Default investments if an employee does not make an election
You must choose an investment for your employees’ automatic contributions. You can limit your liability for plan investment losses by choosing a qualified default investment alternative (QDIA) which satisfies the conditions under ERISA Section 404(c)(5). Types of alternatives allowed under a QDIA are:
- Life cycle funds
- Target maturity funds
- Balanced funds
- A managed account service
Your employees must be given the opportunity to change this investment choice.