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403(b) Outlook: Default Investment Options: IRS and DOL Issue Guidance

 403(b) Outlook Archive

The DOL Final Regulation

The DOL regulation is a final regulation on appropriate default investment vehicles — termed Qualified Default Investment Alternatives (QDIAs) — for defined contribution retirement plans, and will become effective on Dec. 24, 2007.

While the regulation is intended to apply to automatic enrollment plans, it also applies to default investments under any participant directed individual account plan (such as the typical 403(b) or qualified defined contribution plan funded with TIAA-CREF contracts) in which participants or beneficiaries fail to give investment instructions.

The regulation only applies to plans subject to the Employee Retirement Income Security Act of 1974 ("ERISA").

Read the entire article (PDF).

Sample QDIA and Auto Enroll Notices

Sample QDIA and 414W (Auto Enroll) Notices that include lifecycle funds information and participant cover letters are now available for plan sponsors.  The plan sponsor, along with their legal counsel's assistance, must carefully review and modify the sample notice to ensure that it accurately reflects the plan's provisions.

Initial Notices
The QDIA Notice must be provided to participants at least 30 days in advance of the date of plan eligibility or 30 days in advance of the first investment in a QDIA. Based on your plan type, select from the sample Initial Notices below:

• 403(b) Matching Plans With Automatic Enrollment and Employee Withdrawal Rights (PDF)
• 403(b) Matching Plans With Automatic Enrollment, Safe Harbor Contribution Rates, and Employee Withdrawal Rights (PDF)
• 403(b) Plans Without Automatic Enrollment (PDF)
• 403(b) Plan Without Automatic Enrollment That Permits Employee Contributions (PDF)

Annual Notices
The Annual QDIA Notice must be provided to participants at least 30 days in advance of each plan year. Based on your plan type, select from the sample Annual Notices below:

• 403(b) Matching Plans With Automatic Enrollment and Employee Withdrawal Rights (PDF)
• 403(b) Matching Plans With Automatic Enrollment, Safe Harbor Contribution Rates, and Employee Withdrawal Rights (PDF)
• 403(b) Plans Without Automatic Enrollment (PDF)
• 403(b) Plan Without Automatic Enrollment That Permits Employee Contributions (PDF)

Cover Letters
The sample letters (PDF) provide participants with an overview of the QDIA Notice.

Fact Sheet
The plan sponsor should include information on the plan's default investment option.  You can always find the most up-to-date fund fact sheets online by clicking on the appropriate fund and then choosing "View Fund Facts".