Resources

Department of Labor Issues Final Default Investment Fund Regulations

Date:
11/07/2007

Source:
Wally Miller

Link:

Description:
Two weeks ago, the U.S. Department of Labor issued final regulations providing standards for "qualified default investment alternatives" (QDIAs). The QDIA regulations offer employers the means for relief from fiduciary liability for allocating to a default investment fund the contributions of participants who fail to make their own affirmative investment fund election. An Employee Benefits Alert discussing the new QDIA regulations is attached. It is important for you to review the Alert, because prompt actions are required in order for an employer to qualify for the fiduciary protection. These actions include those outlined below. 1. If, during 2007, an employer allocated contributions on a default basis to an investment fund that was intended to be a qualified default fund, then on or before November 24, 2007 (i.e., within two weeks), a QDIA notice that contains all the information outlined on pages 2-3 of the attached Alert must be provided to each such default participant (unless a notice complying with the new standards was previously provided). 2. On or before December 1, 2007, the QDIA notice must be provided to each participant (including any January 1 enrollees) on whose behalf a default investment fund allocation may potentially be made, or will continue to be made, during 2008. 3. Each participant for whom a default investment fund allocation is actually made must be provided a copy of the most recent fund prospectus for the default fund. 4. If a balanced fund has been selected as the qualified default fund, then the employer or other appropriate fiduciary for the plan should verify that the fund's investment mix (i.e., the balance of fixed income and equity exposures) is appropriate for the particular population of the plan. That verification should then be documented. Should you have any questions regarding the new QDIA standards and notice rules, please let us know.

Download:
qdia.pdf