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You may want to check ERISA section 404(c) and the fiduciary responsibilities of companies offering defined contribution plans. Here's a good resource on the matter, in human readable terms:

From my (uneducated, unprofessional) understanding, compliance with 404(c) is what allows defined contribution plan sponsors to not be responsible for investment losses felt by participants within the plan.

And (along with other requirements) I believe that in order to comply with 404(c), a series of reasonable and diversified choices needs to be made available to participants, across a broad swath of the risk/reward spectrum. Additionally, I think that the plan fiduciaries need to regularly assess the investment options available in the plan to assure that they meet the compliance tests.

If I had to guess, a plan that offered one money market fund, one non-company stock choice, and one other mutual fund would have a hard time showing compliance with 404(c). I don't know the legality of such a plan, but presuming that it's legal, the company could potentially have a hard time protecting itself from liability from any participant investment losses.

Of course, I am neither a lawyer nor a retirement plan design professional....

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