Lifestyle Funds:

Fiduciaries of plans that comply with 404(c) are given protection against some fiduciary breach claims for investment decisions in plans where participants direct their investments. ERISA Section 404(c)(5) provides that, in situations where participants have an opportunity to direct their investments but fail to do so, those participants will be treated as having exercised control over their accounts for purposes or ERISA Section 404(c) if they are invested in a qualified default investment alternative (“QDIA”). The fiduciary is still responsible for the prudent selection and monitoring of the QDIA.

Requirements for QDIAs

1. May not hold or acquire employer securities unless (i) the employer securities were held or acquired by a registered investment company or pooled investment vehicle that is independent of the plan sponsor or any affiliate, or (ii) the employer securities were acquired as a matching contribution from the employer or at the direction of the participant;
2. Must not impose financial penalties or otherwise restrict the ability of a participant to transfer his or her benefit to another investment alternative;
3. Must be managed by either a fiduciary (under section 3(38) of ERISA) or an investment company registered under the Investment Company Act of 1940;
4. Must be diversified to minimize the risk of large losses; and
5. Must be one of three types of investments (an age-based lifecycle or target date fund; a balanced fund, including risk-based lifestyle funds; or a managed account).

A Wide variety of Lifestyle Funds are available through the TRPC platform, including funds from such Mutual Fund families as T Rowe Price, Principal, American Century, First Eagle, John Hancock, etc.

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