www.ebook3000.com RETIREMENT ISSUES, PLANS AND LIFESTYLES 401(K) PLANS A SPONSOR'S ROLE IN DEFAULT INVESTMENTS AND AN EXAMINATION OF TARGET DATE FUNDS No part of this digital document may be reproduced, stored in a retrieval system or transmitted in any form or by any means The publisher has taken reasonable care in the preparation of this digital document, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions No liability is assumed for incidental or consequential damages in connection with or arising out of information contained herein This digital document is sold with the clear understanding that the publisher is not engaged in rendering legal, medical or any other professional services RETIREMENT ISSUES, PLANS AND LIFESTYLES Additional books in this series can be found on Nova’s website under the Series tab Additional e-books in this series can be found on Nova’s website under the e-book tab www.ebook3000.com RETIREMENT ISSUES, PLANS AND LIFESTYLES 401(K) PLANS A SPONSOR'S ROLE IN DEFAULT INVESTMENTS AND AN EXAMINATION OF TARGET DATE FUNDS WESLEY MEYER EDITOR New York Copyright © 2016 by Nova Science Publishers, Inc All rights reserved No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic, tape, mechanical photocopying, recording or otherwise without the written permission of the Publisher We have partnered with Copyright Clearance Center to make it easy for you to obtain permissions to reuse content from this publication Simply navigate to this publication’s page on Nova’s website and locate the “Get Permission” button below the title description This button is linked directly to the title’s permission page on copyright.com Alternatively, you can visit copyright.com and search by title, ISBN, or ISSN For further questions about using the service on copyright.com, please contact: Copyright Clearance Center Phone: +1-(978) 750-8400 Fax: +1-(978) 750-4470 E-mail: info@copyright.com NOTICE TO THE READER The Publisher has taken reasonable care in the preparation of this book, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions No liability is assumed for incidental or consequential damages in connection with or arising out of information contained in this book The Publisher shall not be liable for any special, consequential, or exemplary damages resulting, in whole or in part, from the readers’ use of, or reliance upon, this material Any parts of this book based on government reports are so indicated and copyright is claimed for those parts to the extent applicable to compilations of such works Independent verification should be sought for any data, advice or recommendations contained in this book In addition, no responsibility is assumed by the publisher for any injury and/or damage to persons or property arising from any methods, products, instructions, ideas or otherwise contained in this publication This publication is designed to provide accurate and authoritative information with regard to the subject matter covered herein It is sold with the clear understanding that the Publisher is not engaged in rendering legal or any other professional services If legal or any other expert assistance is required, the services of a competent person should be sought FROM A DECLARATION OF PARTICIPANTS JOINTLY ADOPTED BY A COMMITTEE OF THE AMERICAN BAR ASSOCIATION AND A COMMITTEE OF PUBLISHERS Additional color graphics may be available in the e-book version of this book Library of Congress Cataloging-in-Publication Data ISBN: (eBook) Published by Nova Science Publishers, Inc † New York www.ebook3000.com CONTENTS Preface Chapter Chapter Chapter Chapter Index vii 401(k) Plans: Clearer Regulations Could Help Plan Sponsors Choose Investments for Participants United States Government Accountability Office Retirement Savings: Automatic Enrollment Shows Promise for Some Workers, but Proposals to Broaden Retirement Savings for Other Workers Could Face Challenges United States Government Accountability Office Defined Contribution Plans: Key Information on Target Date Funds as Default Investments Should Be Provided to Plan Sponsors and Participants United States Government Accountability Office Target Date Retirement Funds Tips for ERISA Plan Fiduciaries U.S Department of Labor, Employee Benefits Security Administration 47 95 147 153 www.ebook3000.com PREFACE Employers who sponsor 401(k) plans report using a range of default investment types to automatically enroll employees in their plans based on each type’s design and other attributes Department of Labor (DOL) created a regulatory “safe harbor” in 2007 to limit plan sponsor liability for investing contributions on behalf of employees into default investments when employees not otherwise make an election In addition, DOL identified three default investments that, if selected by sponsors, would qualify a plan for safe harbor protection This book examines which options plan sponsors selected as default investments and why; how plan sponsors monitor their default investment selections; and what challenges, if any, plan sponsors report facing when adopting a default investment for their plan Furthermore, this book determines what is known about the effect of automatic enrollment policies among the nation’s 401(k) plans, and the extent of and future prospect for such policies; and the potential benefits and limitations of automatic IRA proposals and state-assisted retirement savings proposals www.ebook3000.com In: 401(k) Plans Editor: Wesley Meyer ISBN: 978-1-63484-727-8 © 2016 Nova Science Publishers, Inc Chapter 401(K) PLANS: CLEARER REGULATIONS COULD HELP PLAN SPONSORS CHOOSE INVESTMENTS FOR PARTICIPANTS* United States Government Accountability Office WHY GAO DID THIS STUDY The Department of Labor (DOL) created a regulatory “safe harbor” in 2007 to limit plan sponsor liability for investing contributions on behalf of employees into default investments when employees not otherwise make an election In addition, DOL identified three default investments that, if selected by sponsors, would qualify a plan for safe harbor protection GAO was asked to review certain aspects of these default investment types This report examines: (1) which options plan sponsors selected as default investments and why; (2) how plan sponsors monitor their default investment selections; and (3) what challenges, if any, plan sponsors report facing when adopting a default investment for their plan To answer these questions, GAO reviewed relevant federal laws and guidance; analyzed industry survey data on the prevalence of default investment use; analyzed nongeneralizable responses from 227 plan sponsors who voluntarily completed a GAO web-based questionnaire; and interviewed 96 stakeholders, including service providers, * This is an edited, reformatted and augmented version of the United States Government Accountability Office publication, GAO-15-578, dated August 2015 Defined Contribution Plans 51 145 Target Date Disclosure, 75 Fed Reg 73,987, (November 30, 2010) (to be codified at 29 C.F.R pt 2550) The comment period for the proposed regulation closed on January 14, 2011 52 ICI, Principles to Enhance Understanding of Target Date Funds, June 2009 53 ICI is a national organization representing the mutual fund industry AARP is a nonprofit, nonpartisan membership organization that provides advocacy for and services to those approaching and in their retirement years AARP’s suggestions were presented in a letter dated July 16, 2009, from David Certner, AARP, to Elizabeth M Murphy, Secretary, Securities and Exchange Commission and the Office of Regulations and Interpretations, Employee Benefits Security Administration, Department of Labor See www.sec.gov/ comments/4-582/4582-28.pdf, last accessed Dec 3, 2010 54 Pensions & Investments is an international newspaper of money management that delivers news, research, and analysis for its readership, including executives who manage the flow of funds in the institutional investment market www.ebook3000.com In: 401(k) Plans Editor: Wesley Meyer ISBN: 978-1-63484-727-8 © 2016 Nova Science Publishers, Inc Chapter TARGET DATE RETIREMENT FUNDS TIPS FOR ERISA PLAN FIDUCIARIES∗ U.S Department of Labor, Employee Benefits Security Administration Target date retirement funds (also called target date funds or TDFs) have become an increasingly popular investment option in 401(k) plans and similar employee-directed retirement plans The U.S Department of Labor’s Employee Benefits Security Administration (EBSA) prepared the following general guidance to assist plan fiduciaries in selecting and monitoring TDFs and other investment options in 401(k) and similar participant-directed individual account plans Employers and other plan fiduciaries can learn more about their fiduciary responsibilities under the Employee Retirement Income Security Act of 1974 (ERISA) by visiting EBSA’s website at www.dol.gov/ebsa/compliance_assistance.html TARGET DATE FUND BASICS With the growth of 401(k) and other individual account retirement plans, many more participants are responsible for investing their retirement savings ∗ This is an edited, reformatted and augmented version of a fact sheet issued by the U.S Department of Labor, February 2013 148 U.S Department of Labor Target date retirement funds, or TDFs, can be attractive investment options for employees who not want to actively manage their retirement savings TDFs automatically rebalance to become more conservative as an employee gets closer to retirement The “target date” refers to a target retirement date, and often is part of the name of the fund For example, you might see TDFs with names like “Portfolio 2030,” “Retirement Fund 2030,” or “Target 2030” that are designed for individuals who intend to retire during or near the year 2030 Because of these features, many plan sponsors decide to use TDFs as their plan’s qualified default investment alternative (QDIA) under Department of Labor regulations A QDIA is a default investment option chosen by a plan fiduciary for participants who fail to make an election regarding investment of their account balances.1 TDFs offer a long-term investment strategy based on holding a mix of stocks, bonds and other investments (this mix is called an asset allocation) that automatically changes over time as the participant ages A TDF’s initial asset allocation, when the target date is a number of years away, usually consists mostly of stocks or equity investments, which often have greater potential for higher returns but also can be more volatile and carry greater investment risk As the target retirement date approaches (and often continuing after the target date), the fund’s asset allocation shifts to include a higher proportion of more conservative investments, like bonds and cash instruments, which generally are less volatile and carry less investment risk than stocks The shift in the asset allocation over time is called the TDF’s “glide path.” It is important to know whether a target date fund’s glide path uses a “to retirement” or a “through retirement” approach A “to” approach reduces the TDF’s equity exposure over time to its most conservative point at the target date A “through” approach reduces equity exposure through the target date so it does not reach its most conservative point until years later Within this general framework, however, there are considerable differences among TDFs offered by different providers, even among TDFs with the same target date For example, TDFs may have different investment strategies, glide paths, and investment-related fees Because these differences can significantly affect the way a TDF performs, it is important that fiduciaries understand these differences when selecting a TDF as an investment option for their plan www.ebook3000.com Target Date Retirement Funds 149 WHAT TO REMEMBER WHEN CHOOSING TARGET DATE FUNDS • • • Establish a process for comparing and selecting TDFs In general, plan fiduciaries should engage in an objective process to obtain information that will enable them to evaluate the prudence of any investment option made available under the plan For example, in selecting a TDF you should consider prospectus information, such as information about performance (investment returns) and investment fees and expenses You should consider how well the TDF’s characteristics align with eligible employees’ ages and likely retirement dates It also may be helpful for plan fiduciaries to discuss with their prospective TDF providers the possible significance of other characteristics of the participant population, such as participation in a traditional defined benefit pension plan offered by the employer, salary levels, turnover rates, contribution rates and withdrawal patterns Establish a process for the periodic review of selected TDFs Plan fiduciaries are required to periodically review the plan’s investment options to ensure that they should continue to be offered At a minimum, the review process should include examining whether there have been any significant changes in the information fiduciaries considered when the option was selected or last reviewed For instance, if a TDF’s investment strategy or management team changes significantly, or if the fund’s manager is not effectively carrying out the fund’s stated investment strategy, then it may be necessary to consider replacing the fund Similarly, if your plan’s objectives in offering a TDF change, you should consider replacing the fund Understand the fund’s investments – the allocation in different asset classes (stocks, bonds, cash), individual investments, and how these will change over time Have you looked at the fund’s prospectus or offering materials? Do you understand the principal strategies and risks of the fund, or of any underlying asset classes or investments that may be held by the TDF? Make sure you understand the fund’s glide path, including when the fund will reach its most conservative asset allocation and whether that will occur at or after the target date Some funds keep a sizeable investment in more volatile assets, like stocks, even as they pass their “target” retirement dates Since these 150 U.S Department of Labor • • • funds continue to invest in stock, your employees’ retirement savings may continue to have some investment risk after they retire These funds are generally for employees who don’t expect to withdraw all of their 401(k) account savings immediately upon retirement, but would rather make periodic withdrawals over the span of their retirement years Other TDFs are concentrated in more conservative and less volatile investments at the target date, assuming that employees will want to cash out of the plan on the day they retire If the employees don’t understand the fund's glide path assumptions when they invest, they may be surprised later if it turns out not to be a good fit for them Review the fund’s fees and investment expenses TDF costs can vary significantly, both in the amount and types of fees Small differences in investment fees and costs can have a serious impact on reducing long term retirement savings.2 Do you understand the fees and expenses, including any sales loads, for the TDF? If the TDF invests in other funds, did you consider the fees and expenses for both the TDF and the underlying funds? If the expense ratios of the individual component funds are substantially less than the overall TDF, you should ask what services and expenses make up the difference Added expenses may be for asset allocation, rebalancing and access to special investments that can smooth returns in uncertain markets, and may be worth it, but it is important to ask Inquire about whether a custom or non-proprietary target date fund would be a better fit for your plan Some TDF vendors may offer a pre-packaged product which uses only the vendor’s proprietary funds as the TDF component investments Alternatively, a “custom” TDF may offer advantages to your plan participants by giving you the ability to incorporate the plan’s existing core funds in the TDF Nonproprietary TDFs could also offer advantages by including component funds that are managed by fund managers other than the TDF provider itself, thus diversifying participants’ exposure to one investment provider There are some costs and administrative tasks involved in creating a custom or nonproprietary TDF, and they may not be right for every plan, but you should ask your investment provider whether it offers them Develop effective employee communications Have you planned for the employees to receive appropriate information about TDFs in general, as a retirement investment option, and about individual TDFs available in the plan? Just as it is important for the plan www.ebook3000.com Target Date Retirement Funds • • fiduciary to understand TDF basics when choosing a TDF investment option for the plan, employees who are responsible for investing their individual accounts need information too Disclosures required by law also must be considered The Department published a final rule that, starting for most plans in August 2012, requires that participants in 401(k)-type individual account retirement plans receive greater information about the fees and expenses associated with their plans, including specific fee and expense information about TDFs and other investment options available under their plans The Department of Labor is also working on regulations to improve the disclosures that must be made to participants specifically about TDFs For example, in addition to general information about TDFs, the proposed regulations call for disclosures to include an explanation that an investment in a TDF is not guaranteed and that participants can lose money in the fund, including at and after the target date Check EBSA’s website for updates on regulatory disclosure requirements Take advantage of available sources of information to evaluate the TDF and recommendations you received regarding the TDF selection While TDFs are relatively new investment options, there are an increasing number of commercially available sources for information and services to assist plan fiduciaries in their decision-making and review process Document the process Plan fiduciaries should document the selection and review process, including how they reached decisions about individual investment options RELATED INFORMATION From the Department of Labor • • • • • 151 Investor Bulletin: Target Date Retirement Funds A Look at 401(k) Plan Fees Meeting Your Fiduciary Responsibilities Understanding Retirement Plan Fees and Expenses Understanding Your Retirement Plan Fees 152 U.S Department of Labor • Selecting and Monitoring Pension Consultants – Tips for Plan Fiduciaries From the SEC • • • Beginners’ Guide to Asset Allocation, Diversification, Rebalancing Invest Wisely: An Introduction to Mutual Funds Mutual Fund Fees and Expenses and From the Financial Industry Regulatory Authority (FINRA) • Fund Analyzer End Notes More information on QDIAs is available in the Department’s publication “Automatic Enrollment 401(k) Plans for Small Businesses” (available at http://www.dol.gov/ebsa/pdf/ automaticenrollment401kplans.pdf) A difference of just one percentage point in fees (1.59 as compared with 0.59) over 35 years dramatically affects overall returns If a worker with a 401(k) account balance of $25,000 averages a seven percent return, the worker will have $227,000 at retirement with the lower fee and $163,000 with the higher fee, assuming no further contributions U.S Department of Labor, Employee Benefits Security Administration, A Look At 401(k) Plan Fees, at http://www.dol.gov/ebsa/publications/401k_employee.html www.ebook3000.com INDEX A B access, 4, 9, 20, 23, 36, 47, 49, 50, 55, 72, 78, 80, 83, 96, 100, 121, 130, 150 administrators, 51, 62, 63, 64, 65, 80, 85, 86, 88, 90 ADP, 86, 88, 92 advocacy, 2, 145 age, 2, 5, 9, 10, 13, 14, 15, 16, 18, 24, 25, 27, 28, 30, 57, 60, 69, 72, 93, 95, 101, 103, 108, 114, 119, 121, 122, 125, 128, 129, 130, 131, 132, 133, 143 agencies, 24, 48, 97, 103, 105, 126, 129, 135 agriculture, 139 appropriations, 81 architect, 56, 87 assessment, 42, 45, 78 assets, 7, 8, 10, 11, 16, 18, 20, 21, 22, 30, 31, 32, 35, 36, 40, 41, 42, 44, 52, 56, 57, 62, 69, 80, 85, 90, 91, 96, 99, 101, 103, 105, 106, 107, 108, 109, 111, 112, 113, 115, 118, 129, 133, 134, 135, 136, 141, 142, 144, 149 attitudes, 88 audit, 6, 52 authorit(ies), 41, 129 automate, 131 awareness, 64, 131 banking, 104 banks, 104 bargaining, 79 barriers, 70, 83 basis points, 114 benchmarking, 45 benchmarks, 18, 19, 20, 123, 124, 131, 133 beneficial effect, 58 beneficiaries, 4, 9, 11, 32, 40, 83, 100, 144 benefits, 16, 31, 39, 42, 52, 54, 64, 65, 71, 72, 76, 79, 83, 84, 93, 103, 113, 123, 125, 130, 139 bias, 137 births, 93 bonds, 21, 40, 91, 101, 106, 110, 142, 143, 144, 148, 149 Bureau of Labor Statistics, 4, 40 businesses, 79 C call centers, 125 CAP, 49, 87, 88 case stud(ies), 59, 85, 90, 135, 139 cash, 90, 102, 106, 108, 109, 121, 122, 130, 141, 142, 143, 148, 149 cash flow, 122, 142 Census, 89 154 Index CFR, 141 challenges, vii, 1, 2, 3, 5, 33, 38, 48, 64, 69, 75, 81, 97, 120, 123, 126, 133 Chicago, 89, 91, 138 citizens, 79 clarity, 32, 141 classes, 4, 9, 14, 22, 29, 48, 61, 68, 69, 91, 92, 101, 110, 111, 112, 113, 115, 149 clients, 41, 64, 124 clusters, 27 communication, 65, 80, 139 community, 88 compensation, 16, 41, 90 complexity, 29, 77 compliance, 42, 45, 66, 79, 82, 147 complications, 134 composition, 19, 38, 122, 125 computer, 124 computer systems, 124 conflict, 114 conflict of interest, 114 Congress, 44, 47, 56, 70, 90, 93, 105 congressional hearings, 87 consensus, 29, 92 consent, 55 constitutional amendment, 82 consulting, 51, 64, 108, 109 Consumer Price Index, 142 content analysis, 37, 42 controversial, 30 controversies, 105 coordination, 79 correlations, 111 cost, 14, 15, 23, 29, 34, 38, 42, 45, 49, 65, 70, 73, 75, 77, 78, 79, 81 covering, credit rating, 142 culture, 76 customer service, 78 customers, 65 D data set, 37 database, 34, 92 deduction, 48, 51, 56, 70, 71, 72, 73, 75, 77, 78, 79, 93 defined benefit pension, 149 deflation, 142 demographic change, 28 Department of Labor (DOL), vii, 1, 2, 3, 4, 5, 7, 8, 9, 10, 11, 14, 18, 20, 21, 24, 25, 27, 28, 30, 31, 32, 33, 34, 37, 40, 41, 42, 43, 44, 45, 56, 57, 72, 82, 84, 85, 86, 87, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 103, 104, 105, 122, 126, 127, 128, 129, 130, 132, 133, 134, 135, 138, 139, 140, 144, 145, 148, 151 Department of the Treasury, 44, 55, 84, 93, 104, 133, 135 deposits, 72 depth, 19, 20, 51, 86, 87, 99, 135, 139 designers, 71 disclosure, 103, 128, 129, 130, 133, 151 disposition, 41, 134 distribution, 13, 27, 65, 93, 108 diversification, 2, 7, 9, 13, 15, 16, 19, 29, 103 draft, 24, 33, 84, 133 drawing, 108 durability, 85 E earnings, 5, 50, 54, 57, 72, 73, 93, 117, 139, 142, 143 earnings data, 117 economics, 53 economies of scale, 14 education, 54, 70, 93, 97, 104, 126, 142 educational materials, 63, 104 educational services, 139 election, vii, 1, 7, 29, 44, 73, 100, 148 e-mail, 36, 63 employees, vii, 1, 2, 5, 6, 7, 13, 16, 32, 39, 40, 42, 44, 48, 51, 53, 55, 56, 57, 58, 60, 61, 63, 64, 65, 70, 71, 72, 73, 75, 77, 78, 79, 80, 82, 85, 87, 89, 91, 93, 94, 96, 100, 101, 120, 125, 148, 149, 150 www.ebook3000.com Index employers, 2, 4, 48, 50, 51, 52, 56, 58, 66, 70, 71, 73, 75, 76, 77, 78, 79, 80, 82, 83, 91, 92, 93, 94, 98 employment, 4, 52, 89, 130 enforcement, 42, 94 enrollment, vii, 4, 5, 6, 7, 8, 9, 30, 32, 34, 37, 40, 42, 44, 47, 48, 50, 51, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 71, 72, 83, 85, 86, 90, 91, 92, 98, 100, 101, 108, 131, 141, 144 environment, 2, 16, 65, 66 environmental conditions, 16 environmental factors, 16 equities, 40, 45, 69, 101, 103, 104, 105, 106, 107, 110, 111, 130, 142, 143 equity, 2, 9, 10, 21, 24, 40, 45, 66, 68, 92, 96, 101, 103, 105, 106, 107, 109, 110, 112, 113, 117, 118, 121, 123, 136, 141, 142, 143, 148 equity market, 66, 112, 121, 123 ethnicity, 60 evidence, 6, 52, 69, 85, 100 exercise(s), 41 expenditures, 75 expertise, 3, 20, 43, 79, 82, 97, 122 exposure, 22, 110, 142, 143, 148, 150 F fear(s), 4, 24, 100 federal funds, 81 federal government, 8, 40, 51, 70, 73, 75, 83, 93 federal law, 1, 5, 34, 88, 90, 99, 139, 140 federal regulations, 51, 140 Federal Reserve, 104 Federal Reserve Board, 104 feelings, 58 fiduciary responsibilities, 100, 122, 147 financial, 27, 30, 34, 36, 38, 69, 73, 76, 77, 78, 79, 80, 81, 82, 89, 93, 98, 99, 103, 106, 111, 112, 117, 118, 131, 139, 144 financial firms, 79 financial institutions, 73, 77 financial markets, 69, 111, 112, 117 155 financial programs, 78 financial resources, 98 fixed rate, 142 flexibility, 32, 40, 111 fluctuations, 92, 106 food, 87 food services, 87 formation, 103 formula, 52 fraud, 104 funding, 8, 40, 81 funds, 2, 9, 10, 11, 13, 14, 15, 18, 19, 21, 22, 23, 27, 28, 29, 34, 38, 40, 41, 43, 44, 48, 60, 61, 63, 68, 69, 78, 81, 82, 85, 91, 92, 95, 96, 97, 99, 100, 101, 102, 103, 104, 106, 107, 110, 111, 113, 114, 115, 119, 121, 122, 123, 125, 126, 135, 136, 137, 141, 143, 144, 145, 147, 148, 149, 150 G GAO, 1, 2, 3, 6, 8, 12, 14, 17, 21, 23, 26, 33, 36, 39, 40, 41, 43, 44, 45, 47, 48, 50, 53, 54, 57, 59, 62, 67, 68, 69, 74, 79, 86, 87, 89, 92, 93, 95, 96, 99, 100, 101, 102, 104, 106, 112, 115, 116, 129, 134, 137, 138, 141, 142, 144 governments, 49, 51, 56, 77, 81 graph, 128 growth, 83, 106, 131, 147 guidance, 1, 5, 11, 25, 28, 31, 33, 34, 41, 44, 66, 69, 83, 97, 104, 127, 130, 131, 133, 134, 147 guidelines, 64 H high school, 143 high school diploma, 143 historical data, 118, 137 history, 97, 101 hourly wage, 16 House, 40, 93, 94, 98 156 Index House of Representatives, 98 human, 45, 139 human resources, 139 hybrid, 32 investors, 69, 91, 96, 97, 103, 105, 107, 108, 111, 113, 118, 128, 129, 131, 132 issues, 5, 11, 34, 49, 69, 77, 82, 83, 94, 96, 99, 105, 124, 130, 133 I L improvements, 127 income, 2, 3, 9, 10, 15, 16, 21, 24, 31, 32, 40, 44, 47, 49, 50, 52, 54, 59, 61, 68, 69, 72, 75, 76, 77, 83, 93, 101, 103, 104, 105, 108, 110, 111, 112, 113, 119, 124, 127, 128, 131, 142, 143, 144 income replacement, 108, 124, 144 income tax, 72, 75 individuals, 42, 82, 89, 90, 93, 148 industr(ies), 1, 2, 5, 11, 12, 21, 23, 26, 34, 35, 36, 37, 38, 42, 43, 48, 51, 64, 71, 73, 76, 77, 79, 85, 86, 88, 97, 101, 108, 114, 120, 121, 122, 123, 124, 130, 131, 135, 137, 139, 140, 142, 145 inertia, 58, 71, 72 inflation, 29, 32, 42, 110, 111, 113, 142, 143 infrastructure, 73 institutions, 104 interest rates, 142 internal rate of return, 117, 118, 143 Internal Revenue Service (IRS), 49, 55, 81, 82, 90, 141 intimidation, 58 investment(s), vii, 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18, 19, 20, 21, 22, 23, 24, 25, 27, 28, 29, 30, 31, 32, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 48, 50, 52, 55, 56, 57, 58, 60, 61, 66, 68, 69, 71, 73, 75, 77, 79, 81, 82, 85, 91, 92, 93, 95, 96, 97, 98, 99, 100, 101, 102, 103, 105, 106, 107, 109, 110, 111, 113, 114, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 141, 142, 143, 144, 145, 147, 148, 149, 150, 151 investment model, 143 laws, 32, 104, 140, 141 laws and regulations, 32, 140 leakage, 92 learning, 82 legislative proposals, 56, 75, 90 life cycle, 101 life expectancy, 9, 10, 24 lifetime, 31, 32, 44, 72, 143 light, 48, 51, 66, 69, 72, 75, 76, 79, 84, 127, 132, 134, 144 litigation, 11, 24, 28 loans, 144 longevity, 106, 124 low risk, 91 loyalty, 122, 133 M magnitude, 78 majority, 2, 11, 50, 61, 63, 67, 113, 121, 123, 141, 142 management, 3, 10, 15, 19, 20, 22, 36, 41, 57, 64, 65, 66, 80, 81, 99, 100, 102, 107, 110, 111, 115, 136, 144, 145, 149 manufacturing, 35, 66 market failure, 79 marketing, 63, 64, 79, 80, 81, 101, 127, 128, 129, 136, 140 marketplace, 21, 31, 78, 123, 124, 131, 136 Maryland, 77, 78, 81, 82, 87, 88, 94 materials, 70, 80, 88, 92, 127, 128, 129, 136, 139, 149 media, 80, 97, 120, 125, 126 Medicare, 72 membership, 145 methodology, 6, 52, 70 mid-career, 16 www.ebook3000.com Index miscommunication, 82 mission, 11 misunderstanding, 127 models, 27, 93 modifications, 21, 22, 23 momentum, 142 multiple factors, 42 N naming, 127, 140 negative effects, 3, 31, 32 North America, 97, 139 O officials, 6, 10, 18, 20, 30, 31, 33, 42, 43, 44, 45, 51, 71, 73, 76, 86, 88, 94, 96, 99, 106, 127, 137, 139, 140, 142 old age, 96 opportunities, 103, 131 opt out, 4, 7, 40, 50, 56, 57, 71, 98 outreach, 79 overlap, overlay, 113 oversight, 80, 82, 122 P pain, 107 participants, 3, 4, 5, 7, 8, 9, 10, 11, 13, 14, 15, 16, 18, 19, 21, 22, 23, 24, 25, 27, 28, 29, 30, 31, 32, 36, 37, 40, 41, 42, 43, 44, 50, 51, 53, 60, 61, 63, 65, 66, 69, 70, 72, 73, 78, 82, 84, 85, 86, 90, 91, 92, 95, 96, 97, 98, 99, 100, 103, 106, 107, 108, 109, 117, 118, 119, 120, 121, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 139, 140, 144, 147, 150, 151 payroll, 42, 48, 51, 56, 70, 71, 72, 73, 75, 77, 78, 79, 93, 94, 123, 124, 144 peer group, 20, 43 penalties, 82 pension plans, 42, 94 157 per capita cost, 79 percentile, 117, 118, 143 permit, 76, 111 policy, 19, 55, 60, 61, 63, 66, 68, 69, 71, 75, 83, 85, 86, 109, 111 poor performance, 44 population, 13, 24, 25, 27, 34, 42, 48, 52, 72, 89, 120, 121, 149 portfolio, 2, 9, 19, 22, 25, 27, 30, 117, 120, 143 potential benefits, vii, 48, 51, 64, 83, 87, 93 PRC, 49, 86, 88 preservation, 4, 9, 10, 40, 57, 141 President, 56 principles, 125, 130 private sector, 8, 40, 103, 143, 144 probability, 118 procurement, 80 professionals, 48, 77 profit, 65, 80, 81, 89, 94, 142 profit margin, 65 project, 114, 117, 118, 137 proposed regulations, 97, 126, 127, 128, 129, 151 protection, vii, 1, 3, 4, 13, 14, 15, 28, 29, 31, 32, 40, 56, 64, 100, 104, 110, 113 prototype, 79 public policy, 94 Q qualifications, 19 quantitative research, 137 quartile, 50, 93 questionnaire, 1, 2, 3, 6, 13, 14, 15, 16, 18, 19, 20, 23, 25, 27, 28, 29, 34, 36, 37, 38, 39, 42 R race, 60 radio, 80 rate of return, 91, 97, 118, 141 readership, 145 158 Index real estate, 22, 98, 113, 142 real terms, 117 reasoning, 13 recession, 45, 65, 84 recommendations, 41, 48, 96, 134, 144, 151 recovery, 107, 117 recreation, 87 reform, 88, 91, 93 regression, 91 regression model, 91 regulations, 3, 4, 5, 7, 9, 11, 14, 18, 24, 25, 27, 28, 30, 31, 32, 33, 34, 40, 42, 44, 45, 55, 56, 57, 88, 90, 93, 99, 100, 122, 127, 128, 129, 132, 133, 134, 139, 140, 141, 148, 151 regulatory requirements, 28 relevance, 97, 129, 130 reliability, 5, 35, 137 relief, 3, 4, 7, 28, 30, 43, 44 replacement rate, 50 requirement(s), 3, 10, 28, 32, 40, 41, 44, 56, 70, 75, 76, 78, 81, 85, 90, 93, 94, 129, 132, 133, 134, 139, 144, 151 researchers, 58, 87, 88 resistance, 61 resources, 3, 20, 23, 43, 97, 122, 123, 131 response, 3, 20, 39, 96 retail, 9, 65 retirement, vii, 3, 4, 5, 9, 10, 11, 14, 15, 16, 24, 27, 28, 29, 31, 32, 33, 41, 42, 44, 45, 47, 48, 49, 50, 51, 52, 53, 56, 58, 61, 62, 63, 64, 66, 68, 69, 70, 71, 72, 73, 75, 76, 77, 78, 79, 81, 82, 83, 84, 87, 89, 90, 92, 93, 94, 95, 96, 97, 98, 99, 101, 103, 105, 106, 107, 108, 109, 110, 111, 113, 117, 118, 119, 120, 121, 122, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 141, 142, 143, 144, 145, 147, 148, 149, 150, 152 retirement age, 9, 10, 24, 27, 64, 69, 82, 121 revenue, 76 risk(s), 2, 4, 7, 9, 10, 15, 16, 18, 20, 21, 22, 27, 29, 30, 32, 34, 38, 42, 48, 61, 66, 69, 70, 75, 82, 91, 92, 99, 101, 103, 106, 107, 109, 110, 111, 113, 118, 121, 124, 125, 126, 127, 131, 132, 134, 136, 143, 148, 149, 150 risk profile, 22 rules, 31, 51, 91 S sanctions, 10 savings, vii, 3, 4, 9, 19, 31, 32, 33, 47, 48, 49, 50, 51, 54, 55, 56, 57, 58, 61, 63, 69, 70, 71, 72, 73, 76, 77, 78, 79, 80, 81, 82, 83, 84, 87, 93, 96, 98, 100, 103, 106, 107, 108, 109, 117, 120, 121, 127, 129, 132, 142, 147, 150 savings rate, 121 scope, 42, 45, 86 securit(ies), 11, 21, 47, 50, 71, 84, 88, 91, 94, 96, 98, 99, 104, 110, 121, 127, 142 Securities Act of 1933, 141 Securities Exchange Act, 141 semi-structured interviews, 42 Senate, 4, 49, 80, 90, 93, 94, 98, 105, 141 service provider, 1, 3, 5, 11, 15, 19, 22, 23, 30, 34, 37, 38, 41, 45, 66, 75, 79, 123, 125, 138, 144 services, 2, 11, 16, 20, 21, 22, 29, 30, 32, 36, 41, 66, 73, 75, 76, 79, 81, 87, 124, 131, 137, 139, 144, 145, 150, 151 shortfall, 119 showing, 117 simulations, 117, 118, 143 small business(es), 76, 77, 80, 88, 90 Social Security, 54, 72, 116, 140, 141, 142, 143 software, 75 solution, 44, 120 specifications, 64 spending, 109, 142 stakeholders, 1, 2, 3, 5, 14, 15, 16, 19, 20, 21, 23, 24, 25, 27, 28, 29, 32, 33, 34, 38, 42, 43, 137 standard of living, 52 state(s), vii, 27, 47, 48, 49, 51, 55, 56, 57, 65, 70, 77, 78, 79, 81, 82, 83, 84, 87, 88, 94, 104, 130 www.ebook3000.com Index state laws, 55 stock, 21, 40, 69, 82, 91, 121, 150 stock price, 91 stock value, 91 structure, 19, 20, 101, 113, 136, 143 styles, 110 subgroups, 59 synthesis, 69 T target, 2, 4, 5, 9, 10, 13, 14, 15, 20, 24, 34, 38, 45, 48, 49, 57, 61, 68, 69, 95, 98, 99, 103, 105, 106, 107, 110, 115, 117, 122, 123, 125, 126, 127, 128, 129, 130, 132, 133, 135, 140, 147, 148, 149, 150, 151 tax incentive, 72, 75 taxes, 72, 93 technical comments, 33, 84, 135 techniques, 96, 99, 111, 118, 137 technology, 21, 35 tenure, 18, 58, 59, 65, 91 testing, 56, 64, 85, 92 theft, 11 time periods, 18, 34 Title I, 11, 42 total costs, 80 trade, 87, 97, 109, 113, 114, 118, 130, 132 trade-off, 97, 109, 113, 114, 118, 132 transactions, 82, 144 transparency, 21, 61, 66 transportation, 35 Treasury, 45, 73, 86, 93, 98, 110, 143, 144 treatment, 90, 106 trial, 44 turbulence, 103 turnover, 48, 65, 72, 83, 86, 121, 132, 149 U U.S Bureau of Labor Statistics, 139 U.S Department of Labor, 3, 57, 69, 147, 152 159 U.S Department of the Treasury, 138 uniform, 27 United States (USA), 1, 4, 40, 44, 47, 49, 59, 86, 88, 89, 91, 93, 95, 98 universe, 6, 11, 35, 85 V variations, 103, 129 vehicles, 12, 35, 37, 50, 59, 69, 71, 76, 77, 80, 102, 110, 121, 124, 141, 143 videos, 126 volatility, 18, 107, 111, 113, 117, 122 vote, 129 W wages, 57, 86 Washington, 39, 40, 41, 43, 44, 77, 78, 80, 81, 82, 87, 88, 89, 92, 93, 94, 141, 142, 144 wealth, 119 web, 1, 6, 34, 36, 39 welfare, 65 White House, 93 withdrawal, 108, 109, 121, 129, 130, 131, 132, 133, 135, 142, 144, 149 workers, 4, 7, 11, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 58, 59, 60, 63, 69, 70, 71, 72, 73, 76, 77, 83, 84, 85, 88, 89, 90, 92, 93, 95, 98, 108, 113 workforce, 4, 15, 18, 48, 50, 52, 55, 63, 65, 66, 70, 83, 100, 120, 121, 122, 130, 131, 132, 134 working population, 52 workplace, 76, 93 Y yield, 52, 106, 110, 142 ... ISSUES, PLANS AND LIFESTYLES 401(K) PLANS A SPONSOR'S ROLE IN DEFAULT INVESTMENTS AND AN EXAMINATION OF TARGET DATE FUNDS No part of this digital document may be reproduced, stored in a retrieval... makes them easy to understand, manage, and monitor Stakeholders noted that, in many cases, balanced funds had been in a plan’s investment lineup for years and were familiar to sponsors and participants... selecting plan investments, including a QDIA, a plan sponsor “must engage in an objective, thorough, and analytical process that involves consideration of the quality of competing providers and investment