Defined terms for the annuity market and lifetime income landscape.
The diversification requirement is the ERISA fiduciary duty requiring a plan fiduciary to diversify plan investments so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so.
The Employee Retirement Income Security Act (ERISA) is the 1974 federal law that sets the rules for private-sector retirement and welfare benefit plans in the United States, establishing fiduciary duties, participant rights, and disclosure and enforcement requirements.
An ERISA fiduciary is any person or entity that exercises discretionary authority over a covered employee benefit plan's management, its assets, or the administration of the plan, and who is therefore subject to the standards set by Title I of the Employee Retirement Income Security Act.
ERISA preemption is the doctrine under the Employee Retirement Income Security Act that supersedes state laws to the extent those laws "relate to" any employee benefit plan covered by ERISA, with specified exceptions preserving state authority over insurance, banking, and securities regulation.
ERISA Section 404 is the provision of the Employee Retirement Income Security Act that sets out the core fiduciary duties — loyalty, prudence, diversification, and adherence to plan documents — that every ERISA plan fiduciary must satisfy in administering a covered plan.
