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ARTICLE · 23 APRIL 2013

Are Your 401(K) Plan’s Target Date Funds On Target?

Osler, Hoskin & Harcourt LLP
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Despite the popularity of the 401(k) plans, target date funds are not well understood by either the fiduciaries who select them or the participants whose accounts are invested in them by default or by choice.

CanadaEmployment and HR
Osler, Hoskin & Harcourt LLP
Osler, Hoskin & Harcourt LLP
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Most 401(k) plans that have qualified default investment funds (QDIA's) have chosen target date funds as their default investments. Target date funds change their mix of investments to become more conservative over time in relation to a projected retirement age.

Despite their popularity, target date funds are not well understood by either the fiduciaries who select them or the participants whose accounts are invested in them by default or by choice. For example, two funds that are designed for participants retiring in 2020 may have different proportions of fixed income and equity investments and different assumptions about when the participant will actually begin receiving pension payments.

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