by Diane M. Morgenthaler, Lisa K. Loesel and Paul J. Compernolle

The U.S. Department of Labor (DOL) issued proposed regulations that require additional disclosures for a participant’s investment in qualified default investment alternatives (QDIAs) and target retirement date funds (TDFs).  The DOL had two primary reasons for issuing these proposed regulations.  First, the DOL provided more guidance and specifics on the content for participant disclosures under existing QDIA regulations.  Second, following the 2008 market decline and recent public hearings on TDFs, the DOL believed that participants would benefit from additional disclosures regarding investments in TDFs. 

The proposed regulations will be effective 90 days following publication of the final regulations in the Federal Register.  Although the comment period for the proposed regulations has expired, the DOL has not indicated when final regulations will be published.  If adopted in their current form, the proposed regulations would amend two existing sets of final regulations:  (1) the final QDIA regulations issued on October 24, 2007, and (2) the final enhanced participant disclosure regulations issued on October 14, 2010.  The DOL’s proposed regulations modify existing QDIA regulations by greatly expanding the required content of QDIA notices.  The DOL’s proposed regulations also modify the participant disclosure requirements by adding special disclosure rules for TDFs.  Assuming the final regulations are substantially similar to the proposed regulations, compliance with these additional disclosure rules will require significant effort from plan sponsors, plan fiduciaries and plan administrators.  For more information on these proposed regulations, click here.