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EBSA Ready for Public Comment on TDF Disclosure

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The Department of Labor’s Employee Benefits Security Administration disclosed in a notice on Wednesday that is reopening the period for public comment on proposed regulatory amendments relating to enhanced disclosure concerning certain qualified plan funds.

Unveiled in November 2010, the EBSA proposal aims to improve the information that is disclosed to participants and beneficiaries concerning target date or similar funds (TDFs).  The EBSA notice says the proposal would amend the DOL’s qualified investment alternative regulation (29 C.F.R., §2550.404c-5) and participant-level disclosure regulation (29 C.F.R. §2550.404a-5).

The comment for the proposal originally closed on January 14, 2011. EBSA says it has extended the deadline to 45 days after the publication of the new notice (RIN 1210-AB38) in the Federal Register.

The proposal, EBSA adds, includes more specific disclosure requirements for TDFs, based on evidence that plan participants and beneficiaries would benefit from additional information concerning these investments.

The proposal would specifically require an explanation of the TDF’s asset allocation, how the asset allocation will change over time and the point in time when the TDF will reach its most conservative asset allocation. The proposal would also require a chart, table or other graphical representation that illustrates the change in asset allocation.

The EBSA notice adds the proposal would additionally require, among other things, information about the relevance of the TDF’s target date, assumptions about participants’ and beneficiaries’ contribution and withdrawal intentions following the target date; a statement that TDFs do no guarantee adequate retirement income; and indicate that participants and beneficiaries may lose money by investing in the TDF, including losses near and following retirement.


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