Options for 401K and Other DC Retirement Plans


Plan participants in a 401K or other type of defined contribution (DC) retirement plan may be interested in a Department of Labor ruling that has facilitated the ability for employers to add sustainable, responsible and impact investment (SRI) fund options to the plan's choices. 

In October 2015, the US Department of Labor rescinded a 2008 bulletin that had discouraged investors from considering environmental and social factors in the companies and funds in which they invest. In its place, the Department issued a new bulletin that assures that fiduciaries of private sector retirement plans "need not treat commercially reasonable investments as inherently suspect or in need of special scrutiny merely because they take into consideration environmental, social or other such factors."

The revised guidance provides reassurance to plan sponsors and fiduciaries who had questioned whether they could offer sustainable investment options. It also allows ERISA fiduciariesand ultimately their plan beneficiariesto benefit from additional analytical tools to assess risks, opportunities and impact of their retirement plans. Just as important, it frees investment professionals to exercise their judgement and expertise in the service of beneficiaries. 

In April 2018, the Department of Labor issued a lower level
field assistance bulletinthat generally reaffirmed its 2015 guidance while offering specific instructions on the qualified default investment alternative.

The following resources provide details on the new guidance and how to add a sustainable investment option to your retirement plan: