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NAPA 401(k) Summit Insider Summer 2022
from accumulation to decumulation remains largely unquestioned. That said, the proposed calculation put forth by the Labor Department is widely viewed as sorely lacking—and until that is resolved, some hesitancy would seem to be warranted, though the long-term optimism (likely assuming that the final proposed calculation’s issues would be resolved) is as well.
CITs Available to 403(b) plans
1%
3% 11%
85%
Managed Accounts
31% 45%
8% 16%
Over the past couple of years managed accounts (re)emerged on the scene with some enthusiasm, at least in the advisor community. These options purport to provide a more customized solution that your traditional target-date fund, and one that also—at least potentially— brings to the fore the insights and perspective of the plan advisor. That said, all managed accounts are (literally) not created equal—and some, arguably, amount to little more than expensive target-date funds—a point that has been made in several litigation filings of late—and perhaps that accounts for the surprisingly negative read on this option—a remarkable turnaround from the last Insider, where 41% saw these as a positive game changer!
Legend
In view of the growth of collective investment trusts, or CITs, in 401(k) plans, it is not surprising to find a high level of enthusiasm for the expansion of this opportunity to 403(b) plans. That said, it’s one thing to anticipate what that open door could mean—and perhaps something else again to see what actually materializes. Fingers crossed.
survey work) that the mandates underlying the state-run IRAs for private sector employers have been “good for business.” Setting aside for the moment the positive impact the programs have had on the retirement savings of the individuals enrolled in them (though the opt-out rates are much higher than what private sector automatic enrollment programs experience), the mandate’s impetus of having to consider setting up the payroll deductions does seem to be opening doors to discussions about “upgrading” to a regular ERISA-qualified plan. That said, and while there are certain consistent structures, each program—and each set of employers (and employees) defaulted into them are unique— which perhaps explains the relatively large “too soon to say” response.
Recordkeeping Consolidation 9%
The Competitive Environment
24%
State-Run IRAs 46%
11%
21%
34% 20%
35%
There’s been plenty of anecdotal evidence (and, thanks to The Pew Charitable Trusts, some actual
Consolidation in the ranks of the nation’s recordkeepers is nothing new, though it seems to “erupt” with a certain vigorous passion about once every 10 years or so, and we appear to be in one of those cycles at present—or at least the tail winds of one. That is why, perhaps, “much ado about not much” is the prevalent response among this year’s Insiders,
• Too Soon to Say | • Positive Game Changer | • Much Ado About Not Much | • Negative Game Changer