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Qualified Default Investment Alternative (QDIA) and Financial Advice

Defined Contribution Plans in a Post-PPA Environment. Qualified Default Investment Alternative (QDIA) and Financial Advice. QDIAs and Financial Advice. Larger employers have embraced 401(k) plan automation in recent years—before the green light of PPA

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Qualified Default Investment Alternative (QDIA) and Financial Advice

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  1. Defined Contribution Plans in a Post-PPA Environment Qualified Default Investment Alternative (QDIA) and Financial Advice

  2. QDIAs and Financial Advice • Larger employers have embraced 401(k) plan automation in recent years—before the green light of PPA • These employers have already taken steps to utilize the clarifications and protections offered by PPA • Large employers generally more likely to use “mechanical” structures to improve employee investment decisions (such as QDIAs and automatic rebalancing) over managed accounts

  3. Increased Growth of Automatic Enrollment Growth of automatic enrollment continues; was 4% in 1997, 36% in 2007 and 44% in 2008 22% of respondents currently also automatically default existing employees, with 27% of the remainder considering it. Source: Hewitt, Hot Topics in Retirement Plans (2008)

  4. Default Investment Option Details—2007 Source: Hewitt, Trends and Experience in 401(k) Plans (2007)

  5. Historical Default Investment Option Comparison 2001–2007 Source: Hewitt, Trends and Experience in 401(k) Plans (2007)

  6. Likely Changes to Automatic Enrollment: 2008 Source: Hewitt, Hot Topics in Retirement Plans (2008)

  7. Tools to Assist Employees with Investment Selection Investment tools are a primary focus of employers. Source: Hewitt, Hot Topics in Retirement Plans (2008)

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