Department of Labor Proposes Additional Disclosure Rules for QDIAs and TDFs

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The U.S. Department of Labor recently issued proposed regulations requiring additional disclosures to participants who direct investment in qualified default investment alternatives (QDIAs) and target date funds (TDFs). These proposed disclosure rules will impact participant-directed account plans that default participant money into QDIAs in the absence of affirmative participant investment elections, as well as participant-directed account plans that permit or mandate investment in TDFs. Assuming the final regulations are substantially similar to the proposed regulations, compliance with these additional disclosure rules will require significant effort from plan sponsors, plan fiduciaries and plan administrators.

The U.S. Department of Labor (DOL) issued proposed regulations that require additional disclosures for a participant’s investment in qualified default investment alternatives (QDIAs) and target retirement date funds (TDFs). The DOL had two primary reasons for issuing these proposed regulations. First, the DOL provided more guidance and specifics on the content for participant disclosures under existing QDIA regulations. Second, following the 2008 market decline and recent public hearings on TDFs, the DOL believed that participants would benefit from additional disclosures regarding investments in TDFs.

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