--- title: Is Your 401(k) Required to Have a QDIA? description: If your company's 401(k) plan has a default investment option, you'll want to learn about Qualified Default Investment Alternatives (QDIAs). image: https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_401_png_category.png --- [![logo](https://www.dwc401k.com/hubfs/_global/logo.svg "logo")](https://www.dwc401k.com/) [![logo](https://www.dwc401k.com/hubfs/Dwc-2019/SVG/logo.svg "logo")](https://www.dwc401k.com/) [![Contribution Limits](https://no-cache.hubspot.com/cta/default/3113501/af3ae025-72b1-41fa-8855-5e196d6c26e4.png)](https://cta-redirect.hubspot.com/cta/redirect/3113501/af3ae025-72b1-41fa-8855-5e196d6c26e4) [![Log in](https://no-cache.hubspot.com/cta/default/3113501/3466ce37-58ba-4a93-bddb-0d4c8bb8ccbc.png)](https://cta-redirect.hubspot.com/cta/redirect/3113501/3466ce37-58ba-4a93-bddb-0d4c8bb8ccbc) [![services-icon1](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon1.png) ## Plan Document A properly drafted document is the foundation of achieving the company's objectives and keeping the plan in operational compliance. ](https://www.dwc401k.com/services/plan-document) [![services-icon2](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon2.png) ## Plan Compliance We have a fundamental understanding of how critical plan compliance is to both the IRS and Department of Labor. ](https://www.dwc401k.com/services/plan-compliance) [![services-icon3](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon3.svg) ## Defined Benefits Services We work with business owners and investment advisors to determine what makes the most sense by providing a detailed cost benefit analysis. ](https://www.dwc401k.com/services/defined-benefits-services) [![services-icon4](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon4.svg) ## Mergers, Aquisitions & Related Company Analysis The DWC team is well-versed enough in the nuances and is ready to help you navigate the situation. ](https://www.dwc401k.com/services/mergers-acquisitions-analysis) [![services-icon5](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon5.png) ## Plan Corrections DWC's extensive experience with both the IRS and Department of Labor voluntary correction programs allows us to help you address just about any accident that might happen. ](https://www.dwc401k.com/plan-corrections) [![services-icon6](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon6.png) ## Government Audits Being selected for an audit can feel overwhelming, but the process doesn't have to be. ](https://www.dwc401k.com/services/government-audits) ![service-right-icon](https://www.dwc401k.com/hubfs/QOTW/March%202020/service-right-icon.svg) ## Investment Advisor Support DWC has a long history of successfully partnering with investment advisors. 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[ DWC ](https://www.dwc401k.com/blog/author/dwc) | Published: 11/28/2017 | [Question of the Week (QOTW)](https://www.dwc401k.com/blog/topic/question-of-the-week-qotw), [DWC](https://www.dwc401k.com/blog/topic/dwc), [QDIA](https://www.dwc401k.com/blog/topic/qdia), [Retirement Plan Investment Menu](https://www.dwc401k.com/blog/topic/retirement-plan-investment-menu), [401(k) Q&A](https://www.dwc401k.com/blog/topic/401k-qa) ## **Facts** Like many 401(k) plans, ours allows employees to decide where to invest their accounts among a menu of approximately 20 different mutual funds. For employees who do not make an investment decision, their contributions are invested in a default fund recommended by our investment advisor. ## **Question** What sort of information do we have to give our employees about use of this default investment option? ## **Answer** Use of a default investment option is very common among plans that allow employees to direct their own investments. As with any decision related to selecting options for a plan’s investment menu, the selection of a default option is a fiduciary decision. In short, that means the company must exercise due diligence and select a default option that is in the best interest of plan participants and does not carry any unreasonable fees or expenses. The retirement plan rules also include something known as a Qualified Default Investment Alternative or QDIA. There are a number of requirements, but generally speaking, balanced funds and other options that take into account a participant’s age and/or retirement date can potentially be used as QDIAs. Companies that select a valid QDIA and provide an annual notice to employees 30 days before the start of each year are deemed to have satisfied their fiduciary duties with respect to the selection of the default investment. The notice must explain the risk/return characteristics of the default fund as well as the fees, and it should notify participants that they have the right to change how their accounts are invested and who to contact for additional information. It is worth noting that unlike other plan notices, the QDIA notice is not mandatory. That is because plans are not required to use a QDIA as the default fund. For example, a money market fund is not a QDIA, but there are plenty of investment professionals who believe that in an uncertain economy, a money market is the most prudent choice. Some plans choose not to designate a default at all. Rather, they make sure they have one-on-one meetings with each employee eligible for the plan to ensure investment elections are made. If all participants make elections, there is no need for a default investment. Even if a plan does use a QDIA, there are no monetary penalties or compliance failures if the 30-day deadline is missed. The fiduciary “free pass” does not kick in until 30 days after the notice is provided, so the company should be sure to distribute the notice as quickly as possible. For more information on participant communications, visit our Knowledge Center [here](https://www.dwc401k.com/retirement-plan-investments-participant-communications).  [![Submit Your Question Today](https://no-cache.hubspot.com/cta/default/3113501/ea1283f0-31cd-4e2b-ac92-d185c9da303c.png)](https://cta-redirect.hubspot.com/cta/redirect/3113501/ea1283f0-31cd-4e2b-ac92-d185c9da303c) - Share - [**](https://www.facebook.com/sharer/sharer.php?u=https://www.dwc401k.com/blog/is-your-401k-required-to-have-a-qdia&title=Is%20Your%20401(k)%20Required%20to%20Have%20a%20QDIA?&picture=https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_401_png_category.png&description=If%20your%20company's%20401(k)%20plan%20has%20a%20default%20investment%20option,%20you'll%20want%20to%20learn%20about%20Qualified%20Default%20Investment%20Alternatives%20(QDIAs).) - [**](https://twitter.com/share?url=https://www.dwc401k.com/blog/is-your-401k-required-to-have-a-qdia&hashtags=) ## Browse categories [ DWC Developments ](https://www.dwc401k.com/blog/topic/dwc-developments) [ Industry Insights ](https://www.dwc401k.com/blog/topic/industry-insights) [ Regulatory Round-Up ](https://www.dwc401k.com/blog/topic/regulatory-round-up) [ Cash Balance Corner ](https://www.dwc401k.com/blog/topic/cash-balance-corner) [ 401(k) Q&A ](https://www.dwc401k.com/blog/topic/401k-qa) [ Operational Overview ](https://www.dwc401k.com/blog/topic/operational-overview) [ Lessons from Litigation ](https://www.dwc401k.com/blog/topic/lessons-from-litigation) [ Pension Primer ](https://www.dwc401k.com/blog/topic/pension-primer) [ Browse by Topic ](https://www.dwc401k.com/knowledge-center-topics) ## Subscribe to our newsletter ### Only the Best Retirement Industry Content Get our 401(k) and defined benefits content delivered directly to your inbox. 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