In prior posts, I have discussed the importance of having up-to-date investment policy statements. Not only are they a good proof of diligence on the part of fiduciaries (assuming they are followed) but they also serve as a sort of check list to verify that appropriate investment options are being offered. But are they plan documents and do they actually have to be provided to participants upon request? 

First, let me say that I am a fan of providing participants almost anything they ask for just to support a contention that they have all relevant information. But on top of that, ERISA requires plan sponsors to provide certain plan documents to participants upon request. Under ERISA, a plan administrator must, upon written request of any participant or beneficiary, furnish various documents, including a copy of the latest updated summary plan description and any “contract, or other instrument under which a plan is established or operated” and it seems logical that the investment policy statement is a document under which a plan is operated. But there is a mild conflict between the Circuits about whether a request for plan documents includes the obligation to provide a copy of the investment policy statement.

A recent case out of the Fifth Circuit highlights the confusion. In Murphy v. Verizon Commc’ns, Inc., the Court of Appeals for the Fifth Circuit was asked specifically to consider whether plan investment guidelines must be provided upon request to plan participants and beneficiaries. The court looked at the requirements in ERISA and determined that the real question was one as to whether the investment policy statement was actually binding on the operation of the plan. The Court held that the disclosure requirement of ERISA should be narrowly interpreted, applying only to formal documents governing the plan. Since the participant did not claim that the guidelines were binding or mandatory in plan operation, they did not have to be disclosed. 

Now under the Sixth Circuit and, to some extent, the Ninth Circuit, the determination would have been less cumbersome because these courts generally favor disclosure of any documents that help participants understand their rights and benefits. This decision seems closer to the ones in the Second, Fourth, Seventh, and Eight Circuits that generally favor the idea that plan documents related to the operation of the plan are the ones to be disclosed, not every available document. Either way, there seems to be a clear suggestion that there is a preference to providing a copy of the investment policy statement whenever a participant makes a request for plan documentation. 

So why write about this? Well, it is a Circuit Court decision that means not only was there a lower court case but there was an appeal. And all of this over the failure to provide a document. Plan administrators have a duty to respond to requests for documentation from participants and that includes all documents governing the operation of the plan. This would seem to include investment policy statements, which further confirms that plans should have one in writing to provide.  

To avoid litigation like this, sponsors and administrators should make sure they have current statements, and make sure that they provide them to participants if they are requested. Otherwise, you might end up being the subject of an article like this in the future.

Keith R. McMurdy is a partner with Fox Rothschild focusing on labor and employment issues; he can be reached at kmcmurdy@foxrothschild.com or (212) 878-7919.

The information in this legal alert is for educational purposes only and should not be taken as specific legal advice.

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