1. SUMM ARY OF ERISA SECTION 404(C) REQUIREMENTS
Introduction
ERISA section 404(c) (“404(c)”) applies to individual benefit account plans that are covered by Title I of
ERISA. Should an employer choose to comply with 404(c), plan fiduciaries will not be liable for any
losses on individual investments so long as:
• The participant exercised control with respect to the transaction; and,
• The investment losses were a result of investment instructions given by the participant.
The 404(c) requirements can be met even if:
• Only certain participants are able to exercise investment control (assuming this is not
discriminatory); or,
• Participants may only exercise investment control over a portion of their account balance.
What follows below is a description of the 404(c) requirements and the information that either must be
provided automatically or at the participant’s request.
Requirements
To be deemed to exercise investment control, the participant must give investment allocation
instructions. The participant must also receive written confirmation of investment transactions,
including investment allocation instructions. Allocation instructions must be given to an identified plan
fiduciary. In turn, the plan fiduciary must give certain information to participants as follows.
To avail themselves of 404(c) relief, plan fiduciaries must provide information that is sufficient to
enable the participant to make informed investment decisions. The information that must be provided
to participants includes:
• A statement that the plan intends to follow 404(c).
• An explanation that the plan fiduciaries may be relieved of liability as a result of their
compliance.

2. • A description of each available investment alternative, preferably encouraging participants to
review investment information.
• A description of the investment objectives and risk and return characteristics of each
investment, and information regarding the type and diversification of assets in the portfolio of
the designated alternative.
• The identity of all designated investment managers.
• An explanation of how participants may give investment instructions, including limitations,
restrictions, penalties or adjustments related to investment transfers.
• A description of transaction fees charged to participants.
• Information on indemnification of the plan fiduciary responsible for giving information on
request.
• Company stock information, if applicable.
• A copy of the most recent prospectus.
• Information related to the exercise of voting, tender, or similar rights to be executed by
participants.
These items must be provided before participants direct their investments.
Participants must also be provided with certain information on request. This information includes:
• A statement of the annual operating expenses of each designated investment alternative,
including fees that reduce the rate of return expressed as a percentage of average net assets
of the designated investment alternative. The prospectus may be sufficiant.
• Copies of prospectuses, financial statements and reports related to the investment
alternatives to the extent that this information has been provided to the plan.
• A list of assets comprising the investment alternative portfolio, including plan assets and their
value. If the investment has a fixed rate of return, the name of the issuer, the contact term and
the rate of return must also be made available upon request.
• The value of shares or units and past and current investment performance of each available
alternative, minus expenses.

3. • The value of the shares or units held in the particular participant's account.
These items must provided upon request with sufficient time for the participant to weigh it prior to
making an investment decision.
Even where 404(c) requirements are otherwise met, the plan fiduciary will not be relieved of
investment liability when a participant’s investment direction would:
• Violate the terms of the plan document.
• Cause plan assets to be owned outside the United States.
• Jeopardize tax qualified status of the plan.
• Result in a loss in excess of the entire participant account balance.
• Constitute or result in a prohibited transaction.
Plan sponsors may decide not to implement a participant’s investment instructions that would cause
these circumstances to arise and remain protected under 404(c).
Additionally, participants must be given the opportunity to make changes their investment directives as
often as the investment volatility may require. This principle is known as the “general volatility rule.”
Specifically, participants must be able to change core investment alternatives (those that constitute a
broad range of investment alternatives) at least every three months, subject to the general volatility
rule.
If an investment alternative permits changes more frequently than once every three months, at least
one core investment must permit the same frequency of change. The investment alternative into which
participants transfer must be income producing, low risk and liquid. Non-core investments are not
subject to this three month requirement, but they are subject to general volatility rule.
Finally, investment alternatives must be sufficiently diverse to permit participants a broad range of
investment alternatives that provide participants the opportunity to affect the potential return and risk
on their investments. Under this requirement, participants must be able to choose from at least three
diversified investments that:
• Have materially different risk and return characteristics.
• Enable the participant to achieve appropriate relative aggregate risk and return.

4. • Tends to minimize the overall risk of the portfolio when combined with the other available
alternatives.
Participants must be given the opportunity to diversify the investments to minimize the risk of large
losses, taking into account the nature of the plan and the size of participant accounts.
Conclusion
ERISA section 404(c) provides electing plan sponsors with a fiduciary liability shield against participant
investment decisions so long as the requirements outlined above are met. The attached checklist may
be used as a tool to assist plan sponsors in determining whether their plans are in proper compliance
with 404(c).

5. ERISA 404(C) COMPLI ANCE CHECKLIST
The ERISA Section 404(c) Checklist below will help to ensure that your plan is complying with ERISA
section 404(c). To the extent that your plan permits participants to exercise control over the assets in
their individual accounts, you will not be liable for losses resulting from investment choices made by a
participant if your plan elects to comply with ERISA section 404(c) and certain information is provided
to participants. This protection does not extend to the selection of the investment lineup, default fund
or to transactions involving voting, tender and similar rights to the extent those rights are not passed
through to plan participants.
Plan Requirements
 The plan offers three or more funds that are diversified, have materially different risk and
return characteristics, enable the participants to achieve aggregate risk and return
characteristics within the range normally appropriate for each participant and enable
participants to minimize risk through diversification.
 Plan participants are given the opportunity to give investment instructions to an identified plan
fiduciary who is obligated to comply with such instructions.
 Plan participants are given the opportunity to make investment changes at least quarterly and
with a frequency that is appropriate in light of market volatility.
Disclosure Requirements
The following information is provided to participants automatically:
 An explanation that the plan is intended to be a section 404(c) plan;
 An explanation that plan fiduciaries may be relieved of liability for any loss that is the direct
and necessary result of investment instructions given by the participant.
 An explanation of how participants may give investment instructions and any limitations on
those instructions including restrictions on transfers and restrictions on the exercise of voting,
tender, and similar rights.
 A description of each of the investment alternatives including the type and diversification of
assets, investment objectives and risk and return characteristics.
 The identity of any designated investment managers.

6.  A description of any transaction fees and expenses chargeable against the participant’s
account.
 The name, address, and phone number of the plan fiduciary responsible for giving information
upon request and a description of the information available upon request (see below).
 A copy of the most recent prospectus provided to the plan for investment alternatives subject
to the Securities Act of 1933 (this must be given immediately before or after an initial
investment).
The following information is being provided to participants upon request:
 A description of the annual operating expenses of each investment alternative that reduces
the participant’s rate of return and the aggregate amount of such expenses expressed as a
percentage of average net assets of the investment alternative.
 A copy of any prospectuses, financial statements and reports and materials relating to the
available investment alternatives to the extent the information is provided to the plan.
 A list of assets comprising the portfolio of each investment alternative, the value of each such
asset and, if the asset is a fixed rate investment contract, the name of the issuer, the term and
the contract’s rate of return.
 Information on the value of shares or units held in the participant’s own account.
 Information on the value of shares or units in available investment alternatives and the past
and current investment performance of the investment alternatives, net of expenses.
Multnomah Group, Inc.
Phone: (888) 559-0159
Fax: (800) 997-3010
www.multnomahgroup.com