Target Date Funds under Dept of Labor Scrutiny

SOLO 401k

The Department of Labor is proposing to amend its qualified default investment alternative regulation (29 CFR 2550.404c-5) and participant-level fee disclosure regulation (29 CFR 2550.404a-5).1.

In particular, the proposal would require a rationalization of the TARGET DATE FUNDS’s asset allocation, how the asset allocation will change over time (the TARGET DATE FUNDS’s “glide path”), and the date when the TARGET DATE FUNDS will reach its asset allocation zenith; including a chart, table, or other chart representation demonstrating the changes in asset allocation. 

The proposal also would require information about the significance of the TARGET DATE FUNDS’s “target date;” including any hypothesis about participants’ contribution and withdrawal intentions following the target date. 

Additionally a disclosure statement that TARGET DATE FUNDSs do not guarantee sufficient retirement income and that participants may lose money by investing in the TARGET DATE FUNDS, including losses both before  and after retirement.

Plan participants would benefit from any additional information concerning these investments.

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