Citing TDFs’ benefits to participants and the safe harbor protection offered to fiduciaries under the QDIA rules, Fred Reish and Bruce Ashton of Drinker Biddle advise plan fiduciaries to add TDFs to their investment lineups and encourage as many existing participants as possible to invest in them. A default through reenrollment is a particularly effective way of achieving the latter goal, Reish and Ashton note in a new white paper — although a “mapping” or an investment reset process can be effective as well.
A reenrollment strategy can be used when going through a plan conversion or while staying with the exiting provider; in both scenarios, participants must be given the opportunity to make a new investment election or they will be defaulted into the plan’s QDIA.
The new white paper, written for plan sponsors, provides a comprehensive, treetop-level look at the issues and strategy alternatives, with an emphasis on reenrollment. We’ll give it a 6.5 on the Must-Read-O-Meter.
