Fred Reish, Drinker Biddle’s resident ERISA expert, provides an investment policy guide to plan fiduciaries when selecting and monitoring TDFs. Though TDFs are similar in nature to other plan investments, Reish suggests that they are sufficiently different to warrant different treatment. In particular, Reish advises that a TDF’s IPS should cover:
• Benchmarking investments and expenses against applicable TDFs
• Asset allocation models
• Whether the glide path is “to” or “through”
• Evaluation of underlying investments
Reish suggests that a plan fiduciary’s selection process for TDFs should include:
• Company demographics
• Asset allocation
• TDF
Fiduciaries should also negotiate for the best share class depending on the plan and fund size. While some may argue that an IPS should be broad to avoid unwanted action or liability — unlike Reish’s recommendation to be more specific — for TDFs, a well-thought-out, documented process suggested by Reish is always prudent.
