Automatic Enrollment and Default Investments

[bzorc]

In reviewing the PPA information on adding an automatic enrollment feature to a 401(k) Plan, it states that contributions must be placed in a multi-asset class default investment if the participants do not direct the investment of their elections.

I deal with a handful of plans where a new plan participant receives a brokerage acccount with a designated brokerage company, and then he or she is responsible for calling the "plan broker" to place investments within the account. If I wanted to add automatic enrollment to a plan such as this, what is my default "multi-asset" class investment?

Thanks for any replies.

[QDROphile]

Whatever the plan fiduciary responsible for investments decides. There are plenty of balanced mutual funds out there. The fiduciary is responsible for the investment. Choose wisely.

[Guest willow]

The DOL has issued proposed regs and that they are looking at lifecycle type funds (both age and risk based) as well as balanced funds.

The DOL does not want to see Stable Value or Money Market as default options. As QDROphile said, the fiduciary is responsible for monitoring the fund, the DOL is telling you what asset class is acceptable.