Summary Prospectus Meets ERISA 404(c) Requirements
09/23/2009The U.S. Department of Labor (DOL) has released Field Assistance Bulletin 2009-03 (FAB), which approves the use of the most recent summary prospectus received by the plan to satisfy the information requirements of ERISA Section 404(c) for mutual fund investments. ERISA Section 404(c) sets out the conditions under which plan fiduciaries are relieved from liability for the consequences of investment decisions made by a participant or beneficiary for his or her own retirement account if the plan permits and the participant or beneficiary exercises investment control of the assets in his or her account. One condition is that the identified plan fiduciary (or such plan fiduciary’s designee) provide, both automatically and upon request, mutual fund prospectus information to the participant and beneficiary. Under new U.S. Securities and Exchange Commission (SEC) rules published in January 2009, a “summary” prospectus is a short-form document, written in plain English, which identifies key information about the mutual fund and the website address and other means to obtain more information, including the full prospectus. The summary prospectus is an optional means of complying with the SEC’s prospectus delivery requirements. In a 2003 advisory opinion, the DOL approved the use of a mutual fund profile, under former SEC rules, as a method of satisfying the prospectus delivery requirement under ERISA Section 404(c). Through the FAB, the DOL has confirmed that the summary prospectus, which has essentially replaced the eliminated mutual fund profile, satisfies the ERISA 404(c) prospectus delivery requirement.
