29 U.S.C. § 1104: Fiduciary duties

providing benefits to participants and their beneficiaries; and defraying reasonable expenses of administering the plan; with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; by diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this subchapter and subchapter III. In the case of an eligible individual account plan (as defined in section 1107(d)(3) of this title ), the diversification requirement of paragraph (1)(C) and the prudence requirement (only to the extent that it requires diversification) of paragraph (1)(B) is not violated by acquisition or holding of qualifying employer real property or qualifying employer securities (as defined in section 1107(d)(4) and (5) of this title). Except as authorized by the Secretary by regulations, no fiduciary may maintain the indicia of ownership of any assets of a plan outside the jurisdiction of the district courts of the United States. such participant or beneficiary shall not be deemed to be a fiduciary by reason of such exercise, and no person who is otherwise a fiduciary shall be liable under this part for any loss, or by reason of any breach, which results from such participant’s or beneficiary’s exercise of control, except that this clause shall not apply in connection with such participant or beneficiary for any blackout period during which the ability of such participant or beneficiary to direct the investment of the assets in his or her account is suspended by a plan sponsor or fiduciary. If a person referred to in subparagraph (A)(ii) meets the requirements of this subchapter in connection with authorizing and implementing the blackout period, any person who is otherwise a fiduciary shall not be liable under this subchapter for any loss occurring during such period. For purposes of this paragraph, the term “blackout period” has the meaning given such term by section 1021(i)(7) of this title . an affirmative election among investment options with respect to the initial investment of any contribution, a rollover to any other simple retirement account or individual retirement plan, or one year after the simple retirement account is established. a rollover of all or a portion of the amount to another individual retirement account or annuity; or one year after the transfer is made; or a transfer that is made in a manner consistent with guidance provided by the Secretary. In any case in which a qualified change in investment options occurs in connection with an individual account plan, a participant or beneficiary shall not be treated for purposes of paragraph (1) as not exercising control over the assets in his account in connection with such change if the requirements of subparagraph (C) are met in connection with such change. the account of the participant or beneficiary is reallocated among one or more remaining or new investment options which are offered in lieu of one or more investment options offered immediately prior to the effective date of the change, and the stated characteristics of the remaining or new investment options provided under clause (i), including characteristics relating to risk and rate of return, are, as of immediately after the change, reasonably similar to those of the existing investment options as of immediately before the change. at least 30 days and no more than 60 days prior to the effective date of the change, the plan administrator furnishes written notice of the change to the participants and beneficiaries, including information comparing the existing and new investment options and an explanation that, in the absence of affirmative investment instructions from the participant or beneficiary to the contrary, the account of the participant or beneficiary will be invested in the manner described in subparagraph (B), the participant or beneficiary has not provided to the plan administrator, in advance of the effective date of the change, affirmative investment instructions contrary to the change, and the investments under the plan of the participant or beneficiary as in effect immediately prior to the effective date of the change were the product of the exercise by such participant or beneficiary of control over the assets of the account within the meaning of paragraph (1). For purposes of paragraph (1), a participant or beneficiary in an individual account plan meeting the notice requirements of subparagraph (B) shall be treated as exercising control over the assets in the account with respect to the amount of contributions and earnings which, in the absence of an investment election by the participant or beneficiary, are invested by the plan in accordance with regulations prescribed by the Secretary. The regulations under this subparagraph shall provide guidance on the appropriateness of designating default investments that include a mix of asset classes consistent with capital preservation or long-term capital appreciation, or a blend of both. receives, within a reasonable period of time before each plan year, a notice explaining the employee’s right under the plan to designate how contributions and earnings will be invested and explaining how, in the absence of any investment election by the participant or beneficiary, such contributions and earnings will be invested, and has a reasonable period of time after receipt of such notice and before the beginning of the plan year to make such designation. The requirements of clauses (i) and (ii) of section 401(k)(12)(D) of title 26 shall apply with respect to the notices described in this subparagraph. For purposes of paragraph (1), a participant in a pension-linked emergency savings account shall be treated as exercising control over the assets in the account with respect to the amount of contributions and earnings which are invested in accordance with section 1193(c)(1)(A)(iii) of this title . under section 4980(d)(2)(B) of title 26 with respect to the transfer of assets from the terminated plan to a qualified replacement plan, and under section 4980(d)(2)(B)(ii) or 4980(d)(3) of title 26 with respect to any increase in benefits under the terminated plan. under section 4980(d)(2)(A) of title 26 with respect to participation in the qualified replacement plan of active participants in the terminated plan, under section 4980(d)(2)(B) of title 26 with respect to the receipt of assets from the terminated plan, and under section 4980(d)(2)(C) of title 26 with respect to the allocation of assets to participants of the qualified replacement plan. any term used in this subsection which is also used in section 4980(d) of title 26 shall have the same meaning as when used in such section, and any reference in this subsection to title 26 shall be a reference to title 26 as in effect immediately after the enactment of the Omnibus Budget Reconciliation Act of 1990. engages in an objective, thorough, and analytical search for the purpose of identifying insurers from which to purchase such contracts; considers the financial capability of such insurer to satisfy its obligations under the guaranteed retirement income contract; and considers the cost (including fees and commissions) of the guaranteed retirement income contract offered by the insurer in relation to the benefits and product features of the contract and administrative services to be provided under such contract; and at the time of the selection, the insurer is financially capable of satisfying its obligations under the guaranteed retirement income contract; and the relative cost of the selected guaranteed retirement income contract as described in subparagraph (B)(ii) is reasonable. the insurer is licensed to offer guaranteed retirement income contracts; operates under a certificate of authority from the insurance commissioner of its domiciliary State which has not been revoked or suspended; has filed audited financial statements in accordance with the laws of its domiciliary State under applicable statutory accounting principles; maintains (and has maintained) reserves which satisfies all the statutory requirements of all States where the insurer does business; and is not operating under an order of supervision, rehabilitation, or liquidation; the insurer undergoes, at least every 5 years, a financial examination (within the meaning of the law of its domiciliary State) by the insurance commissioner of the domiciliary State (or representative, designee, or other party approved by such commissioner); and the insurer will notify the fiduciary of any change in circumstances occurring after the provision of the representations in clauses (i), (ii), and (iii) which would preclude the insurer from making such representations at the time of issuance of the guaranteed retirement income contract; and after receiving such representations and as of the time of selection, the fiduciary has not received any notice described in subparagraph (A)(iv) and is in possession of no other information which would cause the fiduciary to question the representations provided. Nothing in this subsection shall be construed to require a fiduciary to select the lowest cost contract. A fiduciary may consider the value of a contract, including features and benefits of the contract and attributes of the insurer (including, without limitation, the insurer’s financial strength) in conjunction with the cost of the contract. the time that the insurer and the contract are selected for distribution of benefits to a specific participant or beneficiary; or if the fiduciary periodically reviews the continuing appropriateness of the conclusion described in paragraph (1)(C) with respect to a selected insurer, taking into account the considerations described in such paragraph, the time that the insurer and the contract are selected to provide benefits at future dates to participants or beneficiaries under the plan. A fiduciary will be deemed to have conducted the periodic review described in subparagraph (A)(ii) if the fiduciary obtains the written representations described in clauses (i), (ii), and (iii) of paragraph (2)(A) from the insurer on an annual basis, unless the fiduciary receives any notice described in paragraph (2)(A)(iv) or otherwise becomes aware of facts that would cause the fiduciary to question such representations. A fiduciary which satisfies the requirements of this subsection shall not be liable following the distribution of any benefit, or the investment by or on behalf of a participant or beneficiary pursuant to the selected guaranteed retirement income contract, for any losses that may result to the participant or beneficiary due to an insurer’s inability to satisfy its financial obligations under the terms of such contract. The term “insurer” means an insurance company, insurance service, or insurance organization, including affiliates of such companies. The term “guaranteed retirement income contract” means an annuity contract for a fixed term or a contract (or provision or feature thereof) which provides guaranteed benefits annually (or more frequently) for at least the remainder of the life of the participant or the joint lives of the participant and the participant’s designated beneficiary as part of an individual account plan. The amendments made by this section [amending this section] shall apply to plan years beginning after December 31, 2007 . December 31, 2008 , or the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof after such date of enactment), or December 31, 2009 .” The amendments made by this section [amending this section] shall apply to plan years beginning after December 31, 2006 . Final regulations under section 404(c)(5)(A) of the Employee Retirement Income Security Act of 1974 [ 29 U.S.C. 1104(c)(5)(A) ] (as added by this section) shall be issued no later than 6 months after the date of the enactment of this Act [ Aug. 17, 2006 ].” is not subject to the safest available annuity standard under Interpretive Bulletin 95–1 (29 CFR 2509.95–1), and is subject to all otherwise applicable fiduciary standards. This section shall take effect on the date of enactment of this Act [ Aug. 17, 2006 ].” the blend is reasonably representative of the asset class holdings of the designated investment alternative; for purposes of determining the blend’s returns for 1-, 5-, and 10-calendar-year periods (or for the life of the alternative, if shorter), the blend is modified at least once per year if needed to reflect changes in the asset class holdings of the designated investment alternative; the blend is furnished to participants and beneficiaries in a manner that is reasonably calculated to be understood by the average plan participant; and each securities market index that is used for an associated asset class would separately satisfy the requirements of such regulation for such asset class.”