DoL Issues Final QDIA Rules – Without Stable Value

Editor’s Note:  Today’s NewsDash headline said the regulations would be published today.  In fact, they are scheduled to be published in Wednesday’s Federal Register.

According to a Dow Jones news report, the final DoL regulations sanction as default investment options lifecycle funds, professionally managed accounts or a group investment product, such as a balanced fund.

The news report said stable value funds could be included as one of several options in the professionally managed accounts, but stand-alone stable-value funds could not be included as a default option to qualify for safe harbor protections.  There are, however, reports that stable value and money market default choices in place prior to the effective date of the regulation could receive protection under a safe harbor provision – though that would not extend to those options after the effective date. 

If so, that would be a significant help to plan sponsors that have those options in place already – and for the providers of those options who otherwise could well have had to deal with a mass exodus from those options.  Less clear is how that decision will serve participants that have been placed in those choices over time (See  PD2007: Stable Value QDIAs Draw Concerns).

Monday’s release comes more than a year after the DoL put out is proposed safe-harbor regulations to cover auto enrollment programs or other scenarios in which employees failed to choose their own investments (See  DoL Releases Default Investment Option Safe Harbor).  

The final regulation will go into affect 60 days from Wednesday, when the regulations are scheduled to appear in the Federal Register.