I’ve heard that target date mutual funds used in retirement plans aren’t regulated. Is that true?
Absolutely not. When target date funds are used in retirement plans, plan fiduciaries must comply with ERISA’s fiduciary obligations in selecting and monitoring target date funds as investment options. A plan’s fiduciary—usually a representative of the employer—selects and monitors target date funds for use in the plan’s investment lineup. In doing so, the fiduciary must comply with a comprehensive set of ERISA obligations that require it to act with prudence and for the exclusive benefit of the plan and its participants. These regulations prohibit self-dealing and restrict conflicts of interest, among other practices. Target date funds offered by mutual fund companies are subject to the Investment Company Act of 1940, like any other mutual fund. 4The SEC has broad powers under the 1940 Act to regulate the activities of mutual funds in the public interest and for the protection of investors. The 1940 Act imposes detailed requirements and prohibitions on the structure, governance, and d
