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DOL Proposes Enhanced Disclosures for Target Date Funds

The Department of Labor's Employee Benefits Security Administration has proposed new rules aimed at improving disclosures related to target date retirement funds offered as investment options in 401(k), 403(b) and similar types of retirement plans.  These proposed amendments would expand disclosures about the design and operation of target date funds, and similar investment vehicles.  In particular, the proposed amendments would require explanations of:

  • The investment's asset allocation.
  • How that allocation will change over time, with a graphic illustration.
  • The significance of the investment's "target" date.

The proposed amendments also require a statement concerning the risk that a participant investing in a target date fund may lose money in that investment, even close to retirement.

These DOL amendments mirror the disclosure enhancements for target date funds proposed by the Securities and Exchange Commission in June 2010.  The Forum submitted its comments on the SEC proposal on August 23.  The Forum's letter is available here.

Comments on the DOL's target date disclosure proposal are due Jan. 14, 2011.

The full text of the rule proposal will be available upon publication in the Federal Regiaster.  The DOL's announcement is available at:  http://www.dol.gov/ebsa/newsroom/2010/10-1658-NAT.html