January 13, 2011 

Filed Electronically via e-ORI@dol.gov 

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

Room N-5655 

U.S. Department of Labor 

200 Constitution Avenue, NW 

Washington, DC 20210 

Attention: Target Date Amendments 

Dear Sir or Madam, 

The American Benefits Council (Council) appreciates the opportunity to 

comment on the Department of Labor’s proposed regulatory amendments of 

earlier regulations on (1) qualified default investment alternatives (QDIA) under 

participant directed individual account plans and (2) participant fee disclosure. 

The Council is a public policy organization representing principally Fortune 500 

companies and other organizations that assist employers of all sizes in providing 

benefits to employees. Collectively, the Council's members either sponsor 

directly or provide services to retirement and health plans that cover more than 

100 million Americans. 

We would like to start by commending the Department for addressing fiduciary 

issues related to Target Retirement Date investment options (TDFs). Many of the 

Council’s plan sponsor member companies offer TDFs as investment options for 

their plan participants, either as qualified default investment alternatives, when 

participants have failed to make an investment election, or as a regular 

investment alternatives (or both). Clarifying the fiduciary obligations related to 

the TDFs should help provide a road map for fiduciaries working to provide 

appropriate investment options for their participants. With this in mind, we 

have a number of suggestions for improving the regulations that are discussed 

below. 

Effective Date

It is very important that plan fiduciaries have sufficient time to respond to the 

regulations. The proposed regulation indicates that the effective date will be 90 

days after publication of the regulations in final form in the Federal Register. 
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While it is not clear when the regulations will be finalized, the Council would 

urge the Department to allow at least six months after the regulations are 

finalized. Plans and their service providers will need to review documents and 

processes to ensure that the new requirements are met and Council members 

indicate six months would be an ambitious time frame for this process. In any 

event, these regulations should not be effective prior to the participant fee 

disclosure regulations (plan years beginning on or after November 1, 2011). 

Specific Content Requirements

It is also important that plan fiduciaries have clear guidance that will improve 

disclosure to participants without creating new unclear (gray) areas or 

duplicative, conflicting or potentially misleading disclosures that could lead to 

increased litigation exposure. 

First, the proposed requirement to provide a chart or other graphical illustration 

of the TDF’s asset allocation over time appears consistent with a similar proposal 

from the Securities and Exchange Commission (SEC) except that a clause was 

added that the illustration “does not obscure or impede the participant’s 

understanding of the information explained”. On first review, this new phrase 

seems supportable in that no plan fiduciary wants to “obscure or impede the 

participant’s understanding”. However, Council members are concerned that 

interpretation of this generalized standard could lead to confusion as well as 

potential litigation. The Council recommends that registered investment 

products that follow the SEC requirements should be deemed to satisfy the 

Department’s similar requirement and un-registered investment options could 

be provided the same relief if they follow SEC requirements. It would also be 

helpful if the Department could provide an acceptable sample chart that would 

serve as an alternative to the SEC requirements for unregistered investment 

options, where adopting SEC registered fund disclosure requirements would 

otherwise not be required. 

The proposed regulations also require a statement related to the assumptions 

about the participant’s intended contributions and withdrawals after the target 

date. While the Council commends the Department for apparently trying to 

distinguish between TDFs that grow more conservative after the stated date (so 

called “through funds”) and those that remain with the same allocation after the 

dated date (“to funds”), interpretation of this requirement could lead to a lengthy 

disclosure that would not be understood by the average participant. 

Alternatively, the Council recommends that the Department draft and publish a 

simple sample disclosure that could be used by all plans. This would diminish 

the possibility that plan fiduciaries would use lengthy, hard-to-understand 

disclosures designed to cover all of the possible contingencies. 
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In addition, the proposed regulations require disclosure that participants can 

lose money by investing in TDFs and that such investments do not guarantee 

adequate retirement income. While we appreciate that the nature of TDFs may 

make them particularly at risk of being misunderstood by participants with 

regard to retirement income, plan fiduciaries are concerned that such a 

statement, applicable only to TDFs, might be misleading to plan participants. 

The Council notes that the model chart in the participant fee disclosure 

regulations contains a sentence that says “Your investment in these options could 

lose money.” The Council recommends a similar but more comprehensive 

approach in the context of TDFs with a more general disclosure applicable to 

investment allocation in general. Specifically, the Council recommends the 

Department draft a sample disclaimer which makes clear that TDFs, as well as 

other investment options in the plan (unless specifically stated otherwise) do not 

guarantee against loss or that the participant who chooses or is defaulted into 

that investment will have adequate retirement income as a result. 

Overall Consistency with SEC 

The Council also strongly urges the Department to make sure that the newly 

amended regulations are consistent with SEC disclosure requirements for TDFs 

subject to SEC jurisdiction. Council members are concerned that differing 

disclosure requirements may result in confused participants attempting to 

compare apples to oranges. However, it is not necessary to duplicate all of the 

SEC’s proposed rules if the Department makes clear that satisfaction of the SEC 

rules (as described above) will be deemed to satisfy the Department’s 

requirements. 

Consolidation/Conformation of Notices

Also, from a plan participant viewpoint, it is very important that participants not 

be inundated with disclosures at different times that are duplicative or only 

slightly modified (which can cause more confusion). Specifically, the Council 

recommends consolidating the QDIA notices with participant fee disclosure 

notices. Since the requirements are similar, it is more efficient from a cost 

perspective and perhaps more compelling (and less confusing) from a 

participant’s perspective to receive the notices together. Now that all 

participants will be receiving disclosures related to the plan’s investment options 

on an annual basis, it would make sense to add the QDIA requirements to the 

notice, perhaps as an appendix to the comparative chart. This would require a 

change in the timing requirements since they are currently different. 

Alternatively, the QDIA notice could simply refer to the most recent fee 

disclosure notice to avoid duplicative disclosures of items required like 

restrictions, fees or expenses in connection with a transfer out of the QDIA (or 
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simply reference the same website that is required for participant fee disclosure). 

This would simplify the QDIA notice without sacrificing participant disclosure. 

Material Provided on Request

Plan fiduciaries would also appreciate clarification that materials described in 

ERISA Section 2550.404a-5(d)(4) need only be provided upon the request of the 

participant. That section of the regulations currently only requires providing 

those materials upon the request of the participant with other (nearby) 

regulatory requirements to provide other materials without a request from the 

participant. A footnote in the preamble of the current proposal appears to 

indicate that this material must only be furnished upon request, but the QDIA 

regulation itself does not appear to distinguish between materials that must be 

provided or are only provided upon request. Some will interpret this as a new 

requirement to provide these materials automatically without clarification that 

the Department did not intend to change this structure. 

Benchmarking

Finally, the Council understands the Department’s concern about manipulating 

benchmarks but is also concerned that the use of only one benchmark (even if 

followed by a blended benchmark) may be inappropriately confusing to the 

participant in the context of TDFs. The Council urges the Department to allow 

use of a combination of indexes, such as an appropriate blend of a nationallyrecognized equity index and bond index (using the percentages that make up the 

TDF), to benchmark TDFs. 

Again, we appreciate the opportunity to comment on these proposed 

amendments to regulations relating to TDFs. We believe that the American 

Benefits Council offers an important and unique perspective of the employer 

sponsors of, and service providers to, retirement plans and we look forward to 

working with you on these important changes. 

 Sincerely, 

Jan M. Jacobson 

Senior Counsel, Retirement Policy