Per the Department of Labor’s (DOL) guidance, the intent of the regulation “is to ensure that an investment qualifying as a QDIA is appropriate as a single investment capable of meeting a worker’s long-term retirement savings needs.”
What is the DOL's guidance to satisfy the QDIA requirements?
- A QDIA may not impose financial penalties or otherwise restrict the ability of a participant or beneficiary to transfer the investment from the qualified default investment alternative to any other investment alternative available under the plan.
- A QDIA must be either managed by an investment manager, or an investment company registered under the Investment Company Act of 1940.
- A QDIA must be diversified so as to minimize the risk of large losses.
- A QDIA may not invest participant contributions directly in employer securities.
- A QDIA may be:
- Life-cycle or targeted-retirement-date fund;
- Balanced fund; or
- Professionally managed account.
Source: Department of Labor (DOL)
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