The Department of Labor requires a QDIA Notice be provided to participants 30 days before initial plan eligibility, or before the first investment made on behalf of an eligible participant be deposited into a QDIA. The Notice must also be provided annually, 30 days prior to the beginning of each plan year. The regulation permits employers to be shielded from liability under ERISA Section 404(c) for retirement plan investments made under a default investment arrangement, commonly used in participant directed plans to invest the accounts of participants who fail to make an election as to how they want their retirement account invested.
Participants invested in a QDIA must have the same investment transfer rights as any other plan participant:
- The plan must provide all participants with the ability to make investment transfers at least once within any three month period.
- During the first 90 days (starting with the date of the participant’s first contribution), a participant invested in the QDIA must be able to transfer to another investment, without the imposition of any restrictions, fees or expenses.
Although compliance with the QDIA regulations is voluntary, it is recommended that plan sponsors provide this Notice to eligible employees, reducing potential exposure to liability regarding investments under the Plan.
If you have any questions or would like more information, please contact one of our Employee Benefit Administrators.