Investment Mapping in Participant-Directed Investment Defined Contribution Plans

Summary

This practice note discusses the concept of "mapping" participant investment selections in a defined contribution plan from one investment to a similar one or to a default investment, in the absence of having received an affirmative investment instruction by the participant. The concept applies outside of choosing a default investment on automatic enrollment. However, both rely on the same section of the Employee Retirement Income Security Act of 1974, as amended (ERISA): Section 404(c). The concept of mapping can occur in several scenarios, as discussed in the paragraph below. In each of these, unless the statute permits a safe harbor avenue, the plan administrator or other fiduciary would be exposed to liability for not honoring the participant's investment selection, where made, or for the investment selected, where the participant has failed to provide direction.