Action Plan for Evaluating TDFs

Plan sponsors have a fiduciary responsibility to evaluate and monitor TDFs in the plan. The steps below offer an action plan for plan sponsors to evaluate and monitor TDFs.

  1. Identify Roles - The plan sponsor should decide how the TDF evaluation will be carried out and by whom. Plan sponsors should consider whether the evaluation and monitoring process will be handled by an internal investment committee or whether to hire a nondiscretionary investment adviser to assist with the selection and monitoring.
  2. Review and Evaluate - Fiduciaries are obligated to evaluate TDFs including examination of the glide path, asset allocation and fees and expenses.
  3. Document the Process - The TDF evaluation process should be documented in order to establish that the TDF was selected and monitored in accordance with the ERISA standard of prudence and determined to be in the participants’ best interests.