The Participant-Directed Plan Safe Harbor
Chapters in this video
- 0:00 Fiduciary liability and ERISA's safety valve
- 1:08 The participant-directed plan safe harbor logic
- 2:03 Four checklist requirements for the shield
- 2:28 The magic number: three diversified options
- 2:50 Sufficient information and disclosure duties
- 3:14 Exam trap: the ignored excessive-fee fund
- 4:17 Carl versus Iris: two different shields
- 5:05 QDIA options and the 120-day rule
- 6:17 The money market trap and inflation risk
- 6:50 Rapid-fire exam recap
What this video covers
- The four checklist requirements that activate the participant-directed-plan safe harbor, and why missing even one makes the shield disappear
- Why the plan must offer at least three diversified investment alternatives with materially different risk/return profiles, not two and not five
- What "sufficient information" means in the safe harbor context, including notice, risk/return descriptions, fee disclosures, and voting materials
- Why the safe harbor protects fiduciaries from losses caused by participants' own choices but never relieves the duty to prudently select and monitor the options offered
- The distinction between Carl (active chooser, standard safe harbor) and Iris (auto-enrolled non-chooser, QDIA rule), and why mixing these two shields is an exam trap
- What qualifies as a qualified default investment alternative (QDIA), and why a stable value or money market fund is not a general-purpose QDIA
- Why a capital preservation product loses QDIA status after exactly 120 days from the participant's first elective contribution, and how the exam baits you with indefinite cash defaults
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 66 course also includes adaptive practice questions and spaced-repetition flashcards.