Compliance March 4, 2013

EBSA Offers Tips for Selecting TDFs

March 4, 2013 (PLANSPONSOR.com) – The U.S. Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) prepared general guidance to assist plan fiduciaries in selecting and monitoring target-date funds (TDFs).

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The document says the guidance can also be used for other investment options in participant-directed individual account plans. The guidance includes a review of TDF basics.  

In the guidance, the EBSA suggest fiduciaries: 

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  • Establish a process for comparing and selecting TDFs; 
  • Establish a process for the periodic review of selected TDFs; 
  • Understand the fund’s investments—the allocation in different asset classes (stocks, bonds, cash), individual investments and how these will change over time; 
  • Review the fund’s fees and investment expenses; 
  • Inquire about whether a custom or nonproprietary target-date fund would be a better fit for the plan; and 
  • Develop effective employee communications. 
The EBSA guidance is at https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/fact-sheets/target-date-retirement-funds.pdf.

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