Have you considered target date funds as an investment option for your plan? The American Funds Target Date Retirement Series® is a professionally managed collection of mutual funds designed to make it easier for participants to invest for retirement and meet their changing needs over time. The funds invest in a mix of American Funds — investments you and your participants are already familiar with.
The American Funds Target Date Retirement Series meets the Department of Labor’s requirements for qualified default investment alternatives (QDIAs), which can help you avoid fiduciary liability for default investment losses.
Specifically, the funds are intended for retirement plans offering automatic enrollment, for participants who don’t choose their own funds, and for those who want to actively select a single investment option with an asset mix that automatically adjusts over time.
Although the target date funds are managed for investors on a projected retirement date time frame, the allocation strategy does not guarantee that investors’ retirement goals will be met. For more information on QDIAs, see the QDIA notices section in sample notices.
Each target date fund is designed to serve as a single, diversified retirement investment. American Funds investment professionals manage each target date fund’s portfolio, reallocating it over time to account for participants’ changing needs as they approach and move into retirement.*
The funds have a more growth-oriented strategy when retirement is years away and a more income-oriented focus as the fund gets closer to its target date. The target date is the year that corresponds roughly to the year in which an investor is assumed to retire and begin taking withdrawals.
The American Funds Target Date Retirement Series is appropriate for tax-advantaged retirement plans as well as for IRAs. Please consult your plan’s financial professional for more information and to learn how to include the series in your retirement plan.
Diversification does not eliminate the risk of loss from investing; losses are possible in diversified portfolios. Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility, as more fully described in the prospectus. These risks may be heightened in connection with investments in developing countries. Small-company stocks entail additional risks, and they can fluctuate in price more than larger company stocks. Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds. The return of principal in bond funds and for funds with significant bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks that are associated with the bonds owned by the underlying fund. Fund shares of the U.S. Government Securities Fund are not guaranteed by the U.S. government.
* Investment professionals continue to manage each fund for approximately 30 years after it reaches its target date.