QDIA Information and Sample Notices

The use of a Qualified Default Investment Alternative (QDIA) as a default investment for participants who do not select their own funds will provide plan fiduciaries, who are usually the trustees of the plan, protection from participants that may claim their account was not properly invested. There are three main types of QDIAs: life-cycle funds, balanced funds, and managed accounts. Any investment that follows the key principles of these arrangements will qualify, even if the investment is included within an annuity.

In July 2007 we sent clients a letter which contained preliminary information about QDIAs and recommended that plans change their default fund from the then standard money market fund to a life-cycle or balanced-type fund. In addition to having a qualified fund as the default investment alternative, you must distribute an initial notice to a participant 30 days before becoming eligible, or 30 days before the first default-invested deposit occurs. Additionally, an annual notice to those participants who are invested by default in the QDIA at least 30 days prior to the beginning of each plan year.

If you need to review your plan's default fund option please contact your plan's financial advisor or your plan's investment provider. If you have any questions about this letter and the QDIA rules please contact your assigned administrator here at Retirement Planners.

Sample Notices:

Initial QDIA Notice for new default-invested participants
Generic Initial Notice
John Hancock Initial Notice
RPA Daily Initial Notice
ING Initial Notice
Nationwide Initial Notice
American Funds Initial Notice

Annual QDIA Notice
Generic Annual Notice
John Hancock Annual Notice
RPA Daily Annual Notice
ING Annual Notice
Nationwide Annual Notice
American Funds Annual Notice