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Wilson, NC 27896
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September/October 2017
Making the Choice for You
Joining your employer’s retirement plan typically means choosing investments and specifying the percentage of your plan contributions that you want to invest in each one. But what happens if you don’t choose any investments? In that case, your plan may invest your contributions in a “qualified default investment alternative,” or QDIA.
A Look at QDIAs
There are basically four types of QDIAs:
- A lifecycle or target date fund contains a mix of investments, such as stocks and bonds, that takes a participant’s age or anticipated retirement date into account. The fund’s asset allocation generally becomes more conservative as the target date approaches.
- A professionally managed account invests in various plan options to provide an asset mix that is based on an individual’s age or retirement date.
- A balanced fund offers a mix of investments that takes into account the characteristics of the group of employees as a whole rather than each individual.
- A capital preservation product is designed to preserve the value of the account and may be used as a default investment for only a limited period of time.
A QDIA is generally not permitted to invest participant contributions in employer securities.
What’s Best for You?
You’ll have the option of leaving your money in the default investment or making your own investment selections. Before you decide, review your plan’s QDIA as well as the other investments your plan offers. Your goal should be to choose investments that reflect your objectives, time frame, and risk tolerance.
Fund balances may vary and there is no guarantee principal will be intact at maturity for the QDIA funds referenced in this newsletter.
FR2017-0504-0006/E
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