At a breakout session at the NAPA/ASPPA 401(k) Summit in Las Vegas last week, industry experts discussed whether it’s more prudent to select the TDF before the record keeper. With more TDFs being used as the QDIA and more money flowing into them, and some record keepers either having limited choice or requiring a proprietary investment, the idea may not seem so strange.
Steve Geisert of PIMCO noted that most people choose which movie to see before they choose which theatre to see it in. Plan sponsors’ investment choices carry more liability than their selection of record keepers, according to Mark Davis of CapTrust. Though larger plans have more investment flexibility, small plans are usually stuck with the default, because either there is no other choice or the alternatives substantially increase the cost of servicing the plan.
