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Employee Benefit Plan Review

September 8, 2022
About 15 Years After The Pension Protection Act of 2006, Is It Time for a Full Review of a Plan's QDIA?

By Tony Sabos and Michael Chard

Inertia: n. A tendency to do nothing or to remain unchanged. For defined contribution ("DC") plans like 401 (k) plans, the Pension Protection Act of 2006 ("PPA") was a watershed event. The PPA provided key provisions to improve the retirement readiness of DC plan participants with automatic features - namely, auto enrollment, auto escalation and "auto investment" via a qualified default investment alternative ("QDIA"). These provisions cleverly used the inertia of plan participants to get them on a better path to saving for retirement. Over the last 15 years, these auto features have been one key reason for improved retirement savings for many Americans - young and old.

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