Starting in 2008, the Department of Labor provided plan sponsors with some level of cover when selecting a QDIA, or qualified default investment alternative, from three anointed types of qualified investment options: 1) target-risk or balanced funds 2) target-date funds 3) retirement managed accounts
To receive this cover, plan sponsors must follow a prudent QDIA selection process. When selecting a target-risk fund there is an obligation to consider plan demographics, that may carry over to selecting other QDIAs. Unfortunately, there has been a lack of clear guidance on practical methods for incorporating plan demographics into the selection of the QDIA.
• Identify what data plan fiduciaries are required to consider when selecting a QDIA • Recognize how recent technological advances make it possible for plan fiduciaries to consider plan demographics when selecting a QDIA • Recall how that same data can be used to choose an appropriate target-date fund glidepath • Identify how the recent development of “dynamic default” solutions may factor into the QDIA decision