The Department of Labor has unveiled a final rule establishing qualified default investment alternatives, making it easier for employers to enroll workers automatically in their 401(k) and other defined-contribution plans.
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"This is a key component of the Pension Protection Act and will help many more workers and their families build a nest egg for a secure and comfortable retirement," says U.S. Secretary of Labor Elaine L. Chao.
The regulation implements PPA provisions providing relief to plan fiduciaries who invest the assets of participants who do not provide investment direction (such as automatically enrolled workers) in qualified default investment alternatives (QDIAs). The QDIAs described in the rule will encourage the investment of employee assets in investment vehicles appropriate for long-term retirement savings.
"The new default options will be an essential element in the success of automatic enrollment plans to help workers achieve retirement security," said Assistant Secretary of Labor Bradford P. Campbell. "This regulation will ensure that workers in qualified default alternatives are automatically invested in a mix of fixed income, equity and other assets appropriate for long-term retirement savings."
A fact sheet detailing the final regulation can be found at here. The final rule is published in the October 24 edition of the Federal Register.
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