In addition to the American Funds Target Date Retirement Series, advisers and plan sponsors have the added flexibility to choose from among a variety of fund families. “Advisers now have flexibility to offer plan sponsors and participants a broad menu of fund choices without requiring a minimum number of American Funds beyond the target-date default options when they convert to an American Funds solution,” said Bill Anderson, director of retirement plan business at American Funds.
This option is also available for plans converting from one American Funds solution to another, Anderson added. Assets in existing plan investments must be transferred to the American Funds Target Date Retirement Series, which becomes the plan’s default option. But participants then are free to transfer their balances from the target-date funds and to direct new contributions to any fund available in the plan.
American Funds investment professionals actively manage the Target Date Fund’s portfolio, moving it from a more growth-oriented strategy to a more income-oriented focus as the fund gets closer to its target date. The American Funds retirement plan solutions that offer this approach include Recordkeeper Direct (multi-fund), PlanPremier and PlanPremier TPA.
“We think plan participants and sponsors alike will welcome this option because each participant’s assets are transferred directly into an age-appropriate, well-diversified fund-of-funds that automatically adjusts the allocation as the retirement date nears,” Anderson said.