Responding to a request from Sen. Elizabeth Warren, D-Massachusetts, the GAO set out to understand why sponsors choose the way they do when they select a QDIA route for participants, and how they go about monitoring and assessing the quality of their selections.

Drawing on data from three industry surveys of sponsors, and data from Form 5500 filings, the GAO tracks TDFs torrid assent in the 401(k) market relative to the two other options.

By 2013, sponsors that automatically enrolled employees used TDFs between 60 percent and 72 percent of the time, according to the three surveys.

Balance funds and managed accounts were selected at a fraction of that rate, with neither exceeding 18 percent of sponsors that auto enroll participants.

The report doesn't go so far as to conclude exactly why that is.

But it does suggest an absence of clarity in the safe harbor creates ambiguity for some plan sponsors as the whether one default option may carry more liability than another.

The 222 sponsors that responded to the GAO's inquiry listed asset diversification, ease of understanding by participants, limiting fiduciary liability, and appropriateness of the investment alternative for a plan's overall demographics as the main reasons for choosing the option they did.

Sponsors choose TDFs because they are a "conceptually simple, low-cost product that provides diversification and dynamic asset allocation throughout a participant's career," according to the report.

Custom TDFs were chosen for their ability to incorporate best-in-class investment managers in a sponsor's investment objectives.

When sponsors do go with balanced funds, they often do so because of they are easy to monitor, and for the fact that many balanced funds have been in investment menus for years, making them familiar to both sponsors and participants.

And managed accounts, which were the least often selected option in all three of the surveys the GAO examined, were cited as offering the highest level of fiduciary protection.

A plan's specific demographics—namely the average age of participants—is a significant factor in weighing default options, reported sponsors involved in the GAO's inquiry. For instance, an older participant base that is closer to retirement may be better served by a balanced fund, which can weight fixed income allocations to age of participants.

But exactly how sponsors factor the age of participants into the selection of an investment option is not crystalized in the safe harbor. That may be leaving some sponsors in limbo as to whether or not they are fulfilling regulatory requirements when choosing an investment.

Other sponsors said a lack of clarity as to the fiduciary liability of each investment type discouraged changing an investment, even if the change would be better for participants.

"One plan sponsor stated that fear of potential litigation led the plan's investment committee to decide against changing a QDIA, even though the committee believed that initial selection decisions had been prudent and participants would be better served by the change," according to the GAO.

Switching out one default investment for another can also be highly disruptive and costly to sponsors, who in some cases are able to negotiate lower fees if they implement one option, creating a relationship with service providers that further discourages changing the investment option even if the change is in participants' best interest, the report found.

More than half of the sponsors said the three QDIA options did not offer the same fiduciary protection. Half also said they did not know, or "had no basis to judge" as to whether they offered the same protection.

The report's bottom line is that sponsors are craving more clarity from the DOL.

"Without a better understanding of the requirements, plan sponsors— including those that have already adopted a QDIA—face difficulties trying to balance participant safeguards with solutions that can help them establish and sustain financially secure retirement plans for their employees," said the GAO.