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John, Attorney
Category: Legal
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Experience:  Licensed and practicing attorney.
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When a trustee/administrator of a 403B plan is making a wholesale

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When a trustee/administrator of a 403B plan is making a wholesale change in availability of investment funds and from a single tier to a three tier structure of investments to be used by its participants, how is it required under its fiduciary obligations/responsibilties of that 403B retirement plan to notify participants, both current employees and retirees. Is a brouchure describing the changes including a schedule of information meetings one could attend and availability of on site councelors sent by regular mail one time sufficient or is a positve contact required; either registered mail, or return post card acknowledgement or follow-up phone call required? Both a legal and moral answer would be good.
Hi, thanks for submitting your question today. Under the Employee Retiement Income Security Act (ERISA) a plan administrator would be required to provide a material plan changes in writing. The method of furnishing this writing, according to the regulations, is supposed to be a "reasonably calculated to ensure actual receipt of the material by plan participants, beneficiaries and other specified individuals". The regulation further states "Material distributed through the mail may be sent by first, second, or third-class mail. However, distribution by second or third-class mail is acceptable only if return and forwarding postage is guaranteed and address correction is requested. Any material sent by second or third-class mail which is returned with an address correction shall be sent again by first-class mail or personally delivered to the participant at his or her work site."

So there is some requirement that mailed brochures be forwarded, but, to my knowledge, unless you leave a forwarding address with the post office, then you would not get the brochure. Return Receipt and delivery confirmation is not necessary, but they would have an obligation to find you if they received a non-deliverable return from the post office. You can view the particular regulations here.

If it was the case that they relieved a non-deliverable return from the post office, and you were prejudiced because of it, then you'd have a possible fiduciary violation claim against the plan. And you may want to report the same to the Dept of Labor - Employee Benefits Division here.

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Customer: replied 4 years ago.

I did not have a change of address, I just did not receive the info and the administrator unilaterally changed my investments that resulted is $11,000 less being earned than would have been earned under the original investments.

I see. Here's the best thought I can give you. First, you may have a claim of fiduciary violation. The plan is going to maintain that they sent it and did not get a non-deliverable return from the post office. You would have to prove both that you did not receive it and that they had notice that you did not get it. You'd have to attempt to prove this in discovery, which is the phase of a lawsuit in which each side asks for records and testimony from the other party to prove/defend their claim. You lost a fair amount of money because of this but I'm doubtful an attorney would take a case of this amount because the potential reward to the attorney is simply not worth it - wouldn't be worth their time. The other thing you could do is notify the department of labor here, and perhaps they will investigate and bring an administrative charge against the plan.
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