This distinction matters.

Do not tell a sponsor:

"No 404(c) plan status means no QDIA protection."

That is too broad.

QDIA Still Leaves Selection and Monitoring With the Fiduciary

DOL reiterated this in Advisory Opinion 2025-04A.

When the QDIA conditions apply, fiduciaries can receive relief for qualifying default-investment losses, but they remain responsible for prudently:

• selecting
• monitoring

the QDIA.^[9]

Same boundary.

Different route.

404(c) and 404a-5 Solve Different Problems

The rules overlap operationally.

They should not be merged conceptually.

Plan Conditions vs. Transaction Relief

This is the most important Section 404(c) table.

Participant Responsibility vs. Fiduciary Responsibility

The same account can contain decisions owned by different actors.

A Practical 404(c) Evidence File

Plan design

• plan document
• SPD
• investment-direction provisions
• identified fiduciary
• transfer rules.

Investment menu

• lineup
• broad-range analysis
• diversification analysis
• transaction frequency.

Participant information

• 404(c) statement
• 404a-5 annual disclosures
• fee disclosures
• investment comparative chart
• change notices
• requested materials.

Transaction evidence

• election
• timestamp
• confirmation
• transfer history.

Independence

• no improper pressure
• no known undisclosed material facts improperly withheld
• no known competence problem.

Fiduciary process

• fund-selection record
• monitoring
• service-provider review
• fee review.

Special events

• blackout notice
• blackout rationale
• investment mapping notice
• QDIA notice where applicable.

The defense becomes stronger when each layer can be proved without reconstructing it years later.

"404(c) Compliant" Should Not Be a Checkbox

A plan questionnaire might ask:

Does the plan comply with ERISA 404(c)? Yes / No

That is convenient.

It is incomplete.

A stronger annual review asks:

1. Is the plan designed to satisfy the regulation?
2. Are current disclosures being furnished?
3. Does the menu still satisfy broad-range principles?
4. Are transaction rights actually available as described?
5. Are fiduciaries monitoring designated investments?
6. Did any blackout interrupt participant control?
7. Were any investments mapped?
8. Can disputed participant directions be reconstructed?
9. Is any claimed loss really caused by the participant's choice?

That is how the rule operates in practice.

Example: Participant Chooses the Worst Fund on a Prudent Menu

Plan offers a prudently selected and monitored broad menu.

Participant receives required information.

Participant puts:

100%

into the highest-volatility option.

The investment performs badly.

No fiduciary pressure.

No concealed material facts.

The loss is driven by the participant's independent allocation.

This is the cleanest kind of 404(c) fact pattern.

Example: Participant Chooses an Imprudent Fund

Same participant allocation.

Different menu history:

• fund fees became materially excessive
• manager suffered serious compliance problems
• committee ignored repeated warnings
• no monitoring for four years.

Now the case contains two decisions:

Participant

100% allocation.

Fiduciary

continued availability of the fund.

Section 404(c) can address the first without excusing the second.^[2][6]

Example: Participant Directs Investment, Fiduciary Delays Trade

Participant submits valid direction Monday.

Plan's stated process requires execution Tuesday.

Recordkeeper error delays trade until Friday.

Market moves sharply.

The loss caused by:

execution failure

is not automatically the direct and necessary result of the participant's allocation decision.

The participant said what to do.

The system failed to do it correctly.

404(c) should not be treated as an operational-error waiver.

Example: Participant Is Pressured Into Employer Stock

Participant originally wants to diversify.

Senior manager says selling employer stock will be viewed negatively.

Participant leaves the account concentrated.

The transaction right existed.

Independent control may not have.

Improper fiduciary or sponsor influence is expressly inconsistent with independent control.^[2]

Example: Plan Replaces an Index Fund

Old option:

S&P 500 index, 0.08%

New option:

S&P 500 index, 0.03%

Plan provides required 30–60 day statutory notice.

Risk/return characteristics are reasonably similar.

Participant's old position resulted from affirmative participant direction.

Participant does not object.

The statutory qualified-change rule is designed for this kind of mapping.^[1]

What 404(c) Does Not Protect

Bad menu selection

Still fiduciary.

Bad menu monitoring

Still fiduciary.

Bad service-provider selection

Still fiduciary.

Incorrect execution of participant directions

Not automatically caused by participant choice.

Fiduciary's independent prohibited transaction

Not transformed into participant conduct.

Section 4975 excise tax

Not eliminated by ERISA 404(c).^[2]

Imprudent blackout authorization or implementation

Ordinary participant-control relief is unavailable during the blackout; separate statutory protection depends on fiduciary compliance.^[1]

The rule is narrower than its reputation.

Frequently Asked Questions

What is ERISA Section 404(c)?

It is a statutory and regulatory framework that can limit fiduciary liability for losses or breaches that result from a participant's independent exercise of control over assets in an individual account plan.^[1][2]

Does every participant-directed 401(k) automatically qualify?

No.

The plan must satisfy the applicable structure, and relief for a disputed loss also depends on the particular participant transaction.^[2]

Is there a 404(c) filing with DOL?

There is no general annual DOL form that certifies the plan as 404(c) compliant. Compliance is established through the plan's design, disclosures, operation and facts surrounding the transaction.

How many investment options are required?

The broad-range test generally centers on at least three diversified alternatives with materially different risk and return characteristics that collectively support meaningful diversification.^[2]

Does that mean exactly three options are enough?

Not automatically.

The three must satisfy the substantive diversification and risk/return requirements.^[2]

Must every option allow daily transfers?

No.

Frequency must be appropriate to the investment's expected volatility, and at least three core alternatives must permit instructions no less frequently than once within any three-month period.^[2]

What disclosures are required?

The 404(c) regulation incorporates the participant information required by 29 CFR 2550.404a-5 and also requires the plan's 404(c) explanation.^[2][3]

Does 404(c) eliminate the duty to monitor funds?

No.

Fiduciary selection and monitoring duties over designated investment alternatives and service providers remain intact.^[2]

Does the fiduciary have to give participants investment advice?

There is no general Part 4 duty under this rule to give individualized investment advice.^[2]

Can improper employer pressure defeat 404(c) reliance?

Yes.

Independent control is not present when the participant is subjected to improper influence by a plan fiduciary or sponsor.^[2]

What if a participant directs a transaction but the fiduciary executes it incorrectly?

The resulting operational loss is not automatically the direct and necessary result of the participant's investment choice.

Does Section 404(c) prevent Section 4975 excise tax?

No.

The federal rule separately preserves applicable Section 4975 tax exposure for a disqualified person.^[2]

What happens during a blackout?

Ordinary participant-control relief does not apply while the sponsor or fiduciary has suspended the participant's ability to direct investments. Separate statutory protection can apply if the fiduciary satisfied ERISA when authorizing and implementing the blackout.^[1]

How much blackout notice is generally required?

At least 30 days and not more than 60 days before the last date affected participants can exercise the restricted right immediately before the blackout, subject to regulatory exceptions.^[5]

Can the plan map money from an old fund to a replacement?

Yes, and ERISA contains a special qualified-change rule that can preserve participant-control treatment when the new option is reasonably similar, the participant receives 30–60 day advance notice, gives no contrary direction and the original position resulted from participant control.^[1]

Is QDIA relief the same as ordinary 404(c) relief?

No.

QDIA relief applies when a participant fails to give an investment election and assets are invested under the separate default-investment regulation.^[4][9]

Must a plan satisfy full 404c-1 requirements to use QDIA relief?

Not generally. The QDIA regulation says a plan need not satisfy all 404c-1 plan requirements except where 404c-5 specifically incorporates them.^[4]

The ROIStreet 404(c) Liability Map

Start with the disputed loss → identify the participant transaction claimed to have caused it → confirm the plan provided a real right to direct investments → identify the fiduciary obligated to carry out permissible directions → test the broad-range investment structure → confirm required 404(c) and 404a-5 information was furnished → verify transaction frequency was appropriate for the investment → obtain the actual participant election and confirmation → test whether control was independent in fact → separate participant decisions from fiduciary menu, provider and execution decisions → ask whether the loss was the direct and necessary result of the participant's direction → test blackout rules if investment rights were suspended → test the qualified-change rule if assets were mapped to a replacement option → use the QDIA analysis instead when the participant never made the investment election → preserve Section 4975 tax analysis separately → document the fiduciary selection and monitoring process even when 404(c) appears to protect the participant's allocation

The strongest 404(c) analysis does not start by asking whether the SPD contains the right paragraph.

It starts with causation: which decision produced the loss, who actually made that decision, and did that person have the information and freedom necessary for the decision to count as genuine control?

Sources & References

1. Legal Information Institute / U.S. Code: 29 U.S.C. §1104(c) — Control Over Assets by Participant or Beneficiary — https://www.law.cornell.edu/uscode/text/29/1104
2. Electronic Code of Federal Regulations / Legal Information Institute: 29 CFR §2550.404c-1 — ERISA Section 404(c) Plans — https://www.law.cornell.edu/cfr/text/29/2550.404c-1
3. Electronic Code of Federal Regulations / Legal Information Institute: 29 CFR §2550.404a-5 — Participant-Directed Individual Account Plan Disclosures — https://www.law.cornell.edu/cfr/text/29/2550.404a-5
4. Electronic Code of Federal Regulations / Legal Information Institute: 29 CFR §2550.404c-5 — Qualified Default Investment Alternatives — https://www.law.cornell.edu/cfr/text/29/2550.404c-5
5. Electronic Code of Federal Regulations / Legal Information Institute: 29 CFR §2520.101-3 — Notice of Blackout Periods — https://www.law.cornell.edu/cfr/text/29/2520.101-3
6. U.S. Department of Labor — Employee Benefits Security Administration: FAQs about Retirement Plans and ERISA — https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/retirement-plans-and-erisa
7. U.S. Department of Labor — Employee Benefits Security Administration: Advisory Opinion 1996-02A — https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/1996-02a
8. U.S. Department of Labor — Employee Benefits Security Administration: Advisory Opinion 2003-11A — https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/2003-11a
9. U.S. Department of Labor — Employee Benefits Security Administration: Advisory Opinion 2025-04A — https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/2025-04a

Educational Disclaimer

ROIStreet publishes educational content about retirement-plan fiduciary duties, participant-directed investing and ERISA liability rules. This article is not legal, fiduciary, investment, tax or plan-administration advice. Section 404(c) relief depends on the exact plan terms, investment menu, participant information, transaction rights, participant direction, fiduciary conduct, blackout history, investment mapping and causal connection between the participant's decision and the claimed loss.

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