A new document from the U.S. Department of Labor clears up two widespread safe harbor misconceptions: It’s not true that any QDIA will do – you need to vet your selection, and “safety in numbers” is not “safe in reality,” so T. Rowe, Fidelity and Vanguard do not provide fiduciary insulation.
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The Employee Benefits Security Administration has issued “Target Date Retirement Funds - Tips for ERISA Plan Fiduciaries,” a short document that contains invaluable advice. Please see DoL Tips
for guidance on selecting and monitoring target date funds.
The DoL guidance concludes with a recommendation that the selection and monitoring process be documented. You should have an investment policy statement, like the one at Sample TDF IPS
. TDFs are employer-directed rather than participant-directed, so the overall IPS does not do the job because it is focused on supplying choices for the participant, whereas TDFs are chosen by the fiduciary.
The rest of the document details steps that ought to be followed in choosing TDFs. For further clarification, please see the Fiduciary Guide and visit Fiduciary Corner.