Target Date Funds - Discrimination Rules

[Guest Tom:]

Can my plan limit access to the Target Date Fund option that matches my age? Or do the 401(a)(4) benefits, rights and features avaialbility testing rules basically require that I can pick any option within the target date series (e.g., a 55 year old investing in the 35 year old option?

[GMK]

I'd be surprised if the plan could have such a limit. Not everyone is going to retire at 65. Indeed, the 55 year old may plan to work another 30 years or may want something more aggressively invested up to when she/he is say 75.

Target-date doesn't depend on your age, and one date does not fit all, as nice as that would be. Since personal financial status can vary greatly as one reaches the golden years, the target-date fund should be chosen based on the flight plan that best meets the person's own needs at the expected date of retirement.

[Lou S.]

Can my plan limit access to the Target Date Fund option that matches my age? Or do the 401(a)(4) benefits, rights and features avaialbility testing rules basically require that I can pick any option within the target date series (e.g., a 55 year old investing in the 35 year old option?

Sure. But it would be a fiduciary decision by the trustee to pick your investment.

If you are talking about a plan that offers participant choice, then I think you would have to offer all investments to everyone or risk BRF testing. Though not sure why a plan would offer a window of target date funds and restrict access to some by age.