In its most recent report on target-date fund (TDF) adoption in defined contribution (DC) plans, Vanguard reported that 42 percent of its total plan contributions are being allocated to TDFs.
In just five years, from 2009 through 2014, the portion of all contributions allocated to Vanguard TDFs doubled – from 21 percent to 42 percent. Virtually all Vanguard DC plans (97 percent) have adopted a Qualified Default Investment Alternative (QDIA). Among those plans, TDFs were the QDIA choice in 94 percent.
Of course, not every 401(k) participant chooses to use a QDIA or TDF. In fact, most experienced investors select their own plan investments or rely on a professional advisor.
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