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Text of DOL Information Letter to IRS: Fiduciary Guidance with Respect to a Series of Target Date Funds That Seek to Provide Lifetime Income Using Unallocated Deferred Annuity Contracts
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL] Link to more items from this source
[Official Guidance]
Oct. 24, 2014
"This responds to [the Treasury Department's] request for the [DOL's] views on whether a series of target date funds (Funds) could serve as 'qualified default investment alternatives' within the meaning [of the QDIA regulation], in light of the Funds' investments in unallocated deferred annuity contracts, described in [IRS Notice 2014-66]. You also ask whether, and to what extent, the Department's 'annuity selection safe harbor,' is available in connection with the selection of the unallocated deferred annuity contracts as investments of the Funds.... The use of unallocated deferred annuity contracts as fixed income investments, as described in the Notice, would not cause the Funds to fail to meet the requirements of paragraph (e)(4)(i) of the QDIA regulation. The selection of the unallocated deferred annuity contracts satisfies the requirements of section 404(a)(1)(B) of ERISA if the designated investment manager satisfies each of the conditions of the annuity selection safe harbor. The plan sponsor, as the appointing fiduciary, must prudently select the investment manager and monitor the selection at reasonable intervals, in such manner as may be reasonably expected to ensure that the investment manager's performance has been in compliance with the terms of the Plan and statutory standards, and satisfies the needs of the Plan."

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