QDIA Notice

Summary

Use this QDIA Notice to satisfy requirements for participant-directed retirement plans to designate a qualified default investment alternative (QDIA) in accordance with the ERISA Section 404(c) safe harbor. This template contains practical guidance, drafting notes, and alternate and optional clauses. The general safe harbor available under ERISA § 404(c) (29 U.S.C. § 4104(c)) relieves plan fiduciaries from liability for investment losses occurring as a result of a participant's investment elections under the plan. In limited circumstances, this relief is extended to investments made on behalf of a participant to a QDIA without the participant having provided any investment instructions. To be eligible for the QDIA relief, the plan must provide this notice prior to plan eligibility and annually thereafter. The initial QDIA notice should be provided at least 30 days in advance of the date a participant becomes eligible for the plan (or in advance of the first time an investment may be directed to a QDIA). The notice will also be timely if delivered on or before the date of plan eligibility if the participant has the opportunity to withdraw any contributions made under an automatic-enrollment feature, as permitted under I.R.C. § 414(w). Thereafter, the QDIA notice must be provided within a reasonable period of time of at least 30 days in advance of each subsequent plan year. 29 C.F.R. § 2550.404c-5(c)(3). For more information on ERISA § 404(c) plans and QDIAs, see ERISA § 404(c) and QDIA Safe Harbors. For a QDIA notice meant specifically for new plan participants (and initial investments in QDIAs), see Automatic Enrollment and Initial QDIA Notice (401(k) Plan). For a full listing of key content covering ERISA retirement plan investments, see ERISA Retirement Plan Investment Resource Kit. For a full listing of key content covering retirement plan notification requirements, see ERISA Retirement Plan Notices Resource Kit.