Recently, members of NAPA's leadership (Joe DeNoyior, Steve Dimitriou, Jeff Acheson and Lisa Kottler) met with representatives of the Government Accountability Office (GAO) to gain insights for a new study the GAO is conducting on the use of qualified default investment alternatives (QDIAs) in 401(k) plans.
The study, undertaken at the request of retiring U.S. Rep. George Miller (D-Calif.), is a follow-up to a just-published study the GAO conducted on the use of managed accounts in 401(k) plans (also at the request of Rep. Miller).
This newest study was initiated when, after completing the initial managed accounts study, GAO staff had lingering questions about the relationship managed accounts have with other investment options offered as QDIAs in 401(k) plans, specifically target date funds (TDFs), and even stable value funds that may serve as an interim initial default investment. As a result the GAO is conducting the current study, which has been expanded to include all QDIA options.
During the recent call about the QDIA study, GAO representatives and NAPA leaders discussed the following topics, with a clear focus on TDFs:
- the options that plan sponsors select as QDIAs (and the reasons why they are selected);
- how the performance, risks and fees associated with QDIAs compare among the options available; and
- the challenges that remain in the selection and use of QDIAs by plan fiduciaries to increase participants' retirement savings.
The NAPA leadership was able to share their considerable real-world experience with the GAO regarding this sensitive and complex issue. While this new study is only in the beginning stages (and will likely not be completed by the time Rep. Miller retires later this year), NAPA will continue our involvement with the GAO on this very important project.
If you have questions or comments about this study, or the just-published report on managed accounts, please contact a member of the Government Affairs team.
Ronald J. Triche, Esq., APM, is NAPA's General Counsel and Director of Government Affairs. You may reach him at [email protected].
