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Target Date Retirement Funds - TIPS for ERISA Plan Fiduciaries

The Plan Sponsor Council of America (PSCA) recently released the 2013 403(b) Plan Survey. The survey showed that 73.6% of plans offer target date funds (TDF) as an investment option. Similar findings were noted for 401(k) plans. Additionally, many plan sponsors have identified TDFs as their plan’s qualified default investment alternative (QDIA). Target date funds can be an attractive investment option for employees who do not want to actively manage their retirement portfolio. The inflow of monies into TDFs in recent years reflects the growing popularity of these types of investments.


Employers and plan fiduciaries have an obligation to prudently select and monitor the investments offered in their retirement plan. Although all TDFs have similar characteristics, regardless of the investment provider, there are several differences that can significantly affect the way a TDF performs. It is important that fiduciaries understand these differences when deciding which TDF is appropriate for their plan.

The Department of Labor has issued some guidance that fiduciaries can use to select and monitor TDFs as well as other investment options in employee directed, defined contribution plans. The document, "Target Date Retirement Funds – Tips for ERISA Plan Fiduciaries," provides helpful information to assist you in meeting your fiduciary responsibilities.

Many plan sponsors are not comfortable conducting the required due diligence on their plan’s investment options, either lacking the expertise or the time to effectively review the funds, both initially and on an on-going basis.

If you have any questions about target date funds, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at hanysbenefits@hanys.org.

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