Proposed DOL six-factor test should cover all menu options

Plan committees should apply the Labor Department's proposed six-factor investment selection test to every option on the menu, not only alternatives, according to PLANADVISER's Retirement Trend Report.

The report recommends one documentation standard so dissimilar vehicles can be compared on common ground.

For the advisor drafting the committee file, the change is scope: the target-date default and any private asset a sponsor is weighing would be reviewed against the same documented criteria. That matters most where the default holds the bulk of the money. 91% of sponsors offer target-date funds and 86% use them as their QDIA, the report says.

61% of plan sponsors are not evaluating private assets, according to survey data the report cites. Among those exploring them, most are still in early education and 4% plan to implement within 24 months, which suggests the near-term documentation burden sits on the conventional menu, where most of the money already is.

Diversification risk (38%) and downside market risk near retirement (22%) rank as their top target-date concerns, while longevity risk does not make the top three, a gap the report flags for plans with a through-retirement glidepath. Its instruction is to check that the glidepath matches the priorities the committee has written down.

Outside the employer plan, an executive order aims to increase IRA access and use SECURE 2.0 federal matching contributions. The report gives the effective date as January 2027, following the July 2026 launch of Trump Accounts, as Private Wealth Daily previously reported.

The six-factor test the report describes is proposed. The documentation standard it recommends does not depend on the rule's final form: the file a committee keeps for its target-date default can be built to the same template as the file for an alternative added later.