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Employee Benefits Security Administration

Fact Sheet

QDIA - Target Date Fund Disclosure

EBSA plans to enhance retirement security by proposing an amendment to its qualified default investment alternative (QDIA) regulation to ensure that comprehensive information about the benefits and risks of investing in target date funds is disclosed to participants in the required QDIA notice, ultimately supporting the Secretary's good jobs for everyone policy.

Key Action: Publication - Proposed Amendment to QDIA Regulation

The Department's EBSA plans to publish a proposed amendment to the QDIA regulation in August 2010. This guidance will ensure that plan participants are provided with comprehensive information to evaluate target date or similar funds that have been selected as their plan's default investment.

Key Concern and Issues to be Addressed

The popularity of target date funds in 401(k)-type plans is growing, in part due to their inclusion as a category of permissible investments in the Department's QDIA regulation. According to a recent survey, almost 58 percent of 401(k)-type plans offered target date funds as an investment option in 2008. And out of the approximately 40% of 401(k)-type plans that contained an automatic enrollment feature, almost 60% of these plans used target date funds as a qualified default investment alternative.

Recent attention has focused on the importance of understanding the unique characteristics that distinguish target date funds from other types of investments, the differences among the various target date funds available, and how these differences can affect the retirement savings of employees. The Department anticipates that this proposed amendment will better assist plan participants in evaluating target date funds that have been selected as default investments. The Department intends that the information in the QDIA notice will be consistent with that which is disclosed to participants who actively make decisions among their plans' investment options.


The Department published its final QDIA regulation in October 2007. Target date and similar funds were included in the regulation as one of the categories of investments that plan fiduciaries may use to invest on behalf of participants who do not give investment directions. One of the requirements that must be satisfied for a plan fiduciary to obtain relief under the QDIA regulation is a notice describing the plan's default investment must be furnished to participants.

In recent years, attention has been given to the adequacy of information that is disclosed, both to plan fiduciaries and to plan participants, about the benefits and risks of investing in target date funds. The Department's ERISA Advisory Council studied several aspects of target date funds in 2008, and in 2009 the Department and the U.S. Securities and Exchange Commission held a joint public hearing to examine several issues related to target date funds, including how they are selected by plan fiduciaries and by investors. Based on these studies and on testimony presented at the hearing, the Department decided to enhance and provide more specificity concerning the information about target date or similar funds that must be disclosed pursuant to the QDIA regulation.