"Summary Prospectus" Now May Be Used

Under ERISA Section 404(c) in Lieu of Statutory Prospectus 

On September 8, 2009, the U.S. Department of Labor (the “DOL”) issued Field Assistance Bulletin 2009-03. This guidance states that a fiduciary may continue to satisfy ERISA Section 404(c)’s requirements by providing a mutual fund’s “summary prospectus” rather than the fund’s statutory prospectus. 

ERISA §404(c) protects fiduciaries from any loss that is the direct result of a participant’s investment decision. To receive protection, however, a fiduciary must meet several requirements. One broad requirement is that a participant or beneficiary must have access to sufficient information to make informed decisions with regard to the plan’s investment options. Prior to the DOL’s recent Field Assistance Bulletin, a mutual fund’s statutory prospectus had to be provided to participants in order to meet part of this requirement. 

However, in January of 2009, the Securities and Exchange Commission (the “SEC”) published a rule allowing a mutual fund to use a “summary prospectus” as an optional way of satisfying of it’s obligation to issue a statutory prospectus. In general, a summary prospectus is more streamlined and shorter than a statutory prospectus. In response to the SEC rule, the DOL issued guidance on September 8, 2009, in the form of the Field Assistance Bulletin 2009-03. The DOL made clear that a mutual fund’s summary prospectus may now be used to meet ERISA Section 404(c)’s requirements.  

If you have any questions, please contact Jonathan I. Grossman at 412.594.5574 or jgrossman@tuckerlaw.com.


Employee Benefits Law Group: The  Employee Benefits Law Group at Tucker Arensberg, P.C. has a diverse client base of private and public employers.  We are dedicated to working with our clients to resolve complicated legal issues in a practical, common-sense and cost-efficient manner.  In doing so, we routinely work with our clients to design, establish, implement, administer, and terminate many different types of employee benefit plans. Refer to http://www.tuckerlaw.com/practice/employee.html for more information on the Employee Benefits Law Group.

TAX ADVICE DISCLAIMER: Any federal tax advice contained in this communication (including attachments) was not intended or written to be used, and it cannot be used, by you for the purpose of (1) avoiding any penalty that may be imposed by the Internal Revenue Service or (2) promoting, marketing or recommending to another party any transaction or matter addressed herein. If you would like such advice, please contact us.