New Proposed QDIA Rules Bookmark

The opportunity to save in an employer-sponsored retirement plan is certainly an important benefit. Over the years plan sponsors have sometimes encountered issues with employees who begin to participate but who make no affirmative election about investments. The Pension Protection Act of 2006 (PPA) addressed this by providing employers a fiduciary “safe harbor” by offering a Qualified Default Investment Alternative ("QDIA").  QDIA rules cover investments made on behalf of participants in a plan's default investment option such as life cycle or target date funds, balanced funds, or managed accounts.  

The DOL’s Employee Benefit Security Administration (EBSA) has issued proposed changes to the content required in the QDIA notice. In particular, the changes increase the amount of information participants receive about target date funds. According to the new rules, the following information would be required:
  • QDIA investment’s issuer’s name
  • The investment’s objectives and goals
  • The QDIA’s investment strategies and risks
  • The investment's historical performance data
  • Expenses charged and fees imposed that impact investment return.
If the QDIA is a target date fund, additional information must be provided describing:
  • How the target date fund’s asset allocation will change over time; and
  • When the fund will reach its most conservative position; and
  • If the fund refers to a specific date, an explanation of the date's relevance.

Comments are closed.

Showing 0 Comment