Get Participants on the Right Track With an Investment Re-enrollment

Investment re-enrollment aligns participants with their retirement goals.

Despite plan sponsors’ best efforts to help workers save for retirement, many participants may still not have allocated their investments properly. Investment re-enrollment is a simple way to reset participant investments into the plan’s QDIA, or Qualified Default Investment Alternative (usually a target date fund), to better align their investments with their retirement goals.

This two-minute video from American Funds explains how investment re-enrollment can help bring improved retirement outcomes within reach. Check out the three benefits to plan sponsors: expand fiduciary protection, support plan success and greater employee satisfaction.

Before re-enrollment, allocations are often scattered. Some older participants have taken on too much risk, while some younger participants haven’t risked enough to match their long-term objectives. An investment re-enrollment can result in allocations that are more age appropriate.

As case studies have shown, an investment re-enrollment is a process that is much more straightforward than many realize. The plan sponsor announces that, as of a specific date, current and future balances will be invested in the plan’s QDIA, unless participants opt out by making different selections.

There are many benefits to investment re-enrollment for both participants and plan sponsors. If the plan’s QDIA is a target date fund, participants can benefit from a professionally diversified, age-appropriate allocation that automatically adjusts over time. For plan sponsors, re-enrollment can expand fiduciary protection because default investments in QDIAs are covered by an ERISA safe harbor. And bringing plans into better balance at the participant and plan levels may ultimately lead to greater employee satisfaction.

Download this white paper to learn more about the benefits of an investment re-enrollment and how to support the effort with clear participant communication.


Securities offered through American Funds Distributors, Inc.

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