Under ERISA 404(c) provisions, which statement about participant control is CORRECT?

The correct understanding regarding participant control under ERISA 404(c) provisions is that the trustee would not be liable for losses if the participant's direction is responsible for those losses, even if they stem from location issues. ERISA 404(c) allows participants to have control over their accounts, which means they can make their own investment choices. When participants exercise this control, they assume the investment risk, and as a result, the fiduciary liability typically rests with them rather than the trustee. The intention behind this provision is to encourage individual accountability in managing retirement funds.

The implications of this are significant: trustees are generally shielded from liability for investment outcomes that arise directly from a participant's decisions. This framework is designed to promote informed decision-making by participants while protecting trustees from undue liability. Thus, in the context of a participant's specific directions—regardless of the nature of those directions—the overarching principle stands that the responsibility for any resulting investment performance or operational issues falls on the participant, not the trustee.