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Best Practices for Defined Contribution Plans
By Nicole M. Boyson
This paper provides operational and investment recommendations for ERISA 403(b) plans. Based on a review of academic literature and an empirical analysis, I recommend that plan investment menus include mostly passive index funds covering key investment categories, a full suite of index-based target date funds as the auto-enroll qualified default investment alternative, and a self-directed brokerage option. I also recommend that plan sponsors adhere to and regularly review the plan’s Investment Policy Statement, that the Retirement Plan Committee meet at least quarterly and be comprised of members with appropriate expertise and training, that sponsors establish and follow clear procedures for plan decisions, including changes to the plan menu, service providers, or fees, and that sponsors develop criteria to assess the success of their plans. I conclude with specific recommendations about fund selection, fees, and participant education.
Source @SSRN
