Sticking with the default investment rather than pursuing QDIAs? This is a great summary of some aspects that can help you be more discerning from Plan Adviser.
Five things that confuse employers about QDIAs
Plan sponsors have a lot at stake in their choice of QDIAs (qualified default investment alternatives). The percentage of defined contribution plans using automatic enrollment jumped from 24% in 2006 to 57% in 2010, according to an Aon Hewitt survey. Among those that currently do not have automatic enrollment, 36% told Aon Hewitt that they are somewhat or very likely to add it for new hires in 2011.
Many employers now need to select a QDIA or evaluate their previously chosen oneâ€”and they should look closely, since the past few years have shown that most participants stick with the default investment. Advisers can help them navigate the following five areas that employers often find perplexing:
- The Selection Process
- Target Date Fund
- Glide Path Nuances
- Keeping Fees Low
- Monitoring Effectiveness
For a detailed look at these five aspects, check out the full article here.