Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, November 29, 2010

Labor Dept. Proposes Rule to Improve Disclosure on Target Date Retirement Funds

The U.S. Department of Labor's Employee Benefits Security Administration today announced a proposed rule on target date retirement funds and other similar investments offered in 401(k)-type pension plans. The proposed rule would amend the "qualified default investment alternative regulation" and the "participant-level disclosure regulation" to enhance and provide more specificity regarding the information that must be disclosed to participants and beneficiaries concerning investments in target date funds.

The proposed amendments require new disclosures about the design and operation of target date or similar investments, including an explanation 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 TDF may lose money in that investment, even close to retirement.

The comment period on the proposed regulation will run until Jan. 14, 2011.

The SEC also has pending a proposed rule relating to the marketing of target date funds.

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