For 401(k) plan providers and participants, target-date funds are thenot-so-new black.

“The vast majority of all assets are consolidating intotarget-date solutions within retirement plans, so this trend isonly growing,” said Shaun Bromley, an institutional retirementspecialist with Alliance Bernstein in New York.

In fact, TDFs will account for almost 90 percent of newcontributions to 401(k) plans by 2019, according to a study byBoston-based Cerulli Associates.

That's the case in part because TDFs are popular as qualifieddefault investment alternatives under ERISA, so a lot ofauto-enrolled participants are defaulted into them.

Still, picking one that that's suitable for a plan sponsor'semployees can be a tricky proposition.

Also read: SEC commissioner pushes for TDFwarnings

Choosing an appropriate TDF “is really the single most importantfiduciary decision about the investments that the plan sponsors aremaking,” Bromley said, “So, there's a tremendous amount of interestthere and an increasing amount of different choices.”

There are many factors that bear upon a sponsor's choice –off-the-shelf or customized; aggressive, moderate or conservative;active or passive?

In explaining all that to sponsors, advisors are well-advised toremember Denzel Washington's line in “Philadelphia”: “Talk to melike I'm a 6-year old.”

“I spend a lot of time just coaching plan sponsors on thedifferences,” said Matthew Gulseth, an advisor with ChannelFinancial in Minneapolis. “I think our industry presumes too muchas far as the knowledge of most plan sponsors.”

Richard Weiss, an asset manager with American CenturyInvestments in Kansas City, agrees.

“Target-date searches get bogged down or even prejudiced by thejargon,” he said. “There's a whole new language that's arisenaround target-date funds. It's almost like learning a foreignlanguage or accounting.”

Bromley, Gulseth and Weiss served as panelists Sunday in aworkshop on target-date funds at the NAPA (401)k Summit in SanDiego.

Weiss said the three most important factorsthat plans sponsors should consider in choosing a target date fundwere glide path; diversification; and the underlying managementstyle, taking into account the demographics, income and savingsrates of a sponsor's employees.

If the sponsor owns a high-tech firm in Silicon Valley and hisemployees' average age is 25, his best choice is probably a fundwith an aggressive, equity-heavy glide path. The plan sponsor for ahigh-powered New York law firm where the employees' average age is45 is probably wise to pick a fund with a more conservative glidepath.

“What I tell clients is that there's no right or wrong,” Gulsethsaid. “It's what's right for you. Let's just document the reasonsand why you've chosen to go that way.”

The conversation gets confusing when the question of whether togo with an off-the-shelf or customized fund arises.

In February 2013, the Labor Department issued “Target DateRetirement Funds – Tips for ERISA Plan Fiduciaries.” It suggested,among other things, that fiduciaries consider bothoptions.

Also: Youngerworkers lean on TDFs

Weiss argued that in most cases, there is no reason for anemployer to choose a custom fund.

“There's a wide array of products out there with provenexpertise and track records and that have different types ofstructures. I can't really envision many situations that woulddemand the extra cost and time and liability of a purely customizedsolution,” he said.

Plan sponsors should also be made aware of how much participantswill have to pay in fees. There is a wide difference in feestructures, even between two funds with the same targetdate.

Future Advisor analyzed more than 1,700 TDFs. It reported inNovember that 198 funds with a 2040 target date had annual costratios ranging from zero to 2.39 percent.

“You could drive a truck through the differentials in fees,”Weiss said.

On the other hand, fees are just one consideration, he said.

“You shouldn't let the fee tail, if you will, wag the investmentdog. It's looking at return net of fees that's probably the properperspective.”