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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).
Reported by Rebecca Moore
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:
- 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.