The proliferation of target date fund (TDF) varieties can bewilder many plan sponsors. One survey found that, while nearly two-thirds (65%) of plan sponsors consider investment performance the most important selection criterion when choosing a TDF for their participants, more than half (54%) aren’t confident that they have a solid basis for benchmarking the TDFs against others in the marketplace. One of the biggest challenges is segmenting competing TDFs into logical categories for comparative performance analysis purposes.

What’s the difference?

When TDFs were first introduced, they were typically divided into two basic groups, according to their glide path: “to” or “through” retirement. Under the “to” framework, the TDF’s goal is to minimize participants’ investment risk in stages until they reach retirement age (also called the “landing point”). At that time, the funds would be minimally exposed to market volatility, allowing participants to decide for themselves what their asset allocation should be and reset it according to their own wishes going forward.

The “through” model is built on the assumption that participants will remain invested in the fund through retirement. This means they need to maintain a significant (although diminishing) equity exposure at retirement to maintain sufficient capital to live on over the remaining years of their lives — at least two or three decades.


The “to” vs. “through” categorization model for making apples-to-apples comparisons may have serious flaws, however. Importantly, it can cause sponsors to speed past the basic question of which glide path is more appropriate in the first place — an assessment that needs to be revisited from time to time.

A pair of surveys from Cammack Retirement Group underscores the importance of reassessing the glide path regularly. In 2013, the first poll revealed that most participants were liquidating their 401(k) accounts at retirement, while most of their employers were using “through” TDF models. This mismatch could have jeopardized many employees’ retirement income security. Three years later, however, a higher proportion of participants opted to remain invested and stay in their TDFs.

But even when taking into account participant investment behavior patterns at retirement, the to-vs.-through comparison model can still fall short. Basically, some would expect a “to” model glide path, no matter what the underlying portfolios, to be inherently more conservative than a “through” model. But it doesn’t always work out that way. Why? Because there aren’t hard and fast definitions or standards regarding the labeling of TDFs.

A review of TDFs billing themselves as employing the “to” model can reveal widely divergent equity exposures at the landing point, ranging from below 10% to nearly 60%. Similarly, when glide paths of a variety of TDFs — some self-described as “to” and others as “through” — are categorized on a conservative-to-aggressive spectrum, you’ll find both self-described “to” and “through” TDFs falling in the “conservative” grouping.

How to compare TDFs?

Remember that the glide path and composition of a TDF’s underlying portfolios won’t remain fixed indefinitely. Competing TDF providers are mindful of how they perform relative to each other. They recognize that many participants and plan sponsors will simply compare investment returns of various TDFs with the same target date. Without more research, prospective participants and sponsors won’t understand why competing TDFs might have divergent investment performances over a particular time period because of their different glide paths.

For example, during a long period of strong domestic equity performance, it might be tempting for “TDF X 2030” to move its equity allocation up a notch or two to appear more competitive compared to “TDF Z 2030,” which had always maintained a higher equity allocation than “TDF X 2030.” You might have chosen TDF X specifically because its glide path was conservative. An abrupt change in equity market trends could result in poorer performance for “TDF X 2030” than would have been the case if competitive pressure hadn’t prompted it to tinker with its glide path.

The bottom line

In the final analysis, “to” and “through” labels say more about how TDF providers view themselves, not necessarily how plan sponsors and participants might view them. Take the time to research any TDFs you want to include as part of your retirement plan. The DOL’s Target Date Retirement Funds — Tips for ERISA Plan Fiduciaries has helpful information so that you can offer what’s best for the plan and your participants. 

BPM is one of the largest California-based public accounting and advisory firms, ranked as one of the 50 major firms in the country. With six offices across the Bay Area – as well as offices in Hong Kong and the Cayman Islands – we serve emerging, mid-cap, and closely-held businesses as well as high-net-worth individuals in a broad reach of industries. Our Employee Benefits team consists of professionals with extensive knowledge of ERISA guidelines and deep expertise performing employee benefit plan audits. We can help you craft a smooth-running plan that serves your employees while mitigating associated risk. For more information or for a free expert consultation, contact Jenise Gaskin at (925) 296-1016, Michelle Ausburn at (707) 524-6588 or visit us at

Jenise Gaskin - CPA - Advisory

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