Investment of Employer Contribution

[khn]

An annual special contribution made by an employer for Union employees is invested in a Stable Value fund and can be transferred into the plan's default fund (target date funds).  Wouldn't it be a better practice to invest initially into the target date fund, which is their QDIA? Or would it be better to invest it according to the participants' chosen investment elections?

 

[BG5150]

What does the plan say?

[khn]

The Plan has the contribution specified as going to the Stable Value fund for now, but they are open to amending the document.

[BG5150]

Then answer as to what is better is up to the Trustee(s) as to what it sees as the more prudent investment.

To me, it doesn't make much sense.

You said they allow transfers from the SVF to the Target Date funds.  Can the participants transfer to their own elections later?  Or are the funds stuck in either the SVF or Target funds?

[khn]

This special contribution for union employees gets invested in the Stable Value fund, and can only be transferred to the target funds. The reason for this originally was because the contribution replaced a pension they had so the company was trying to protect it from market fluctuation I supposed.