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COLLECTED WISDOM™ on Qualified Default Investment Alternative

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Target-Date Funds With Annuities Can Be Prudent Default Investments

Abstract: Target-date funds with annuities can now be considered prudent default investment options, so long as certain liquidity requirements are met, the Department of Labor said in informal guidance.

Source: Bna.com (registration may be required), January 2017

What is the Maximum Equity Exposure Allowed in TDFs as QDIAs?

Abstract: The QDIA regulations do not establish fixed income or equity exposures necessary to satisfy the requirement for a mix within a QDIA, but an investment fund or product with zero fixed income would not qualify as a QDIA.

Source: Retirementlc.com, July 2016

The Devil May Be in the Default Option

Abstract: In order to provide the highest level of protection to fiduciaries, the default option should be appropriately analyzed, selected and monitored. Increasingly, sponsors are signing up for managed accounts, rather than target-date funds or diversified balanced funds, as the default option.

Source: Pionline.com, June 2016

QDIA Fiduciary Red Flags 401k Plan Sponsors Must Look Out For

Abstract: The only way to guard against excessive fiduciary liability exposure is to have a fully informed workforce. In addition, plan participants must be repeatedly notified of their QDIA exposure and reminded of their ability to opt out of the investment at any time. But, like the proverbial horse, you can lead employees to a periodic education meeting, but you can't get them to learn.

Source: Fiduciarynews.com, June 2016

Choosing Default Investment Alternatives for 401ks Requires Close Due Diligence

Abstract: Target-date funds are the runaway top choice to serve as the default option for 401k plans. But successfully gathering assets doesn't necessarily mean that a TDF is the right choice for every plan's QDIA. It certainly doesn't mean that TDFs are well-suited for every plan participant, so plan fiduciaries should not act hastily in choosing a QDIA.

Source: Investmentnews.com (registration may be required), May 2016

Participants Show Troubling QDIA Behavior Trends

Abstract: Target-date funds and other QDIAs are often thought of as set-it and forget-it investments, but new data from J.P. Morgan Asset Management highlights some troubling behaviors among participants invested in their plan's default.

Source: Plansponsor.com, January 2016

QDIAs Under the Pension Protection Act

Abstract: The Department of Labor's final fiduciary rule could be released before the next presidential inauguration in January 2017. For some, it is a very ambitious time frame and raises a question about how they can do it in that time frame.

Source: Consultrms.com, September 2015

The Challenges of Picking a QDIA

Abstract: A recent GAO report takes a look at the various factors plan sponsors consider when they pick and monitor default investments, and the results of their monitoring efforts, which hinge on plan-specific considerations.

Source: Planadviser.com, September 2015

Are Managed Accounts a Better QDIA?

Abstract: The basic premise of a managed account is the construction of a completion portfolio with participants' defined contribution assets, built around their whole asset profile and individual circumstances. Paper posit that managed accounts, customized at the participant level, have the ability to improve retirement outcomes if designed and implemented appropriately.

Source: Towerswatson.com, June 2015

Helping Employers Choose Qualified Default Investments

Abstract: Fiduciary responsibility requires the careful selection of default retirement investments. Benefit advisers can add value with knowledgeable advice on qualified default investment alternatives, including through the use of selection tools.

Source: Benefitnews.com, June 2015

Four Things You Need to Know About Default Funds

Abstract: A growing number of retirement plan participants, and retirement plan assets, are being invested in the default option selected for the plan. The existence of default funds isn't exactly a new phenomenon. Arguably it's as old as that first participant enrollment form returned without the investment election section completed. Here are four things you should know about default funds.

Source: Napa-net.org, March 2015

Employee Demographics Play Role in QDIA Selection

Abstract: Companies that sponsor 401k plans need to consider employee demographics when deciding which types of qualified default investment alternative to offer, according to research by Manning & Napier.

Source: Benefitnews.com, March 2015

Is Your QDIA Increasing Your Fiduciary Risk?

Abstract: If a Qualified Default Investment Alternative is supposed to help employees, how can it increase your fiduciary risk? The QDIA is supposed to go under a due diligence screen similar to your other investments. This screen is your fiduciary liability unless you transfer the risk to a financial professional that takes on the risk of its selection, monitoring and replacement. Many financial professionals and the press say that the target date strategy is the most popular. They often then rush to recommend its use. However, what is it and what are the other choices?

Source: 401kadvisor.us, October 2014

The QDIA Decision: Does Your Strategy Align With Plan Goals and Demographics?

Abstract: This paper is intended to discuss how plan demographics and sponsor goals may influence the QDIA selection process, and covers the following points: Selecting an appropriate type of QDIA in light of plan demographics and sponsor goals; If the fiduciary decides to use TDFs, selecting specific target date fund investment strategies that best fit plan demographics and sponsor goals; and, Given the DOL’s guidance for plan sponsors to consider custom glide path alternatives, the demographics that may suggest a need for customization.

Source: Manning-napier.com, September 2014

Qualified Default Investment Alternatives

Abstract: A key provision of the PPA was providing a safe harbor for plan fiduciaries investing participant assets in certain types of default investment alternatives in the absence of participant investment direction. Article discusses the conditions must be met for fiduciary relief.

Source: Strategicbenefitservices.com, June 2014

Target-Date Strategies As a QDIA

Abstract: The provisions of the Pension Protection Act of 2006 defined target-date funds as one of three types of QDIAs for use in qualified retirement plans. While the final regulations require plan fiduciaries to meet several technical and operational requirements to qualify for safe harbor protection, the following discusses the utilization of the Manning & Napier target-date options as QDIAs, and provides guidelines for translating individual participant birthdates into a Manning & Napier target-date option when target-date funds are being utilized as the default investment.

Source: Manning-Napier.com, June 2014

Safe Harbor Investments

Abstract: When examining retirement plan design, sponsors naturally have many questions. What investments should be offered to plan participants? Are the participants legally protected? Are you, as a plan sponsor, legally protected? A decision that speaks to all of these questions is whether to choose a qualified default investment alternative or a non-QDIA investment as the default investment for plan participants.

Source: Plansponsor.com, July 2013

Fiduciary Implications: Using Re-enrollment to Improve Target-Date Fund Adoption

Abstract: In light of the benefit to participants of using TDFs and the fiduciary protections offered by the QDIA rules, fiduciaries are well advised to add TDFs to the investment line-up and to take steps to cause as many participants as possible to be invested in those funds. This white paper discusses legal principles and industry practices, and then illustrate the advantages of using the re-enrollment process to provide the greatest protection for plan fiduciaries.

Source: Drinkerbiddle.com, June 2013

QDIA Q&A: A Resource for Plan Sponsors

Abstract: A qualified default investment alternative, or QDIA, is intended to encourage investment of employee assets in appropriate vehicles for long-term retirement savings. This Q&A will help you understand how selecting QDIAs that comply with the Department of Labor regulations can reduce fiduciary liability for plan sponsors and help participants save for retirement.

Source: Invesco.com, October 2012

QDIAs and Affirmative Investment Elections

Abstract: In Bidwell v. University Medical Center, Inc., the Sixth Circuit ruled that an employer was not liable for resulting financial losses when it transferred assets in participants' retirement plan accounts from a stable value fund to a Qualified Default Investment Alternative ("QDIA") even though the participants had previously elected the stable value fund.

Source: Bryan Cave, July 2012


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