5 Steps to Smart QDIA Selection

By Diane Gallagher - July 17, 2017

Qualified Default Investment Alternatives (QDIAs) are the risk management go-to for plan sponsors and a convenient way for plan participants to get a well-diversified investment vehicle to save for retirement. But choosing one takes thoughtful consideration. How can advisors help their plan sponsor clients fulfill one of their most important duties?

Properly selecting a QDIA is the cornerstone for complying with Department of Labor (DOL) rules, and a critical way to help increase fiduciary protection. In conjunction with Jason Roberts, nationally-recognized ERISA attorney of the Retirement Law Group, we developed an easy-to-follow process to help clients in QDIA selection.

The five steps walk you through a review of the current default fund, research options and QDIA selection, followed by implementation and oversight. This step-by-step guide covers the major milestones—including key considerations for each stage.

Use the five-step process below when selecting an investment that meets QDIA rules.

1. Assess

Determine if the process used to select your plan’s current default meets QDIA guidance.

2. Research and Evaluate

Collect data on available providers and QDIA types to determine the best match for your plan and participants.

3. Select

Choose the most appropriate investment to serve as your plan’s QDIA based on specific, pre-determined criteria.

4. Implement

Choose an implementation method that best serves the needs of your plan and your participants.

5. Monitor

Document changing needs or demographics, confirm satisfaction of relevant criteria, and periodically re-evaluate QDIA selection process.

Diane Gallagher
Diane Gallagher

QDIA
Qualified Default Investment Alternative

QDIA Selection Process

Get more information about the QDIA Selection Process and how you can help your plan sponsor clients.

More Information
  • Related Articles
  • More From Author

Asset TV: In the Hot Seat

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.

The Making of a Glide Path

Understanding the impact of design decisions on retirement outcomes.

How to Evaluate Target-Date Funds: A Practical Guide

The paper explains in a clear and comprehensive way the balance-of-risks approach that underpins the creation of our own target-date series.

    Retirement Savers to Employers: Help Me Save More

    A survey of retirement savers says employees count on their employers to get prepared for retirement. Review key 2018 findings.

    Start Your Engines for Retirement Savings

    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.

    5 Steps to Smart QDIA Selection

    Properly selecting a QDIA is the cornerstone for complying with the DOL rules. Consider these 5-steps when selecting a QDIA investment.

      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.