Currently, many plan sponsors use money market or similar investments when they must invest employees' 401(k) contributions without direction from them — so-called default investments. Plan sponsors were afraid that other investment options could potentially lead to fiduciary-based lawsuits. With the expected rise of employers using negative-option 401(k)s due to the passage of the Pension Protection Act of 2006, Congress realized that money market investments would not give participants the necessary returns needed for their retirement. As part of the Act, they directed the DOL to issue new regulations that would provide fiduciary relief for plan sponsors that offered default investments other than just money market accounts.
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