During the climax of the movie A Few Good Men, Jack Nicholson's character confronts Tom Cruise's with the memorable line “You can't handle the truth!”
We could have something similar brewing in 401(k) and 403(b) plans—and plan sponsors might not like it.
Instead of the word “truth,” substitute the word “freedom” and you'll see what I mean. The beauty of 401(k) plans has always been the 404(c) diversity requirement. As long as plan sponsors offer three “materially different” investment options (that, of course, pass a minimal due diligence regime), the plan sponsor is not liable for the investment decisions of individual employees. In a sense, employees have a degree of freedom, although not unlimited.
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