Search
 

A Better Way to Default

With automatic enrollment quickly becoming a standard, companies are looking for better returns on the default options they offer 401(k) participants who don't like to choose

By Beth Karlin | Updated on December 28, 2007

Automatic enrollment is on a tear. After the federal government gave its blessing through the Pension Protection Act (PPA), a steadily mounting number of employers are signing up new employees automatically into 401(k)s to help them make sure they put enough away for retirement. But this also raises the fiduciary stakes for plan sponsors since most default options–the investments that participants are placed in when they fail to select one–have tended to offer only the lowest of yields, albeit accompanied by the smallest of risks.

The PPA took that into account too, by providing a working definition of qualified default investment alternatives, or QDIAs. And in Novemberthe Department of Labor identified three types of investment funds that qualify under the PPA as safe harbors: target-date funds, balanced funds and professionally managed accounts.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Why Companies Are Racing to the U.S. Debt Market

Why Companies Are Racing to the U.S. Debt Market

Caleb Mutua & Jeannine Amodeo |

Borrowing costs have become compelling, as markets are already pricing in expectations for reduced interest rates. And several external factors could reverse that trend.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.