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By Diane Gallagher - June 28, 2017
You don't have to look very far to see why Qualified Default Investment Alternatives (QDIAs) are important to retirement plan sponsors and participants—their advisors too.
Stricter regulations, economic downturns, and increased legal activity have motivated many plan sponsors and advisors to increase their fiduciary protection through QDIAs. In addition, more participants are finding QDIAs to be a convenient investment choice for retirement, mostly in the form of target-date investments.
When QDIA rules—set by the Department of Labor (DOL)—are satisfied, it can ease the burden for plan fiduciaries who may no longer be liable for losses sustained by participants. Participants, in turn, get diversified investments for retirement, and a potentially smoother ride in reaching their goal. Retirement plan design has also been affected, with plans implementing more automatic features to enhance participant outcomes.
Knowing the history of QDIA rules can help advisors and plan sponsors understand the rapid growth of target-date investments and changes in plan design. It also helps you understand why the selection process is vital to the success of a retirement plan.
Help clients satisfy their fiduciary obligations by adopting and implementing an objective and prudent QDIA selection and monitoring process.
Rich Weiss, CIO, Multi-Asset Strategies, addresses a range of topics, including the drivers of return and risk in target-date funds, elements of glide path design and a breakdown of the SECURE Act.
Understanding the impact of design decisions on retirement outcomes.
The paper explains in a clear and comprehensive way the balance-of-risks approach that underpins the creation of our own target-date series.
A survey of retirement savers says employees count on their employers to get prepared for retirement. Review key 2018 findings.
August 21, 2018
In our fifth national survey of plan participants, we again heard common themes about participants’ perceptions on saving for retirement. As in years past, the results revealed that employers and plan administrators can have a profound influence on an employee’s ability to save for a secure future.
December 05, 2017
Properly selecting a QDIA is the cornerstone for complying with the DOL rules. Consider these 5-steps when selecting a QDIA investment.
July 17, 2017
1 Target Date Funds: Translating Department of Labor Guidance into Action; JPMorgan Asset Management, Strategic Insight Target Date Assets Analysis, 2010 & 2013 Data
2 DCIIA Plan Sponsor Survey 2014
3 Department of Labor, Employee Benefits Security Administration, Regulation Relating to Qualified Default Investment Alternatives in Participant-Directed Individual Account Plans, April 2008
4 Target-Date Fund Use in 401(k) Plans and the Persistence of Their Use, 2007-2009. (2011, August)
5 Hanson, J. (2013, June 20). Target-Date Funds Shrink in Number, but Popularity Is Growing
6 Auto Enrollment and Escalation: Does It Really Work? (n.d.)
7 Trends in 401(k) Plans and Retirement Rewards, WorldatWork and the American Benefits Institute, March 2013
8 Plan Sponsor Guide to Qualified Default Investment Alternatives, American Century Investments, June 2017
9 Blakely, S. (2016, April 28). New Hires Continue to Favor Target-Date Funds for 401(k)s
10 Plan Sponsor Council of America’s 59th Annual Survey of Profit Sharing and 401(k) Plans Reflecting 2015 Plan Experience
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.