Alerts

New Regulation on Qualified Default Investment Alternatives for Participant-Directed Individual Account Plans

November 20, 2007

On October 24, 2007, the Department of Labor issued the final regulations implementing the default investment amendments made to the Employee Retirement Income Security Act of 1974 ("ERISA") by the Pension Protection Act of 2006. This regulation provides a safe harbor for fiduciaries of participant-directed individual account plans (such as a 401(k) plan) investing participant assets in the absence of participant investment direction. If plan assets are invested in Qualified Default Investment Alternatives ("QDIAs") as defined in the regulation, then the participant is deemed to have exercised control over the assets in his or her account and the plan fiduciary will not be liable for any loss, or by reason of any breach, that occurs as a result of such investments. This regulation becomes effective December 24, 2007.