Skip to main content

Target Date Fund Basic Definitions - Part 2

The U.S. Department of Labor's Employee Benefits Security Administration issued tips intended to help plan sponsors select and monitor target date funds (TDFs) in their investment lineups. These target date fund basic definitions will help plan fiduciaries navigate the Department of Labor Tips for ERISA Plan Fiduciaries.
  1. Asset classes are groups of securities that exhibit similar characteristics. The three main asset classes are equities (stock), fixed-income (bonds), and cash. Additional asset classes that may be employed within a target date fund are: world bond, emerging markets, and/or real assets like commodities and real estate investment trusts (REITs).
  2. Risk is the probability or likelihood that an investment’s actual return will be different from the expected return. This includes the possibility of losing some or all of the original investment.
  3. Volatility refers to the relative rate at which the price of a security moves up or down. Certain investments are more volatile than others.
  4. Proprietary target date funds are pre-packaged investments comprised of the underlying mutual funds of a single investment firm.
  5. Custom target date funds are built by plan sponsors who can choose to customize the glide path, asset classes, and/or underlying mutual funds appropriate for their plan demographics.
  6. Regulatory disclosure requirements refers to the DOL requirements that participants in retirement accounts receive information about the fees and expenses associated with their plans, including target date funds. Proposed regulations are being considered that would improve the disclosures that must be made to participants, specifically about target date funds.
Read 4 Steps to Building an Optimal Retirement Plan Lineup for Participants and download the Fiduciary Checklist for Target Date Fund Decisions to learn more. If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (800) 388-1963 or e-mail us at hbs@hanys.org.

Popular posts from this blog

COVID-19: Retirement and Benefit Plan Resources

As the COVID-19 crisis continues to unfold, we are closely monitoring news and updates from top sources. We’ll be updating this section as new developments unfold. Here are several key articles and links to help plan sponsors and administrators navigate the COVID-19 impact to retirement and benefit plans: Retirement Plans 4 Key CARES Act Provisions for Retirement Plan Sponsors Markets React to Coronavirus   Important Considerations for Retirement Plan Sponsors during the Coronavirus Pandemic In Fed We Trust Participant Education Services: Timely Help from a Safe Distance CRDs 100% Taxable for New York State and Local Income Tax Purposes in 2020 IRS Permits Remote Notarization of Participant Elections   Employee Benefits CARES Act Expands Health Coverage Rules Understanding the Historic $2 Trillion Stimulus Package Employee Compensation and Benefits During Closures and Furloughs DOL Clarifies Exemptions to Coronavirus Paid Leave Laws Small Business Exemption to

HBS named as a Top 100 Retirement Plan Adviser, again!

The 2021 PLANADVISER Top 100 Retirement Plan Advisers list is out—and HANYS Benefit Services is on it!  PLANADVISER’s Top 100 Retirement Plan Advisers is an annual list of noteworthy retirement plan specialists, based on number of plans and total assets under advisement — including sponsors of defined contribution, defined benefit and nonqualified plans. “Each recognition by PLANADVISER reaffirms our commitment to our clients.” said James J. Kelley, president, HBS. “HBS conducts business in a manner that is in the best interests of our clients, with an ultimate goal of assuring our clients’ employees are ready for retirement. We are grateful to our clients for allowing us that opportunity.” HBS is categorized by PLANADVISER as a large team, having met this year’s eligibility standards of $5 billion or more retirement plan assets under advisement. HBS was previously named to PLANADVISER’s list in 2019, 2017 and 2016.  HBS is a full-service, independent consulting firm, registered invest

Coronavirus-related distributions 100% taxable for New York state and local income tax purposes in 2020

The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law on March 27. Under the Act, participants affected by the coronavirus may be able to take distributions in 2020 of up to $100,000 from an employer-sponsored retirement plan or an IRA. Although allowing these distributions from a qualified retirement plan is optional, we have seen that a number of employers have chosen to amend their plans to permit such distributions. The Act provides that coronavirus-related distributions will not be subject to the mandatory 20% withholding nor the 10% early withdrawal penalty (for those younger than 59½) that would otherwise apply.