Participants in Multiple TDFs

[khn]

10% of participants in a client's plan are invested in multiple Target Date Funds, apparently not understanding the concept of enrolling in the one most age/retirement date appropriate for them.

If the client re-enrolls those who are in multiple tdfs into the proper single age appropriate tdf, would they be afforded the fiduciary protections under the QDIA default approach?

[MoJo]

First, Yes, they would be a fiduciary for making the change on re-enrollment - if targeting those specifically (and not doing so for the entire plan participant base). Second, there may be *reasons* to be in multiple TDFs (and yes, I'm giving the participants probably more credit than usual). Some may be balancing their in plan portfolio with outside assets. Some may be choosing to be more aggressive with a "portion" of their portfolio without having the burden of managing it through the other fund options. Some may have other reasons. I constantly use as an example of the "misuse" of TDFs by asking whether a client/prospect thinks two 45 year olds should be in the same TDF when one contributes 1% to the plan, and the other 15%?

I learned long ago not to second guess participants (for a variety of reasons, including the fiduciary reason), and to resolve such matters with "education."

[Bird]

I agree; I wouldn't second-guess the participants. If it's a small-enough plan, someone could contact the participants and say "hey you have multiple TD funds which is somewhat unusual; if you want to change please go to the website and do so." (Deliberately phrasing it in such a way to put the burden of change on them.)

But it is possible it is deliberate. It is also possible that it doesn't make any difference at the moment - far-off target date funds can have identical allocations. I'd be inclined to minimize any action on this.

(I'm not anti-TD funds in general, but I am against the concept of re-enrolling into TD funds, and mapping to TD funds. I think someone over-thought the issue too much and all of a sudden it's a "thing.")

[hr for me]

I will totally admit that my DH and I only have his 401k (my employer doesn't have one). So we have two different TDFs related to both his age and mine. We put more of his salary away than we would if I also had a 401k (so we view part of the balance as mine)

So I have to agree that it might be truly deliberate.

[khn]

All great points. Thank you, I think we'll stick to education!