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The Fiduciary Responsibility for Self-Directed Brokerage Accounts in 401(k) Plans

By Fred Reish

Including a self-directed brokerage account (SDBA) window in a 401k plan is a fiduciary act and the plan fiduciaries must prudently select and monitor the SDBA service provider.

Fred Reish is an ERISA attorney whose practice focuses on fiduciary responsibility, retirement income, and plan operational issues. He has been recognized as one of the “legends” of the retirement industry by both PLANADVISER magazine and PLANSPONSOR magazine.

While advisers and 401(k) plan committee members are familiar with the considerations for selecting and monitoring a plan’s investment line up of mutual funds, the same cannot be said of the requirements for selecting a brokerage or mutual fund “window” for participants who want to venture beyond the pre-set line-up. This article explores the requirements for the selection and monitoring of those windows.

The views expressed here are those of Fred Reish. They should not be construed as investment advice or as the views of Hartford Funds or the employees of Hartford Funds. They are based on available information and are subject to change without notice. The information above is intended as general information and is not intended to provide, nor may it be construed as providing, tax, accounting or legal advice. As with all matters of a tax or legal nature, please consult with your tax or legal counsel for advice. This material and/or its contents are current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Fred Reish.

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