DOL, SEC's Target Date Fund Guidance Is Released

Phase two of the target date fund initiative, Borzi said at the ICI event, will be a “best practices checklist” for plan fiduciaries to use; the checklist, which Borzi said will be out in a matter of weeks, is designed for small and medium-sized plan sponsors. The third piece of the initiative will include an amendment to the Qualified Default Investment Alternative (QDIA) regulation as it relates to target date funds, Borzi said.

As quite a few mutual fund executives noted at the ICI conference, target date funds are becoming the most popular default option in 401(k) plans. Greg Johnson, president and CEO of Franklin Resources, said at the event that target date funds will become a “bigger and bigger” part of the new money that’s flowing into 401(k)s.

Borzi reminded attendees that EBSA is “taking a fresh look” at the definition of fiduciary, and won’t be issuing a proposed regulation in this area until later this fall. “We need to look at the fundamental regs that were issued after ERISA, and bring those up to date,” she said. Fiduciary duty “is the lynchpin” of DOL’s enforcement activities.

EBSA is also sifting through the 700 comment letters that it received regarding its request for information (RFI) on how best to integrate lifetime annuities and other income-generating options into 401(k)s and other employer-sponsored retirement plans.