In a new whitepaper, "Building a Common Language to Promote Adoption of Auto Features in DC Plans," produced by DCIIA's Retirement Research Board and its
The paper, which is based on the team's findings, provides a definitional framework with the objective of increasing the common understanding and usage of these practices.
Proposed definitional framework:
- Auto enrollment: Automatically enrolling new hires into a Qualified Default Investment Alternative (QDIA) within the DC plan, at a fixed contribution rate.
- Auto enrollment sweep: Automatically enrolling existing eligible employees who aren't participating in the plan into the plan's QDIA at a fixed contribution rate, either as a one-time event or periodically.
- Auto escalation: Increasing participant contribution rates at regular intervals, by a predetermined amount.
- Fund-to-fund mapping: Re-directing an existing investment from one fund to a similar, or like, fund.
- QDIA re-enrollment: Redirecting existing account balances and future participant contributions from existing investment allocations to a QDIA, unless participants opt out or make another election before assets are moved. Provided that the plan sponsor has satisfied the safe harbor requirements, it will be provided with relief under ERISA Section 404(c) for investment outcomes related to the QDIA.
- Non-safe harbor re-enrollment: Redirecting existing account balances and/or participants' future elections to a QDIA-eligible fund, without providing participants the opportunity to opt out or make another election prior to the assets being moved, or otherwise not satisfying the safe harbor requirements. In this instance, the plan sponsor will not be provided with relief under ERISA Section 404(c).
To read the full whitepaper, please click the link below:
DCIIA's "Building a Common Language to Promote Adoption of Auto Features in DC Plans" http://bit.ly/2dGs5Zf
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/defined-contribution-institutional-investment-association-proposes-industry-standard-lexicon-to-encourage-greater-auto-feature-adoption-300338653.html