Four Questions to Ask About Default Investments in 401(k)s This Year

Share Article

The beginning of a new year is the ideal time for consumers to review their current financial situations, including retirement accounts, 401(k)s and investments. Hutchinson Financial, Inc., offers tips for those with questions regarding default investments in 401(k)s in the New Year.

Hutchinson Financial - Your Financial Partner

Target or lifecycle funds are becoming popular with retirement plans

In the beginning of each year, with tax season fast approaching, consumers across the United States take time to review their financial standings and investments. Hutchinson Financial, Inc., is committed to helping not only their clients, but consumers throughout the country reach their individual financial goals with financial planning and investment advice. With the New Year in full swing, Hutchinson Financial advises consumers to take time this month to review their investments, especially with regard to QDIAs – Qualified Default Investment Alternatives commonly used in 401(k)s.

QDIAs are used when an employee is enrolled in a 401(k) plan and doesn’t make an investment selection on their own. Balanced funds create an assortment of investments for QDIAs that are intended to fit the group of employees as a whole, while target or lifecycle funds for QDIAs contain specific mixtures of investments targeted to an investor’s age or retirement date.

Target or lifecycle funds are becoming popular with retirement plans as default investments, and with many individual investors as well, according to Eric Hutchinson, president of Hutchinson Financial.

“Why the demand? In part, these types of funds have been positioned as no-brainer investments for those individuals without the time, inclination or knowledge to choose investments for themselves,” Hutchinson said. “When evaluating target, lifecycle, or one-size fits all investment vehicles, it’s important to ask the right questions and seek out the right answers.”

For most people, it will be helpful to seek guidance from a qualified investment professional, as a properly trained financial planner can help to custom tailor investment strategies.

Hutchinson Financial recommends asking the following four questions to get started with customizing investments to suit individual needs and goals:

1. How much money would it take to retire comfortably? Each individual should consider their age and their own vision of what they want in retirement.
2. How does the employer select the fund it is offering?
3. What happens to the 401(k) when transferring jobs? What happens to the target investment plan?
4. What are you paying for in a target fund?

Hutchinson says individuals should ask the right questions and seek the right answers, then make adjustments as necessary to keep retirement savings plans on track. In the end, the decision to use a target, lifestyle, or balanced fund in their employer’s retirement plan should be a deliberate one, rather than a choice by default.

To learn more about how to begin investing and planning for the future, please visit the extensive library of learning tools and resources available at

About Hutchinson Financial
Hutchinson Financial, founded in 1988, is an Independent Registered Investment Advisory firm based in Little Rock, Arkansas. Hutchinson Financial, Inc. is a fee-only financial planning firm committed to helping all clients reach their individual financial goals. All Hutchinson team members who provide financial planning services and investment advice to clients have professional credentials such as Certified Financial Planner, Chartered Retirement Planning Counselor, Chartered Financial Consultant, Chartered Life Underwriter, or Accredited Investment Fiduciary. To learn more about Hutchinson Financial, Inc., please visit

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Eric Hutchinson
Follow us on
Visit website