With the increasing popularity of target date retirement funds as an investment option in individual account retirement plans (e.g., 401(k) plans), the Department of Labor (DOL) recently published informal guidance intended to assist plan fiduciaries in selecting and monitoring those funds. Target date funds typically hold a mix of stocks, bonds, and other investments that automatically changes over time as the participant ages. The fund’s initial asset allocation, when the target retirement date is a number of years away, usually consists mostly of stocks or equity investments, which often are higher-return, higher-risk investments. As the target retirement date approaches, the fund’s asset allocation shifts to include a greater proportion of conservative investments (e.g., bonds and cash instruments), which generally are lower-return, lower-risk investments. In other words, these funds automatically rebalance to become more conservative as an employee gets closer to retirement. Target date retirement funds can be attractive options for employees who do not want to actively manage their retirement savings. The DOL guidance reminds plan fiduciaries that there can be considerable differences among different target date retirement fund products offered in the market. Plan fiduciaries need to be engaged in a prudent and documented process for evaluating, selecting, and monitoring target date funds that focuses on matters such as the performance of the funds, the principal investment strategy and risks associated with the funds, and the investment fees and expenses that are charged by the funds. The DOL’s guidance can be found here.