No. of Recommendations: 1
I believe the primary reason so many qualified retirement plans offer TDFs is because this meets the ERISA definition of a "Qualified Default Investment Alternative", which if offered, relieves the retirement plan fiduciary of fiduciary breech WHEN a 'stock-drop' occurs during market corrections and for auto-enrollment plan default investments, as well as an offering to meet investment diversification requirements when employer stock is offered as employer contributions to the plan.

From ERISA's web site on this topic:

"The final regulation provides for four types of QDIAs:

o A product with a mix of investments that takes into account the individual’s age or retirement date (an example of such a product could be a life-cycle or targeted-retirement-date fund);"...

And yes, TDFs can vary considerably, based on projected stock/bond mix by age and by the 'glide path' of the change of this mix at various future age points.

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