Belying their name, passive investment options are making a lot of noise in the 401(k) arena.

Not surprisingly, considering the growing popularity of passively managed funds among investors generally, plan-sponsoring employers are providing more ways for participants to go passive.

401k intro artWhat may be quite surprising to some is that participants’ best interests are not necessarily the top motivation for plan sponsors’ shifting strategies. Rather, research shows that many decisions about plans, including shifting the mix of investment options available to participants, are made primarily with an eye to avoid being sued. And that’s sparking discussion as to whether companies’ plan or investment committees, often headed by CFOs, are properly exercising their fiduciary duties.

Fiduciary liability is also at the heart of another developing story in the 401(k) arena: adjusting to the Department of Labor’s new rule requiring financial advisers to small retirement plans — and participants of any-size plans — to take on fiduciary responsibility.

Among issues of concern to plan sponsors is the possibility that the rule could spark consolidation among retirement-plan providers/recordkeepers and a concomitant increase in administrative fees.

This package of articles offers some advice of its own for plan sponsors, in the form of tips for increasing a plan’s value and how and why to structure a 401(k) plan to more resemble a 403(b) plan. Finally, on the occasion of the 10th anniversary of the Pension Protection Act of 2006, we take a look at what the law has wrought, both positive and negative.

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