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PCSA Signature Awards: Innovation in Retirement Plan Education
PSCA honored the winners of its annual Signature Award competition at the 2024 National Conference.
by Hattie Greenan with Tobi Davis
Helping Employees with Student Loan Debt
The resumption of student debt repayments challenges many Americans’ finances, including saving for retirement.
by Judy Ward
Sponsor Roundtable Strateg ic Solutions: Implementing Key Elements of Secure 2.0 Act
28, 2024 4:00 p.m. - 5:00 p.m. EST
Investment Summit Save the Date: Nov 6-7 More information coming soon.
National Conference
the Date: April 30-May 2, 2025
Insights is Published by
PSCA MEMBER BENEFITS AND RESOURCES
Conferences and Training
National and regional conferences designed for defined contribution plan administrators and sponsors.
Our must-attend events provide education from industry leaders and peer networking.
Signature Awards
Peer and industry recognition for employee communication and education.
Recognizing outstanding defined contribution programs implemented by plan sponsors, administrators, and service providers.
Research and Benchmarking
PSCA surveys: Most comprehensive and unbiased source of plan benchmarking data in the industry.
Annual surveys of profit sharing, 401(k), 403(b), and NQDC plans, as well as HSAs, created by and for members. Current trend and other surveys available throughout the year. Free to members that participate. Surveys currently available include:
• 6 6 th Annual Survey of Profit Sharing and 401(k) Plans
• 2023 403(b) Plan Survey
• 2023 NQDC Plan Survey
• 2023 HSA Survey
Executive Report
A monthly electronic legislative newsletter.
Providing concise, current information on Washington’s most recent events and developments.
Media Outreach
PSCA works to ensure fair coverage of the DC system in the media.
PSCA continually speaks to reporters to provide and promote accurate, concise, and balanced coverage DC plans and responds to negative press with editorials and letters to the editors. PSCA is also active on social media — follow us on twitter at @psca401k and on LinkedIn.
Washington Representation
Your direct connection to Washington DC events and developments affecting DC plans.
PSCA works in Washington to advocate in the best interests of our members and bring you the latest developments that will impact your plan. PSCA is a founding board member of the Save Our Savings Coalition that is currently working in Washington to preserve plan limits amongst tax reform.
Quarterly Magazine, Insights
An award-winning and essential 401(k) and profit sharing plan resource.
Featuring nationally-respected columnists, case studies, the latest research, and more. Providing practical and constructive solutions for sponsors.
Professional Growth — Join a Committee! For plan sponsors, administrators, and service providers.
Many opportunities for PSCA members to serve on committees, speak at regional and national conferences, and write articles for Defined Contribution Insights.
PSCA Mission Statement
The Plan Sponsor Council of America (PSCA) is a broadly based association of diverse businesses which believe that profit sharing, 401(k), and related savings and incentive programs strengthen the free-enterprise system, empower and motivate the workforce, improve domestic and international competitiveness, and provide a vital source of retirement income.
PSCA Competition Law Statement
The Plan Sponsor Council of America (PSCA) is committed to fostering a best practices environment for profit sharing, 401(k), and other employer-sponsored defined contribution retirement programs. PSCA adheres to all applicable laws which regulate its activities. These laws include the anti-trust/competition laws which the United States has adopted to preserve the free enterprise system, promote competition, and protect the public from monopolistic and other restrictive trade practices.
Editor, Director of Research & Communications Hattie Greenan hgreenan@usaretirement.org
Advertising Sales Thomas Connolly TConnolly@usaretirement.org
Digital Advertising Specialist Tony DeScipio tdescipio@usaretirement.org
Production Assistant Brandon Avent bavent@usaretirement.org
PSCA STAFF
Executive Director Will Hansen whansen@usaretirement.org
Joyce Anderson, GE; Ann Brisk, HSA Bank; Dena Brockhouse, Kent Corporation; Chris Dall, PNC; Brandon M. Diersch, Microsoft Corporation; Scott Greenman, The Principia; Teresa Hassara, Principal Financial Group; Mercedes Ikard, Disney; Tim Kohn, Whole Foods; Matthew Maier, Lockton Investment Advisors; Michelle McGovern, American College of Surgeons; Dan Milfred, Pacific Woodtech; Rose Murtaugh, Navistar; Cynthia Oberland, Precision Medicine Group; Laura Stamps, Financial Finesse; Malika Terry, NCR Atleos; Tracy Tillery, GM; Gabrielle Turner
Sanford Burnham Prebys Medical Discovery Institute
JAZMYNE HEATH
TCP
SARAH HECHT BPM LLP
LEW HENDRICKSON
Higher Ground Education Inc.
GREGORY HENSON
Bon Secours Mercy Health
BRIAN HEWES
Rockwell Automation
ERICA KING
Southwest Ohio ENT Specialists
MARYANN MA
Heritage Financial Credit Union
SUMMER 2024
ZHUNQUADREAT HILL
Clark Nexsen
MELINDA HILLMANN
HR Advantage Advisory
MADISON HOUSOUR
Apollo MGA
ANDREA HOWARD
Hershey Entertainment & Resorts Company
CARNITA HUNT
Navigator HR Services
KEVIN HUNT
Retirement Plan Solutions
ABIGAIL JACKSON
Greater Baltimore Medical Center
JODIE JAROCKI
ICF
CARMON JENKINS
Cathcart Group
TYLER JOCK
Mohawk Gaming Enterprises
CHRISTINE JOHNSON FULLBEAUTY Brands, Inc.
JULIE JONES
The Springs Living
JERAD JUSTESEN
Junior Achievement North
CHIRAG KAMATH
Alimentiv
JANICE KARLUK
Georgian Court University
HEATHER KEAY Alation, Inc.
KAREN KEENE
Disability Rights California
VIRGINIA KENNEDY
Mary’s Place Seattle
STEFANIE KINCAID-TUCKER
Ohio Machinery Co
EKATERINA KIRILLOVA
Cloudbeds
JAMES KLAHR
Missouri Board of Law Examiners
GRACE KNOX-PERRY
USG Water Solutions
BRENDA KOTTINGER
Boyd Corporation
SHERYL KOVARIK CARBONE
Signet Jewelers
KATY KOWALIK
Gerresheimer
SARAH KRAMER
Apace formerly Region V Services
SONJA KREKUN
Vassar College
BONNIE KUJAWA
Wayne Health
MARGARET LAPRADE
Bowman Infrastructure Engineers
RUTH LEE-MERLOS
Manufacturing Engineering Systems
MARIA LEGIER
TBC Corporation
MICHELLE LEMANSKY Covestro, LLC — HR
ASHLEY LEMASTER
Merit Energy Company
STUART LESSMAN
Arcata Associates, Inc.
MARYBETH LITERATUS-SOSA PCV Murcor
CHRISTINA LUBACK
Goodwill Industries of Greater NY & Northern NJ, Inc.
KIRSTIN LUKACS
Reliance Standard Life Insurance Company
DAWN M SHAHAN
DB Schenker
MICHELLE MAGHAN
Bristol Myers Squibb
THU MAI
Maryland Family Network
CAROLINE MARCUS
Anaqua inc
DANIELLE MARGOLIA Knowland Group LLC
CAROLE MARVIN
Community Bankers of Michigan
MCF MARY C. FITZGERALD CrossCom National, LLC
NAOMI MATERO Fieldstead and Company, Inc
DONNA MATLOCK
Integrated Service Company, LLC
DAN MATTILA Ear Medical Group
KATHRYN MAXWELL
Control Risks Group, LLC
GABRIELLE MCCALL-RILEY Creative Testing Solutions
KRISTEN MCLEMORE ALK Abello
KATHERINE MCNAMARA Arlington Coal & Lumber
GUADALUPE MEDINA
Housing Trust Silicon Valley
SANDRA MONAHAN UFG Insurance
RACHEL MORAN
SAS Global Corporation
SARAH MORRIS
Plastics Family Holdings, Inc.
TARA MOSBY JONES
Natural Retreats US, LLC
SUSAN NELESKI
Communicare, Inc
GASSANDRE NEREUS
Swan Products LLC
LILI NEUMAN ProMedica Health System
JENNIFER NICHOLS
First Florida Credit Union
LAURA OLDHAM Bonset America
SUNI OSBORN Silicon Labs
BLANCA PARADA RODRIGUEZ Gentiva
MARTIN PHILLIPS
The Community Solution Education System
LAURIE PLISCH Wausau Homes
SABRINA POPE
Johns Hopkins Hospital
JIMENA PRATT Omnyon LLC
ALYSSA QUEALY Neighborhood Healthcare
JEANINE QUINN Toll Brothers
LORENA RAMIREZ Alley Theatre
SHARON RILEY League
SUSAN RIZZUTO Arkema Inc.
SHALITA ROBINSON NOVONIX Limited
SANDRA RODRIGUEZ ANDMORE
ANA RODRIGUEZ Cornerstone Benefits Inc
AMY RYAN Hudson Cook, LLP
JODI SAENZ
Park Side Credit Union
OMAR SALIH
Quick Med Claims, LLC
TIFFANY SANDERS
Pacesetter Steel Service, Inc.
AMY SCHUMM
APRN
HEATHER SEEBALD
Station Casinos
SUSAN SHOLD
Members Cooperative Credit Union
HELEN SIM Ergobaby
TRACEY SKJEVELAND
Merchant & Gould P.C.
ROBYN SLEDGE
Simmons & Associates, LLC
AMIE SMITH
World Wide Technology
FABIAN SOLORIO
Celanese Americas LLC
CHASITY SPAIN
Tri Star Services, LLC.
SARAH STALEY
Wycliffe Golf & Country Club
PATTY STANFORD
Project Brilliance
LISA STINSON
Commonwealth Credit Union
CRYSTAL STOKARSKI
National Field Representatives LLC
CRYSTAL STOKEY
StepStone Group LP
CATHERINE STROBEL
HBC
CRYSTAL TALE
Webber LLC
LATISHA TAYLOR
Intercontinental Terminals Company
CRYSTAL TEMPLEMAN
Dynamic Mfg
LAUREN VAGLE
Center for Energy and Environment
BONNIE WEBBER
Salem Five Cents Savings Bank
ME WEBSTER
Biscuitville, Inc
RYAN WEBSTER
Neighborhood Healthcare
WENDY WELLS
Century Park Law Group
SARA WELLS
Kennedy Krieger Institute
SARAH WILKERSON
Yokem Motors LLC
MORENIKE WILLIAMS
Community Access
TENEKA WILLIAMS
Resources for Human Development
LANA WRIGHT
Total Terminals International, LLC
JALIN WU
Silicon Laboratories
KELLY YETTER
Lawrence Academy
LISA ZIEMKIEWICZ
ProMedica
Changes in member contacts should be sent to psca@psca.org.
by Hattie Greenan
A Financial Trustfall?
What role does trust play in retirement plans and financial education?
THE KEYNOTE SPEAKER AT OUR RECENT NATIONAL CONFERENCE, MICHELLE SINGLETARY, BROUGHT THE HOUSE DOWN WITH HER ABILITY TO EMOTIONALLY CONNECT WITH THE AUDIENCE. She was very clearly demonstrating how to do what she was suggesting the audience do with their participants – be the “Big Momma,” the cheerleader, the advocate, the truth teller her grandmother was, and use connection and trust to motivate employees to “do the right thing” with their money. This notion of trust came up in three different sessions at the conference which seemed like an interesting departure from a lot of the more behavioral approaches to engaging participants that we typically hear about (auto everything). In addition to Ms. Singletary’s session, a diversity session and a session from Moniwell addressed this notion of building trust and connection with employees (and provided examples of how to do so in very different ways) before asking them to trust in the financial education and guidance provided. It’s another approach to moving away from a more traditional paternalistic approach that I noticed at the conference a couple years ago.
Life is full of decision points – important ones that can permanently alter its path and minor ones affecting what’s for dinner. In making the big decisions we also have to decide who we are going to trust to give us guidance and advice on things we are not particularly familiar with, whether it’s a contractor on a remodel, realtors on a house purchase, a specialist on a healthcare decision – or advice on financial decisions.
THE TRUSTFALL
In thinking about this notion of trust, I realized we are essentially asking employees to do a trustfall with their money (remember those team building exercises that asked one person to blindly fall backwards and the group of coworkers would catch them? They stopped doing them because of the number of injuries and lack of evidence that they actually accomplished anything positive). Isn’t that what we are suggesting employees do with their money – blindly trust that the employer is going to support them and help them find solid (financial) footing? One of the perceived positives about employer-sponsored retirement plans is that employees are more likely
THOUGH PATERNALISM IS STILL THE PRIMARY APPROACH TO RETIREMENT PLAN DESIGN, THERE SEEMS TO BE A BURGEONING AWARENESS THAT BUILDING TRUST WITH EMPLOYEES GOES A LONG WAY TOWARDS GETTING BUY-IN TO THE PROGRAM – WHICH CAN HAVE LONGER LASTING POSITIVE EFFECTS THAN JUST USING INERTIA IN AUTOMATIC ENROLLMENT.
to participate in them as they are cultivated and monitored and there is an element of implicit trust. Afterall, it is the foundation of fiduciary duty that retirement plans be operated in the best interest of employees, and the belief from the system side is that this should then foster trust. But does it? Why are participation rates among certain employee groups low? Why are financial wellness programs and investment advice offerings underutilized?
Trusting that the employer is acting in your best interest is not the forgone conclusion that many in the industry seem to think it is. Often who we trust is influenced by our past experiences – perhaps our untrustworthy uncle was a financial advisor we would never listen to, or a trusted friend is an attorney so we have a preconceived notion about lawyers, or we have had unfavorable interactions with HR in the past. Our past experiences inform our current decisions. So how does one account for those individual differences in trust? How do you bridge that gap? Perhaps we start with channeling our inner “Big Momma.”
The diversity session at the conference discussed trust from a cultural lens – people are more likely to take advice from someone who looks like them, speaks like them, is from where they are from and who understands the cultural dynamics at play. There is often a hierarchy and a sense of division between human resources and upper management and the employees you are trying to educate. This division can widen the trust gap – one way to bridge it is by making sure there is diversity in the departments providing the education, and a cultural fit, another is by using employee resource groups. A couple of this year’s Signature Award winners used multilingual video testimonials from participating employees, and others used business resource groups to have employees spread the word about wellness programs and retirement savings to their peers.
PHILOSOPHICAL APPROACHES TO PLAN DESIGN
Though paternalism is still the primary approach to retirement plan design, there seems to be a burgeoning awareness that building trust with employees goes a long way towards getting buy-in to the program – which can have longer lasting positive effects than just using inertia in automatic enrollment. These more holistic approaches are certainly still in the minority (often more due to a lack of resources than a lack of will), but they are out there and there seems to be an increasing recognition that if we want to continue to expand and reach more individuals, and meet employees where they are to help them become more financially secure, perhaps there is a space or a place or a time for a more compassionate, more person-centered approach that looks to build connection
and empathy and trust to then move forward to building a more secure financial future. Perhaps it means embracing our inner Big Mommas – though I’m pretty sure the consensus in HR circles is that you cannot tell your employees to stop acting a fool and just save their money – but it does mean that we can take the time to build those safe spaces and those relationships that will extend beyond just retirement education, but will benefit the organizational culture as a whole.
Hattie Greenan is the director of research and communications for PSCA. . Editor
by Diane Garwood
Elevating Your Plan and Your Career
PSCA membership has so many ways to elevate your career – the national conference, the CPSP credential, and joining a committee.
ALTHOUGH IT’S BEEN A COUPLE OF MONTHS NOW, THE POSITIVE ENERGY FROM THE 2024 PSCA NATIONAL CONFERENCE CONTINUES. I SEE POSTS CONSTANTLY ON LINKEDIN OF PEOPLE WHO ATTENDED THE CONFERENCE AND THE GOOD INFORMATION THEY RECEIVED OR THE GOOD TIME THEY HAD WITH THEIR FELLOW ATTENDEES.
If you were able to join us there, I hope you had a wonderful experience. And if something didn’t quite meet your expectations, we want to hear from you! Let us know what suggestions you have for improvement. If you were unable to join us, we hope that you are able to consider joining us in Las Vegas in 2025! The National Conference Planning Committee is already hard at work on the event in Las Vegas and it promises to be a great one. An email went out on July 11th with our annual voting tool where you get a chance to vote on the topics you would like to see presented at the conference. There’s even an opportunity for you to add topics if you have one that you are interested in seeing on the agenda. Please take a few moments to provide your feedback.
We are very excited about the upcoming release of a new PSCA website. Much work is being done through the American Retirement Association to update the platform used by all the sister organizations and the experience the members have when using the platform. Some of the highlights we anticipate include personalized content, product and service recommendations, AI-driven searches, and the consolidation of and greater access to web information. The new platform is scheduled to go live in September so keep an eye out for additional information emails regarding the new web platform.
There are a lot of surveys out for completion and your input is incredibly valuable. The 401(k) survey has unofficially been extended to the end of July. The 403(b) survey is open now, and so are the HSA and NQDC surveys. CE credits for the Certified Plan Sponsor Credential (CPSP) are available for completing these surveys. Without your input, we have no information to provide. Consider taking some time to participate. For more information, visit psca.org/research
Our CPSP certification continues to grow! I get excited when I see peers share their success on passing the exam posted on LinkedIn. If you haven’t yet completed yours, why not? There are so many ways to study and take the exam. Many have shared stories about promotion opportunities, pay increases, and recruiter contacts once CPSP certification is shared. Consider taking the time now to get yours underway. And remember – CPSP certification gets you free attendance at the National Conference. Such a deal!
Becoming a part of PSCA has been one of the most valuable experiences I’ve had. The knowledge I’ve gained and the people I’ve met have truly enhanced my career and frankly my life. Becoming a member of one of the committees through PSCA is a great start to learning about even more opportunities. PSCA has so many opportunities to get involved – regardless of your level of expertise. When I was first asked to join the Investment Committee, I was doubtful I could add any value to the conversation. And to be honest, I couldn’t at first. But I was able to hear from and learn about topics from the service providers experts on the committee. I soon found myself doing research about topics I didn’t even know I wanted to learn more about – to become more knowledgeable so that I could provide input or ask better questions. If you’re looking to expand your knowledge, there’s no better place for that to happen.
Hope you’re having a great summer! It’s going fast, so make sure to take the time to enjoy the weather.
Diane Garwood is the Vice President of Human Resources for Horizon Bank.
The uncashed check dilemma
Uncashed retirement plan distribution checks pose a significant challenge for plan sponsors. Generally, uncashed retirement distribution checks occur when plan participants forget about their retirement account balances with former employers, but plan sponsors arrange for that money to be distributed via check for the following reasons:
• To make required minimum distributions to plan participants that are age 73 or older
• To cash out a former employee’s small-balance retirement account of $1,000 less
It isn’t mandatory for qualified retirement plans to have a cash-out provision, but many do to reduce the fiduciary responsibility and plan costs of managing small-balance accounts of former employees. As a result, plan sponsors establish a cash-out threshold that falls within the guidelines of the Internal Revenue Code, the Employee Retirement Income Security Act, and recent amendments to both by the SECURE 2.0 Act of 2022.
Key SECURE 2.0 changes
The SECURE 2.0 Act contains many provisions that will impact retirement plans and plan sponsors’ fiduciary duty. Two stand out:
First, the act raised the upper limit of small-balance cash-out distributions from $5,000 to $7,000. This means that since the beginning of 2024, plan sponsors of retirement plans with cash-out provisions may have to manage a lot more account distributions.
Second, SECURE 2.0 mandates that beginning in 2025, most employers must automatically enroll eligible employees in a 401(k) or 403(b) plan established on or after Dec. 29, 2022, at an employee contribution rate of at least 3%. Some employers have already implemented automatic enrollment, and it has dramatically increased employee participation in retirement plans. However, it has also led to an increase in small-balance accounts left behind and forgotten by former employees as job-hopping becomes more common.
According to the U.S. Bureau of Labor Statistics, the median employee tenure is 4.1 years (3.7 years in the private sector)¹. In addition, nearly 40% of employees quit their jobs within a year, and 30% of employees quit within 90 days². Consequently, with mandatory automatic retirement plan enrollments looming and increasing numbers of U.S. workers switching employers within four years, it will become more difficult for plan sponsors to keep track of former employees.
Implications for plan sponsors
The U.S. Department of Labor has repeatedly indicated that uncashed checks have implications for plan fiduciaries. For example, when checks are cut and mailed to former employees, those checks are considered plan assets until they are cashed. Yet the funds on which uncashed checks are drawn don’t accumulate earnings, potentially making plan sponsors liable for lost earnings. Moreover, when uncashed checks for small balances are canceled, the assets are returned to the plan, so new accounts must be created. This increases retirement plan costs.
Possible solutions
To reduce the administrative burden and fiduciary liability of uncashed checks, plan sponsors should consider one of the following:
• Implement an automatic rollover program for all eligible former employees’ account balances that are $7,000 or less — including accounts that are less than $1,000; this keeps their money in the retirement system.
• Use a search services provider to confirm or update the contact information of former employees and non-responsive participants and reunite them with their retirement money.
by Hattie Greenan
2024 Lifetime Achievement and Industry Award Winners Announced
PSCA recognized four individuals for their contributions to the retirement plan industry at its national conference in May.
AT PSCA’S ANNUAL NATIONAL CONFERENCE HELD IN MAY, PSCA BESTOWED TWO LIFETIME ACHIEVEMENT AWARDS TO DESERVING INDIVIDUALS FOR CAREERS DEDICATED TO improving retirement outcomes for employees. New this year, PSCA bestowed two additional awards – one for an outstanding plan sponsor member holding the Certified Plan Sponsor Professional (CPSP) Credential, and one for Advisor of the Year, as nominated by clients.
Winners of all four awards are nominated by PSCA members and then voted on by the PSCA leadership committee and announced at the annual national conference. Profiles of the winners follow.
LIFETIME ACHIEVEMENT
PSCA recognized Catherine Collinson, founding CEO and President of Transamerica Institute and its operating division, Transamerica Center for Retirement Studies (TCRS), with its 2024 Lifetime Achievement Award for her nearly threedecades of dedication to the retirement industry, working to improve outcomes through research. Her leadership has been instrumental in advancing our understanding of retirement trends, as evidenced by the Annual Transamerica Retirement Survey, now in its twenty-fourth year, providing invaluable insights for employers and employees alike.
Ms. Collinson’s influence extends to shaping public policy discussions, particularly regarding employer-sponsored retirement plans among small businesses, with four testimonies before Congress emphasizing the Saver’s Credit. Her innovative approach is evident in co-hosting the ClearPath: Your Roadmap to Life podcast, expanding the reach of her insights. Her measurable impact includes the publication of more than 100 research reports and recognition as an Influencer in Aging by PBS Next Avenue, affirming her significant contributions to improving retirement security, especially among women.
Beyond her executive role, Ms. Collinson’s leadership extends to advisory roles at the Milken Institute’s Center for the Future of Aging, DCIIA, and WISER, showcasing her commitment to advancing retirement security discussions. Her accolades and ethical leadership underscore her status as a leader and innovator in the field, making Catherine Collinson a deserving recipient of the PSCA’s Lifetime Achievement Award.
The second 2024 Lifetime Achievement Award was given to longtime PSCA member and award-winning plan sponsor, Beth Pattillo, the Director, Retirement and Financial Programs, HR Benefits for Leidos.
Ms. Pattillo’s illustrious career, marked by unwavering dedication to retirement benefits oversight and delivery, has left an indelible mark on the industry. As the head of retirement at Leidos, she leads a team managing more than $11 billion in a DC plan for more than 65,000 participants, a role that earned her recognition as a finalist for the 2019 Plan Sponsor of the Year by PlanSponsor Magazine. Ms. Pattillo’s leadership extends beyond her corporate responsibilities; she serves as Chair of the DC Institutional Investment Association’s Plan Sponsor Institute and is a member of their executive board, alongside other esteemed positions such as her membership in T. Rowe Price’s DC Client Advisory Board and Vanguard’s Client Council. Prior to her tenure at Leidos, Beth made significant contributions as a benefits manager at BAE Systems and a senior benefits analyst at Progress Energy.
Throughout her career, Beth has demonstrated an unwavering commitment to championing good participant outcomes and advocating
Catherine Collinson, right, receives the Lifetime Achievement Award from PSCA President Diane Garwood.
Beth Pattillo, right, receives the Lifetime Achievement Award from Michael Davis, T. Rowe Price.
for sound retirement policy initiatives on Capitol Hill. Her innovative approach to plan design and her dedication to mentorship exemplify her passion for advancing the industry. Beyond her professional achievements, Beth’s character and moral integrity are unparalleled. Her kindness, compassion, and dedication to the well-being of others shine through in every interaction, both personal and professional. Beth’s extraordinary contributions, coupled with her exemplary leadership and unwavering commitment to excellence, make her a truly deserving recipient of this prestigious award.
CPSP MEMBER OF THE YEAR
This CPSP Member of the Year award honors individuals who have earned the Certified Plan Sponsor Professional (CPSP) credential, showcasing their dedication to effectively managing retirement plans and improving participant outcomes. Nominees in this category demonstrated a commitment to excellence in their field and have a clear vision for how they will utilize their credential to enhance their role as plan sponsors.
Cecilia Spencer, an accomplished HR Generalist who has played a pivotal role in establishing the 401(k)
program at TekWissen, was given the inaugural CPSP Member of the Year award. Her dedication and expertise have been instrumental in navigating the complexities of implementing and managing the plan, particularly within the unique challenges of a staffing company with high turnover.
Ms. Spencer’s commitment to excellence is evident in her attainment of the CPSP certification, reflecting her dedication to professional development and mastery of retirement plan administration. She has worked tirelessly with the payroll team and oversight of the TPA to ensure seamless enrollment and ongoing management of the plan, which has recently reached a significant milestone,
surpassing one million dollars in size. Her proactive approach and leadership in advocating for a more robust plan with complex offerings demonstrates her unwavering commitment to the financial well-being of plan participants. Her exemplary work ethic, strategic vision, and dedication to ensuring the success of the 401(k) program make her a valuable asset to TekWissen and a true leader in the field of retirement benefits administration.
ADVISOR OF THE YEAR
PSCA’s first Plan Advisor of the Year award was given to an advisor nominated by a PSCA plan sponsor member, Sean Waters. This new award celebrates outstanding professionals within the retirement planning industry who have demonstrated excellence in providing advisory services to employer-sponsored retirement plans. These advisors exemplify a commitment to guiding plan sponsors and participants towards their financial goals through exemplary guidance, education, investment strategies, and overall plan management. Nominations for this award come from plan sponsor members, highlighting the invaluable partnership between advisors and those responsible for managing retirement plans.
Mr. Waters is a founding partner and senior consultant at Cook Street Consulting, Inc. With more than 19 years of experience, he leads the firm’s investment committee and holds the Chartered Financial Analyst (CFA) designation. Sean’s background includes roles at Scudder Kemper Investments and Crédit Lyonnais. Beyond his professional achievements, Mr. Waters is deeply involved in community service, serving on the Board of Invest In Kids and contributing to various educational organizations. Under his leadership, Cook Street Consulting has become a top-ranked advisory firm, advising more than $106 billion in retirement assets for 242 clients in the US and Canada, directly impacting 1.2 million plan participants and beneficiaries. Mr. Waters’ commitment to diversity and inclusion is evident in the firm’s initiatives, including a college scholarship program for underrepresented groups in finance.
Cecelia Spencer receives the CPSP Member of the Year award from PSCA Leadership Committee member Brandon Diersch.
Sean Waters receives the Plan Advisor of the Year award from PSCA Leadership Committee member Brandon Diersch.
by Monte Harrick
Maximizing Deferred Compensation Plan Distributions
Distribution elections are a critical decision for NQDC plan participants, and one they need to make when enrolling in the plan.
NONQUALIFIED DEFERRED COMPENSATION PLANS (DCPS) ARE IMPORTANT VEHICLES IN DEVELOPING RETIREMENT AND WEALTH. PARTICIPANTS IN DCPS SET ASIDE A PORTION OF THEIR COMPENSATION, ELECTING TO RECEIVE IT AT RETIREMENT OR A FUTURE DATE. HOWEVER, ONE AREA THAT DOES NOT GET ENOUGH ATTENTION IS HOW AND WHEN THOSE PAYOUTS FROM A DCP SHOULD OCCUR. FURTHERMORE, THE PAYOUTS FROM DCPS, IF PROPERLY STRUCTURED, CAN BE USED TO MITIGATE TAX AND ENHANCE ACCOUNT BALANCE ACCUMULATION.
The decision on when and how to take plan distributions is critical in determining how participants receive cash distributions in the future. It involves assessing potential cash flow needs and tax liabilities many years – or even decades – into the future. Participants need a clear picture of the role a DCP will play in achieving a comfortable retirement or other financial goals. Providing information to participants before they enroll in your DCP can help employees make more informed distribution decisions and enhance the value of the plan.
PLANNING RETIREMENT DISTRIBUTIONS
DCPs must provide for when and how deferred compensation, and any applicable earnings, will be distributed. Still, distribution rules for deferred compensation are considerably different from those governing distributions from other retirement plans, such as 401(k)s or IRAs.
For example, the Internal Revenue Code (IRC) allows
for 401(k) withdrawals to begin penalty-free after age 59½ – but the IRC also requires that participants start taking distributions at age 73. By contrast, there are no IRC age restrictions on distributions from a deferred compensation plan.
Deferred compensation plans don’t have required minimum distributions either. Plans generally provide for one of two distribution options – a lump-sum payment or installment payments. Based on
those two options, participants should carefully consider how they should take future distributions by considering the following options.
SEPARATION OF SERVICE/RETIREMENT –LUMP SUM
Choosing a lump-sum distribution gives participants immediate access to all their deferred compensation once it is distributed, usually at retirement or separation from service. Once participants
receive a lump sum, they have the option of reinvesting that money at their discretion, but they will pay ordinary income tax on the entire lump sum. There is no capital gains treatment on DCP distributions nor are there options to roll the account balance into an IRA. The lump sum distribution could result in a larger tax bill than if participants were to choose installment distributions (see below), in part because it may push them into a higher
tax bracket. They also lose the benefit of tax-deferred compounding when they withdraw money from the plan.
SEPARATION OF SERVICE/RETIREMENT – INSTALLMENT DISTRIBUTIONS
Electing installment distributions allows participants to spread out the payment of their account balance thus potentially minimizing their tax bill, especially if personal income tax rates decline. More importantly, the unpaid balance continues to accrue on a tax deferred basis. The spreading of the payments from the DCP account will significantly increase future payments, provided the investment returns are positive. With an installment plan, smaller distributions are taken over time – typically on a yearly schedule. The remainder of the deferred compensation remains in the account, where it can continue to grow tax deferred. Spacing distributions over several years may reduce participants’ overall tax bill, especially if their personal income tax rate declines.
Source Tax Rule: For those living and working in high income tax states and participating in DCPs, they should be familiar with the Source Tax Rule. This rule allows anyone who elects a distribution 10 years or longer to take advantage of a special state tax benefit. Under this specific 10-year-plus election, if a participant moves from the state of employment to
another state in retirement, their payouts are not subject to tax in the state of employment. In short, payments structured this way are taxed in the state of residence when paid, not in the state in which the income was earned. This is a tax benefit for those planning to move to a state with lower income tax rates. Whatever form of distribution chosen, participants should consider the timing of those distributions relative to other company benefits, such as the vesting of restricted stock and the exercise of stock options, as well as income from other retirement plans.
IN-SERVICE DISTRIBUTIONS
Some DCPs allow you to schedule distributions based on a specific date—also known as an “in-service” distribution. For some participants, this flexibility is one of the biggest benefits of a deferred compensation plan. It offers a tax-advantaged way to save for a child’s education, a new house, or other short- and mid-term goals.
In-service distributions also can help partially mitigate the risk that a company could default on its obligations. Scheduling in-service distributions requires more up-front work than simply deferring all compensation until retirement. Here is a strategy for scheduling preretirement distributions:
The class-year approach: This strategy – also known as “laddering” – involves scheduling distributions for specific years and establishing
separate accounts and investment portfolios for each one. For example, if a child will be starting college in 2024, participants could schedule distributions for 2024, 2025, 2026, and 2027 (the years they’ll need to pay tuition). They can also schedule a distribution for their anticipated retirement date. If participants elect to defer part of their compensation each year and the plan tracks that deferred compensation for each class year, they may be eligible to schedule a different payment for each year. For example, if the plan allows for installments as a form of payment, participants could elect for one class year to be paid as a 4-year installment payment beginning in 2024. The other class years can be paid at separation from the employer. Depending on the plan’s provisions, the payment of the deferred compensation can also be structured to reduce participants’ tax liability based on a series of installment payments or lump sum payments based on a specified time. By spreading out the payments, participants can potentially reduce their taxable income for each applicable year.
DISTRIBUTION STRATEGIES AND TAX PLANNING
Questions typically arise as to whether a participant can change a previous distribution election. The answer is, yes, but there are restrictions.
A subsequent distribution election, if allowed by the plan, cannot permit the payment to be paid earlier than originally
elected except in cases of extreme hardship, death, or disability – so participants can’t change their minds and ask for their deferred compensation a year or two earlier than the scheduled distribution date.
However, participants can postpone a distribution as long as they follow strict “redeferral” rules: The request to push back a distribution must be made at least 12 months before the planned date, and you must defer the compensation for at least five additional years beyond the original distribution date. For example, a participant may have scheduled a distribution for May 2029 to help pay for college costs. Then their child receives a scholarship or chooses to postpone college plans, and they decide they’d rather put the money toward retirement. They must make the change before May 2028, and then can’t receive the money until May 2034 or later.
These restrictions on changing distribution schedules are another reason why careful, up-front planning is essential to help participants get the most out of their deferred compensation plan. Providing access to education and professional advice can increase the value of the plan. DCPs are powerful tools for growing wealth and preparing for retirement. How elections are made about eventual payouts from these plans are critical to maximizing return.
Monte Harrick is the SRVP, Retirement/Executive Benefits, for OneDigital.
by Hattie Greenan with Tobi Davis
PSCA Signature Awards
Innovation in Retirement Plan Education
PSCA HONORED THE WINNERS OF ITS ANNUAL SIGNATURE AWARD COMPETITION AT THE 2024 NATIONAL CONFERENCE.
PSCA’S ANNUAL PSCA’S SIGNATURE AWARDS COMPETITION RECOGNIZES EDUCATION PROGRAMS THAT EMBRACE CREATIVE AND INNOVATIVE SOLUTIONS TO PLAN EDUCATION, RESULTING IN TANGIBLE POSITIVE OUTCOMES FOR PARTICIPANTS. The awards program is the longest-running, most distinguished retirement plan education and communication recognition program of its kind. The winners of this year’s competition were announced at the recently held PSCA national conference.
As technology has fundamentally changed the way we communicate with each other, retirement plan education has had to adapt – this year’s winners did so with exemplary results. From using technology to tackle specific obstacles to emphasizing diversity and inclusion to improve outcomes for all employees, these plan sponsors and their provider partners embraced innovative solutions to improving retirement outcomes for all.
A panel of business leaders evaluated and selected the winners of the 2024 Signature Awards in four key categories. The 2024 Signature Award Winners are:
Emphasizing Diversity and Inclusion
• 1st Place – Fidelity National Financial with Principal Financial Group
• 2nd Place – Danone with Transamerica
• 3rd Place – Froedtert Health with Lincoln Financial Group
Financial Wellness
• 1st Place – ADP TotalSource with Voya Financial
• 2nd Place – Froedtert Health with Lincoln Financial Group
• 3rd Place –Ryan Specialty with Empower
Provider Innovation
• 1st Place – The University of Texas at Dallas with Lincoln Financial Group
• 2nd Place – Savannah River Nuclear Solutions, LLC with Transamerica
• 3rd Place – Trek Bicycle Corporation with Transamerica
Innovation in Promoting Participation
• 1st Place – Savannah River Nuclear Solutions, LLC with Transamerica
• 1st Place (tie) – Trek Bicycle Corporation with Transamerica
• 2nd Place – Nestlé USA, Inc. with Voya Financial
• 3rd Place – Bechtel with Empower
Detailed descriptions of the winning campaigns follow.
Emphasizing Diversity and Inclusion
Greater focus is being placed on diversity, equity, and inclusion in the workplace and in all aspects of life. Companies are highlighting individual differences, providing equal opportunities for growth and development, and treating each other with dignity and respect. This category showcases examples of how retirement plan communications are embracing these individual differences by using more inclusive language, imagery, and other creative methods. Entries in this category include print or digital communications relating to any diversity topic or non-majority employee group aimed at retirement and financial wellness such as increasing participation among minorities, women, or other populations.
1st Place
Fidelity National Financial with Principal Financial Group
Fidelity National Financial (FNF) provides title insurance and settlement services to the real estate and mortgage industries. FNF has four main divisions (with different branding and company names) that make up the company with more than 12,000 employees across the country.
The purpose of the program was to drive an increase in saving rates, savings behaviors, and engagement for women by encouraging them to take the wheel and be the “doer” in their own financial futures. The campaign specifically aimed to close the gap between the average deferral rates between men and women, increase the account access (multifactor authentication) rate for female plan participants, and increase the “Retirement Wellness Scores” among women.
The campaign targeted eligible women in the plan and consisted of three emails, live webinars, and one direct mail piece that included personalized projections and variable content based on age.
Having employees across six different time zones proved a logistical challenge to providing live webinars.
The campaign produced a 6.71% action rate with an average deferral rate increase of 3.34%. Additional accomplishments during the campaign included:
• 50% logged into their account at principal.com
• 17% increase in multifactor authentication rates for women
• 52% increase in Retirement Wellness Planner users
• 19% increase in Principal® app users
• 26% participation rate for virtual webinar on Women Building Wealth
At the plan level, the gap in average deferral rate between men and women was cut in half. Women in the plan are now deferring an average of 6.81% compared with their male counterparts who are deferring 7.52%. Additionally, the average “Retirement Wellness Score” is now one percent higher for women than men.
This campaign won because it ticked all of the boxes from identifying the need through good data sourcing, to identifying goals, being creative with a cohesive communications campaign, and results clearly meeting the goals.
2nd Place Danone with Transamerica
Danone North America is the world’s largest Certified B Corporation with 5,600 employees and 16 production locations across the U.S. and Canada, manufacturing and distributing popular food brands including Activia®, Danimals®, Dannon®, evian®, and Happy Family® Organics.
A large portion of Danone’s employees are Spanish speaking, including 100% of employees at some locations. The goal for their program was to provide general education about the plan, including the use of automatic enrollment, Roth, and the company match of 100% on the first 4% an employee contributes, plus 50% on the next 2% of pay to increase participation among the Spanish speaking employees. Danone wanted to arm all employees with essential knowledge and resources pertaining to retirement planning while also fostering a culture of inclusivity and belonging within the Danone ecosystem. They wanted to empower every individual to navigate their own financial journey with confidence, resilience, and a sense of belonging.
To accomplish these goals, the “Danone Diversity and Inclusion Digital Slide Initiative” was created. Recognizing the importance of catering to diverse linguistic and cultural needs, the initiative
was tailored to ensure equitable access and relevance for all employees regardless of their background or role.
The “Danone Diversity and Inclusion Digital Slide Initiative” included a digital slide library that leveraged the prominent display monitors across the Danone locations. The slides were designed to be visually captivating and were written in both English and Spanish. Some slides were embedded with QR codes, linking employees to their account login page, webinar registrations, and other resources enabling them to take immediate action. Additionally, the library included slides linking to videos sharing the significance of saving early, the long-term impact of one percent contribution increases, and the features and benefits of Roth contributions. All the materials on the digital monitors are also posted on the Danone intranet site for easy access for all employees and their HR representatives nationally. During annual enrollment a Spanish speaking representative from Transamerica was on-site for one-on-one meetings with employees.
After the program, the Danone 401(k) plan had an 80% participation rate, saw a seven percent increase in deferral rates, and a 12.5 percent increase in total assets. Employees also benefited from an increased and heightened awareness of the tools and resources available to them.
The campaign won a Signature Award because it was cohesive, creative, engaging, and forward thinking using texting and multiple communications channels, and achieving positive results. The slides were well thought out with the variety of items they covered and all important in providing the essential knowledge of the campaign – it seems that everyone could have benefited from at least one item of the campaign. Having onsite education shows the importance of the topic to the worker and reinforced the inclusivity goal.
3rd Place Froedtert Health with Lincoln Financial Group
Froedtert Health is a Wisconsin-based, integrated health care system providing a variety of health-related services, including hospitals and health centers, home care, laboratory, health insurance, employer health services and workplace clinics, and digital health solutions with16,000 US employees. The employee base includes doctors, nurses, and specialists, as well as food service workers, cleaners, security, transportation, and other support personnel.
Froedtert Health recognized that an inability to save for the future is often related to struggles with debt or the ability to pay current bills and expenses, so they provided holistic financial wellness education and support. Some of the challenges they faced were that many of the departments with the lowest participation, deferrals, and fewer interactions with onsite representatives also have higher turnover, less locational cohesiveness, and less online engagement. To address these challenges, Froedtert Health implemented four campaigns throughout 2023 in addition to their typical ongoing educational programs. Their program included:
of employees of color – and some of Froedtert’s lowest participation rates and deferral rates. It shared the employees’ personal experience with the retirement plan, turning them into financial wellness champions. It was posted to the Froedtert Health News workplace page, which has more than 18,000 members and was viewed by 3,800 employees.
• Moving to weekly pay and offering additional financial education to help employees more effectively manage their financial obligations. It was determined that more frequent and consistent paychecks could allow less financially stable staff to pay their bills as they come in. The communications around this change were internal posting and onsite and virtual webinars entitled “Managing your finances with pay,” articles posted via Workspace, targeted emails from retirement consultants, and a special form to help them switch from flat dollar contributions to a percentage of pay. In less than a month after the communication began 217 people (44% of those saving less than $600) switched from a flat dollar contribution to a percentage contribution.
• Creating an inclusive video to highlight the value of the Froedtert retirement plans and the support from Lincoln Financial retirement consultants. The video featured two employees of color who worked in two departments with high numbers
• Offering bilingual financial wellness education during National Hispanic Heritage Month through the LatinX Business Resource Group (BRG). The education was provided as an on-demand webinar in both English and Spanish by bilingual Lincoln retirement consultants. The webinar was promoted by an article and a bilingual flyer. Employee feedback on the education was positive, with several mentions that it was great that the education was provided in both English and Spanish.
• Promoting women-focused financial education through a partnership with a Lincoln Financial retirement consultant and the Women in Leadership BRG. A virtual book club discussion on “Smart Women Finish Rich” by David Bach was held.
Froedtert won for its multifaceted approach to delivering financial wellness education to targeted groups. The diverse testimonials were a great idea as was the use the BRGs to deliver the messages.
Financial Wellness
Financial wellness programs work to address employees’ total financial circumstances, rather than focusing solely on retirement. These programs can help employees with cash management, debt reduction strategies, saving for college, home buying and other financial life events that people face throughout their careers. This category seeks to highlight financial wellness programs offered by specific plan sponsors that achieved significant results. Examples include programs that provide solutions for the different needs of diverse employees, groups, or on-going targeted campaigns covering various participant behaviors. Campaigns can include those that cover a single financial need, or multiple needs, such as balancing financial needs, saving for college, student loan debt, budgeting, debt management, etc.
1st Place
ADP TotalSource with Voya Financial
The ADP TotalSource Retirement Savings Plan (the “Plan”), is a complex 401(k) multiple employer plan (MEP), with more than 6,300 employers covering more than 194,000 eligible worksite employees. Because of the nature of the MEP with organizations of varying industries and plan designs, they face unique communication and education challenges.
For 2023, ADP TotalSource developed a campaign to target pre-retirees, aged 50+ with specific tools and resources to help them with retirement readiness and their financial goals as they near retirement. A plan analysis showed that more than 53,000 participants with a balance are aged 50+ (making up the largest life stage in the plan) and more than 37,000 were not contributing. The objectives of the campaign were to:
• Encourage participants to think about retirement planning and steps they can take to better prepare by using the refreshed Retirement Planning Guide website (originally launched in 2019).
• Encourage participants to incorporate outside assets into myOrangeMoney to get a better picture of retirement readiness.
• Meet with a Voya Retirement Advisor to discuss specific preretirement needs.
Keep thinking of your future
Feeling adrift with saving for retirement?
The results were impressive. More than 400,000 employees and participants were reached with an overall email open rate of 37.2% and 10,000 employees engaged with the material. The campaign worked across industries, ages, and income levels and it clearly hit the mark. The judges awarded this campaign because it was directed to the right audience, and the email open rate was solid. Communications were generally clear and concise and creative. ADP TotalSource®
• Educate participants about draw-down strategy and creating an income stream for retirement.
• Educate participants about the new Social Security guidance tool now available.
The nautical-themed campaign included multiple touchpoints and multiple media, including emails, postcards, webinars, a microsite, and one-on-one sessions with advisors. Catchy taglines such as “Learn the ropes so you can sail smoothly into retirement!,” “Feeling adrift?...Seas the day…,” and “Put the Power of investment advice into your sails!” tied back to the initial “Smooth Sailing into Retirement” campaign announcement.
2nd Place
Froedtert Health with Lincoln Financial Group
The campaign’s goal was to increase financial security, with fewer staff living paycheck-to-paycheck and more being on track to retire in comfort. The campaign initially began in 2018 and the 2023 campaign used the theme “A rising tide lifts all boats.” The ongoing, holistic employee education program includes a variety of educational resources to engage employees, including live webinars on different financial subjects. Strong onsite support and education (from non-commissioned financial professionals who do not cross-sell additional products) was provided. Userfriendly retirement planning tools were incorporated. Throughout the year, 259 different educational presentations were available, including webinars promoted by postings on Froedtert Health’s business communication platform every 45 days, in-person new hire presentations, and presentations in departments identified as having lower retirement readiness. Individual meetings with Lincoln retirement consultants were promoted by a flyer and monthly Workplace postings that reminded staff where they can find the consultants in person. A new financial wellness tool, Lincoln WellnessPATH®, was promoted through two different HTML emails and a Workplace posting.
The total attendance for these education presentations was 2,408. Of the 71 employees who completed an optional postseminar survey, 85.9% rated the seminars as very beneficial and 12.7% rated them as somewhat beneficial. As of 12/31/2023,
60.8% of current employees have met with a Lincoln retirement consultant, an increase of 57.7% from the end of 2022.
In 2023, a promotional campaign ran for the new financial wellness tool. In late September, an email was sent, urging Froedtert employees to take advantage of the new tool. New users completed a quick quiz to get an overall financial wellness score comprised of four different areas: saving, spending, debt, and protection. An article on Workplace included a short video on the tool and let employees know about a raffle for $25 Amazon gift cards to anyone who completed the initial quiz. In late October, another email was sent to employees who had signed up, urging them to set financial goals and begin tracking their progress. As a result, at the beginning of 2023 the number of users increased 63%. Overall retirement plan participation rose in 2023, from 87.5% to 88.3%. Retirement plan participation in the four lowest participating departments has risen steadily since Lincoln began implementing their educational strategy and took a significant jump in 2023.
This campaign won because the materials were relevant and were communicated clearly. The focus on the four areas with lowest participation had very positive results. Although it’s a mature program the materials are engaging, and the statistics show the program is still working.
3rd Place
Ryan Specialty with Empower
Ryan Specialty is a specialty insurance firm that provides innovative solutions for brokers, agents, and insurance carriers and has about 3,500 employees. The company had recent mergers and wanted to promote financial wellness to employees and the benefits of rolling in assets to the current 401(k) plan, provide point-in-time advice, and saving strategies. They created an email campaign featuring a puppy rolling over with the subject line, “You can teach your retirement account new tricks!” and body copy including “Do more with your 401(k) than just sit and stay!” This simple and creative campaign was successful in getting new employees from the merger to roll assets into the plan. In the first half of 2023, the assets that were retained or rolled into the plan were $11 million (total roll-in assets were $7,357,209). From June through August 2023, right after campaign launched, the assets retained or rolled into the plan were $9 million (total roll-in assets were $3,932,514). The trend continued until the end of the year.
The campaign won because the communications were very simple and informative, along with a clear “fun” factor and clear call to action. The message was easy to follow, and instructions were intuitive.
Provider Innovation
The Retirement Plan Service Provider Innovation award highlights service providers that bring pioneering ideas, services, or solutions to the retirement planning industry. This award typically acknowledges innovation in technology, investment strategies, or administrative services within retirement plans that is effectively communicated to educate plan sponsors and/or participates to increase outcomes. It celebrates those who introduce new methods to enhance plan effectiveness, improve participant outcomes, streamline processes, or offer unique solutions to challenges faced by retirement plan sponsors and participants. Examples include complete education campaigns with a unique or innovative approach or targeted campaigns addressing a specific problem with a unique solution.
1st Place
The University of Texas at Dallas with Lincoln Financial Group
The University of Texas at Dallas (UT Dallas) is a public university with more than 7,240 employees, and plan participants including staff, faculty, graduate students and other student and non-student employees, retirees, and surviving dependents. The employees are spread out across six locations with eight schools and for the third year in a row, employees are working remotely or in a hybrid capacity. Each year an all-vendor benefits fair is held. For the 2023 UT Dallas Benefits and Wellness Fair — the first on-site fair since the COVID-19 pandemic began — the aim was to create engaging on-line content and on-site events that motivated employees to make the most of their benefits.
Using a Hollywood theme, employees were encouraged to walk the red carpet and celebrate themselves and their benefits. The fair’s theme was “Lights, Camera, Benefits, Action!” A movie star theme was used as a fun way to entertain while educating employees on taking advantage of benefits that were right for them. On-site attractions, including the red carpet walk, a photo booth, talent show, and vendor booths all tied into the theme. The fair also featured a wall of fame with stars to recognize colleagues. Virtual pages ensured employees who were unable to attend in person could still be a star of the show and have access to this valuable information. Employees received a golden ticket punch card to win raffle items from visiting booths both in person and online.
The campaign incorporated interactive agendas, informative materials, a custom website, and live events to drive engagement with the basic and voluntary benefits, all leading up to the open enrollment deadline. Communications targeted benefit-eligible employees plus retirees, allowing them to become benefits stars. Interactive roundtable panel discussions were held. The event provided engaging information that attendees needed to select the best benefits for their situations. It helped attendees feel connected to UT Dallas and each other, even if they weren’t on-site. Easy access
to the fair allowed participation for retirees, faculty, and graduate student employees, who are generally on summer break.
The event saw great success in helping employees celebrate each other and their benefits - 632 people attended in person and virtually (combined) the two days that kicked off open enrollment, a 47 percent increase over the virtual-only 2022 event. Employee feedback was positive, with 93% rating the fair as Good or Excellent.
UT Dallas won by using a hybrid approach to a benefits fair which is very innovative and celebrated their employees. It had a great theme and fun factor. Every medium was employed including an app store option and employee feedback was very positive.
2nd Place
Savannah River Nuclear Solutions, LLC with Transamerica
Headquartered in Aiken, South Carolina, Savannah River Nuclear Solutions, LLC (SRNS) is dedicated to making the world safer through disciplined performance in producing and protecting nuclear materials used by the energy industry for the nation’s security. They have 8,906 employees.
SRNS is committed to helping their employees grow their retirement savings so they can prepare for a successful financial future. They use Transamerica’s online OnTrack® retirement forecast tool. This tool establishes “Your Retirement Outlook®,” which uses weather icons to show participants how likely their current strategy is to help them live comfortably in retirement. SRNS and Transamerica created a “Plant the Seeds to Grow Your Retirement” campaign to raise awareness about the OnTrack® tool and teach participants how to use it to positively change their forecast and “Get Sunny.” Participants who have a rainy, cloudy, partly sunny, or no established forecast can easily make changes using the online tool to improve their forecast. Participants must first engage with the tool, increase their contribution rate, and/or add outside assets for a more holistic and brighter picture. SRNS deployed emails launching the campaign in Spring 2023, when planting was on the mind of many individuals. South Carolina’s state flower, the Yellow Jessamine, was the primary visual for all campaign materials. The flower’s use made the
campaign relatable and recognizable to SRNS employees. In addition, the “Get Sunny” tag across all mediums created consistency in the actionable messaging. The campaign kicked off with an internal company posting with a Transamerica themed banner and copy to the pre-login page on the participant website. An informational flyer was posted for additional guidance and education. Transamerica then sent an email on behalf of SRNS in late March, when seeds are typically planted. The email distribution was segmented by participants’ current retirement forecast (rainy, cloudy, partly sunny, sunny, and no forecast for those who had not yet engaged with the online tool). This campaign also provided Transamerica the opportunity to try three fun and exciting new tactics. These included:
1. Incorporating an animated Graphics Interchange Format, or GIF, in the emails that showed seeds of Yellow Jessamine flowers sprouting and growing under a rainy to sunny sky.
2. Mailing a lenticular postcard that provided a visual effect, giving the card 3D-depth and movement. When you hold a lenticular card and shift it from side to side, the image appears to move. Similar to the GIF, the card featured Yellow Jessamine flowers growing under the changing sky and included Transamerica’s weather icons.
3. Sending a client-specific text message using new methods targeting SRNS plan participants who have elected to receive text messages from Transamerica.
The campaign also included quarterly account statement messaging as another reinforcement (statements were sent to participants shortly after the emails deployed). Transamerica’s participant statements feature a detailed section highlighting a participant’s retirement forecast. The digital statement also provides a link so participants can make adjustments to improve their forecast immediately. Using multiple communication formats to spark action allows the participant to digest communications in the best manner for them.
The impact of this campaign was positive with 78% of participants who were rainy, cloudy or without an outlook taking action to improve their forecast to partly sunny or sunny. The e-mail open rates averaged 41%, and all email sends surpassed the benchmark rate and the average deferral rate increased by one percent (to 9.78%).
Savannah River Nuclear Solutions won an award due to their good results and fun theme carried through multiple media.
3rd Place Trek Bicycle Corporation with Transamerica
Trek started in a small Wisconsin barn in 1976 manufacturing bicycles, and 48 years later, they have 3,870 employees across 249 locations. Trek boasts a diverse population, encompassing individuals working in corporate offices, retail spaces, and manufacturing units. This unique blend of employees represent a broad spectrum of roles, skills, and backgrounds.
Trek and Transamerica collaborated to create a unique beneficiary campaign that used a Valentine’s Day theme. The campaign featured a corporate buzz word: “Wheelie,” which Trek used in various ways. The word resonates especially well, considering Trek manufactures bicycles. Post-COVID, “Wheelie” was used on posters and welcome signs: “We Wheelie Missed You.” Knowing this, Transamerica strategized with Trek about using the idea for the beneficiary campaign, and “Who Do You Wheelie Love?” emerged as the theme. They took it a step further by using the same imagery from the earlier campaign and added hot pink coloring, which made it ideal for Valentine’s Day. This campaign was immediately relevant and easy to identify as coming from Trek in partnership with their plan administrator, Transamerica.
YOU DON’T HAVE A BENEFICIARY ON FILE
Give your loved ones a gift they’ll appreciate this Valentine’s Day. Go online and designate at least one bene ciary for your Trek 401(k) Plan and Trek ESOP While we hope this doesn’t come into play for years to come, designating a bene ciary will help you stay in control of your assets and estate plans, and will ease time and stress on your loved ones down the road
DESIGNATE NOW
Take a moment to designate your bene ciary by logging in to your account at transamerica.com/portal/trekbikes If you don’t have an online account yet, click Create an Account in the top-right corner to get started. To designate a bene ciary on your 401(k) plan, hover over My Plan in the top navigation and click Bene ciaries To designate a bene ciary on your ESOP plan, click About You to get started It’s quick and easy!
There were three primary objectives to the “Who Do You Wheelie Love?” beneficiary campaign:
1. To encourage participants to designate a beneficiary for their Trek Retirement Plans.
2. Use consistent Trek branding throughout to catch attention and prompt participants to take action. The campaign message needed to create an emotional connection, and the goal was to accomplish this with brand consistency.
The campaign was simple, yet effective, as it was a single email sent on valentine’s day. The email boasted a 38% open rate, while the benchmark during this time was closer to 25%. Within 90 days, 178 participants took action (5%), with 35% of those doing so in the first 30 days of the campaign.
If you’re married and designate someone other than your spouse as your primary bene ciary, spousal consent may be required
3. Take advantage of Valentine’s Day to make the message timely and relevant. They wanted to encourage Trek employees to consider their loved ones’ future security as an act of love and responsibility.
Transamerica Retirement Solutions (TRS) is a liated with Massachusetts Fidelity Trust Company (MFTC) through which TRS provides certain investment education services to plan participants and other administrative services on behalf of the plan MFTC is an Iowa trust company with its principal o ce located at 6400 C Street SW, Cedar Rapids, IA 52499 All Transamerica companies identi ed are a liated, but are not a liated with your employer
Beneficiary designations are always a hurdle for plan sponsors and Trek’s success in reaching participants made them stand out. Taking advantage of Valentine’s Day, a season when people are already thinking about the well-being of those they care about most, and ensuring that Trek’s brand and voice were used in this campaign added the pizazz and were the components for success! The campaign effectively leveraged the sentiment of Valentine’s Day to drive home the message that it’s important to designate a beneficiary, which can help secure one’s legacy. Judges noted that branding is a strong influencer, especially when employees value the company brand, which is why they were awarded.
Transamerica 6400 C St SW, Cedar Rapids, IA 52499
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Trek 401(k) Plan/Trek ESOP
Innovation in Promoting Participation
The Innovation in Promoting Retirement Plan Participation award celebrates creative and effective strategies implemented by plan sponsors or financial service providers to encourage and increase participation in retirement plans. Recipients of this award often showcase innovative methods, educational initiatives, or engagement programs that successfully boost the number of employees enrolling in and contributing to retirement plans.
1st Place
Savannah River Nuclear Solutions, LLC with Transamerica
Savannah River Nuclear Solutions (SRNS) wanted their participants to increase their contribution rates, and/or add outside assets for a more holistic and brighter financial future. SRNS and Transamerica created the “Plant the Seeds to Grow Your Retirement” campaign to encourage employees to contribute more to the plan.
The tools and materials used to communicate the message were emails starting in spring when planting typically begins, use of the state flower image, internal postings, a banner on Transamerica’s participant website, a flyer, a GIF in emails, a 3D postcard text messaging and messages in participant statements.
The results were that 78% of participants improved their retirement savings outlook.
76% of those who visited the pre-login website did so for the first time. The average contribution rate increased by one percent (to 9.78%). There was a 100% increase in one-onone appointments with Transamerica’s retirement planning consultants over the same period the previous year. Nineteen percent of those who received the final campaign text took action. Email open rates averaged 41%, and all email sends surpassed the benchmark rate. Feedback from the plan sponsor indicated the success of the campaign: “The campaign clearly caught the attention of our employees, and we’re pleased with the impactful results. In partnership with Transamerica, we achieved our goal to
educate our employees, encourage them to view or establish their retirement forecast, and guide them to take action to help them “Get Sunny.” This campaign won because of their multiple, and creative, outreach methods and strong results.
1st
Place (tie)
Trek Bicycle Corporation with Transamerica
The primary goal and purpose of Trek’s Employee Benefits Fair was to engage and educate employees across all sectors about their comprehensive retirement benefits package. Trek wanted to encourage employees to designate a beneficiary and adopt a more holistic approach to retirement planning. This was a difficult challenge, because the message needed to resonate with a group of people with diverse backgrounds and roles. To address these challenges, Trek and Transamerica executed a multi-faceted campaign promoting the benefits fair where employees were encouraged to explore and better understand their workplace benefits. Bicycle-shaped stress balls were distributed, creating a tangible and memorable connection to the campaign. A poster with the tag line “THE RIGHT COMPONENTS FOR YOUR RETIREMENT,” used the anatomy of a bicycle to explain how each part correlates to retirement planning. A bike helmet promoted account security and safety. A bike frame represented the Transamerica website and mobile app. Pedals demonstrated how plan participants who add their email address and mobile number to their account can stay informed with timely and relevant plan communications. Wheels conveyed rolling along and logging in to the plan website to take important steps, such as designating a beneficiary, selecting investments, and adjusting contributions. Brakes illustrated stopping along the retirement journey to visit Transamerica’s Financial Wellness Center and pausing to watch Trek’s educational videos.
YOUR RETIREMENT
A second poster was titled “EMBRACE THE JOURNEY, PEDAL TO A BRIGHTER FUTURE” and displayed QR codes linked to educational resources suitable for employees to explore, regardless of career stage or age. There were specific plan materials and Medicare and Social Security resources. The poster also promoted downloading the Transamerica app. The Transamerica retirement planning consultant engaged with nearly 100 employees.
Evidence of the fair’s success includes the following 90 days after the fair:
• 4% increase in beneficiaries on file
• 95.2% participation rate (11.5% above the benchmark)
• 3% increase in website traffic
• 1.2% increase in average deferral rate
• 2.5% increase in average Roth deferral rate
• 3% increase in the number of retirement outlooks with a partly sunny or sunny forecast.
The bicycle-shaped stress balls were a huge hit, symbolizing the connection between a smooth ride and a secure financial future. Employee feedback emphasized the clarity and creativity of the educational materials, making complex financial concepts simple, accessible, and engaging for all.
Judges felt that this campaign had good success using a benefits fair for the target audience. The materials were creative, fun, and well aligned to the company and its goals.
2nd Place
Nestlé USA, Inc. with Voya Financial
Nestlé USA has 30,000 employees across 28 states and manufactures products in pet care, coffee, premium bottled water, consumer health, and infant nutrition.
The goal of this campaign was to reach as many employees as possible to bring awareness to the new Roth choice in the Savings Plan while providing education to employees about the benefits of plan participation and Roth contributions.
The company feels that retirement is a journey and that it takes time to get there. A campaign theme around the “Path to Retirement” was created with visuals showing an individual faced with the choice of two paths. A series of communications were deployed starting in July 2023. The communications began with announcement emails and letters sent to internal stakeholders including HR and key contacts. The letter shared the upcoming plan enhancement along with an Onsite Marketing Kit and instructions on how to use the materials. The kit included posters, table tents and handout cards. In addition, they received information on how to electronically download digital signage that could be used on TV monitors and digital displays. A custom website was made available and emails sent to employees to announce the Roth option. Educational meetings were promoted. Posters and table tents were placed in all office locations. An eBook and enrollment kits were updated to reflect the Roth 401(k) option. Other communications on the ease and simplicity of enrolling, the tax benefits, and in-plan Roth conversion were provided.
The campaign elicited an average email open rate of 43%. In the first week the custom website had views by 2,420 employees. During the first week the Roth features video was viewed more than 200 times and the Roth guide was downloaded more than 406 times. More than 1,500 employees registered for both English and Spanish live education meetings, with several meetings having attendance rates at or above 70%. There was a 42% increase in unique employee visits to the Roth Informational website after the second email and a 57% increase in Roth guide downloads. Within
the first 45 days after adding the Roth 401(k) option, approximately 1,400 participants made changes to their contributions – 593 employees also increased their savings rate an average of 3.9% from 7.9% to 11.8%. The great results and getting in front of the Rothification of catch-up contributions made Nestlé a winner.
3rd
Place
Bechtel with Empower
Through more than five generations of family leadership, Bechtel is a trusted engineering, construction, and project management partner to industry and government. Since 1898, Bechtel has helped customers complete more than 25,000 projects in 160 countries on all seven continents and has created jobs, grown economies, improved the resiliency of the world’s infrastructure, increased access to energy, resources, and vital services, and made the world a safer, cleaner place. Bechtel serves nuclear, security & environmental; oil, gas & chemicals; and mining & metals markets. They have 8,000 employees in more than 100 locations.
The purpose of the campaign was to encourage people, creatively, to start saving, showing them it’s never too late and for most, it’s part of their total comp that they’re missing out on. Bechtel had the challenges of some people not yet being match eligible, and the timing of the campaign being during the holidays, when many people are stretched financially thin.
All non-savers were targeted in two groups: match eligible and those who weren’t. A selfmailer, extra sealed for security purposes, was mailed that explained how much they were missing in match based on their current salary. With a snowball theme, they were shown the effect of saving. Messaging included, “The Bechtel company match can have a snowball effect on your savings!” and “Get your savings rolling with the company match” with snowball imagery. The messaging resonated and 12.6% of the match eligible group enrolled and 9.8% of those ineligible for the match enrolled.
Bechtel won due to their great messaging, especially with the personalized communication component. The communications were brief and to the point. The personalization was particularly effective and achieved great results.
by Judy Ward
HELPING EMPLOYEES
WITH STUDENT
LOAN DEBT
The resumption of student debt repayments challenges many Americans’ finances, including saving for retirement.
THE RESUMPTION OF STUDENT DEBT
PAYMENTS IN OCTOBER
2023 HAS BEEN VERY MUCH ON THE RADAR FOR MANY
RETIREMENT PLAN
PARTICIPANTS, SAID JOE DEBELLO, A VICE PRESIDENT AT CAPTRUST IN TAMPA, FLORIDA.
“That created a dark cloud over a lot of people’s financial situation,” DeBello said. “We’re hearing about student debt more frequently and louder from participants, but we’re also hearing more interest from plan sponsors and committees about trying to help.”
Outstanding student loan debt stood at $1.6 trillion in fourthquarter 2023, according to a report from the Federal Reserve’s Center for Microeconomic Data. Student debt continues to compound on itself, and it’s becoming a bigger and bigger problem, said Alex Sylvester, executive partner and presidentinstitutional advising at Shepherd Financial in Carmel, Indiana.
“I don’t see this going away as a problem anytime soon, and I think there are some creative student loan benefits that are going to become more and more part of the desired benefits package for employees,” Sylvester added. “A lot of momentum is starting to pick up for that, so we’re seeing a major uptick in conversations with committees.”
THREE OPTIONS TO HELP
For employers interested in helping their employees with student debt, it makes sense to first survey employees to understand the extent of their challenges. Sylvester has mostly seen employers do this as part of an annual benefits survey that asks employees to individually rate the value they see in specific benefits, including student debt repayment. Incorporating this issue into a broader benefits survey allows an employer to understand how much employees would value a student loan repayment benefit relative to other potential benefits enhancements, he explained.
DeBello now sees some employers doing an employee survey focused specifically on student debt.
“By and large, after the employers see the survey results, their response is, ‘Wow, this is a lot bigger and wider issue than we realized,’” DeBello said. He offered three tips for how to do the survey effectively. First, tell employees why the employer is asking about its employees’ student debt: Explain that the employer cares about employees, and is exploring various ways to help employees with their student debt. Second, the employer itself should send the survey, not have a third party do it. And third, ask employees about more than just the amount of their student debt—ask them how it has impacted them.
“What’s interesting is for committees to see some of the narratives from employees in a comments section of one of these
surveys,” DeBello said. “It puts real-life stories in front of the committee, some of whom may not have any personal experience with student debt.”
Student loan Match –Secure 2.0
Employers have several options for implementing a program to help employees with student debt. Stevenson sees real potential in a SECURE 2.0-style program for employers to contribute to an employee’s retirement account in response to student debt repayment. SECURE 2.0 allows employees’ student debt repayments to be counted as if they are retirement plan contributions in calculating an employer matching contribution, utilizing the plan’s match formula.
An employee reaps the benefits of taking another step each payment toward paying off his or her student loans, and gets the benefit of accumulating savings for retirement at the same time. Seeing their retirement account balance grow every month will reinforce to younger employees especially that starting to save early makes a big difference, Stevenson believes. Nationwide Retirement Solutions is testing a couple of options for offering one of these matching programs to
its recordkeeping clients, and aims to introduce a student debt repayment program in 2025.
In January, Fidelity Investments rolled out Student Debt Retirement, a SECURE 2.0-style matching program. Employers including LVMH, News Corp., Sephora, and Walt Disney Co. have added the benefit.
Three in 10 employees who are eligible to participate in their employer’s plan and who have student debt outstanding do not contribute, Fidelity’s research indicates. Fidelity’s models project that participants in the Student Debt Retirement program will nearly double their 401(k) balances (from $195,248 to $389,371) by the time they reach retirement, compared to student debt holders who don’t participate in the program, said Amanda Hahnel, a vice president at Boston-based Fidelity.
“It helps make the retirement benefit more accessible to all employees,” Hahnel said of a SECURE 2.0-style match program. “And because many of these employees are starting to get retirement plan contributions so early in their employee life, that will have dividends for those employees for decades to come.” Additionally, some employers considering adding
Student Debt Retirement
don’t see the retirement plan matching contribution as an additional expense, because they’ve already budgeted for an employer match, she said.
“A lot of employers look at this and say, ‘This doesn’t look like new dollars to me,’” Hahnel added. Using data from Fidelity’s separate, direct student debt repayment program it offers, Fidelity can project for an employer the savings it could experience from reduced turnover if the employer adds its Student Debt Retirement program.
As the SECURE 2.0-style matching approach illustrates, the workplace retirement plan is evolving to become not just a tool for retirement, but a tool to address other financial concerns employees have, DeBello said. But with that comes challenges, such as the role that inertia plays in saving for retirement.
“My concern around doing a match for student loan repayments is that it will create an incentive for some employees to not save for retirement,” DeBello said. “My concern is that it’s going to be perceived as the employer saying, ‘Hey, you can forget about saving for retirement, we’ll take care of it.’ That could give people a false sense of security.” It will be crucial for employers adopting a SECURE 2.0-style program to make crystal-clear that the employer contribution alone will likely not be enough to get an employee to a sufficient ultimate accumulation, he added.
That is a potential negative incentive that could lower average deferrals, particularly for plans that already have relatively high contribution rates, Copeland said. Whether that concerns employers will depend on their motivation for adding the student debt repayment program, he thinks.
“It seems like the employers that are doing it are really trying to attract new workers. Their focus in doing this is on attraction and retention, to show, ‘This is something we have that other employers don’t,’” Copeland said, “They want to show that they can help employees to save for retirement, regardless of what the employees themselves are doing for their contribution.”
Reimbursement Programs
An employer that wants to offer tangible help, but doesn’t want to integrate that with the retirement plan, can do a stand-alone student debt repayment program. Most of the conversations Shepherd Financial is having with clients about student debt are around the employer making a direct contribution or match to their employees’ repayments, Sylvester said. In part, he added, that’s because this approach offers more flexibility in how it’s implemented than a student debt repayment program integrated with a qualified retirement plan.
“With this type of program, the employer will have the opportunity to say, ‘Do we want to make a set contribution for all employees?’ Or, if there
is a certain position that the employer is having trouble filling, the employer can just offer the program to employees in that position,” Sylvester said. “Half of the employers we’ve worked with to implement this type of program offered it across all employees, and half focused on a certain job category or on certain management/leadership positions. And the contribution can be a flat-dollar amount or a match, whichever the employer prefers.”
A stand-alone program has gained traction especially among employers in industries where employees’ student debt tends to be significant, such as health care, accounting, and engineering, DeBello said. The challenge is that it’s a new–and significant–budget item for employers, but he also sees important upsides.
“In my mind, the ‘silver bullet’ for student debt repayment is a direct reimbursement program., if an employer truly wants to make an impact on employees’ student loan debt, and if it has the budget and the willingness to do it,” DeBello said. “That’s really meaningful money to people, because it’s helping them with today’s money issues. A program like this is a huge competitive benefit in fighting turnover. It’s an expensive benefit, but it’s an effective one.”
Education
Even if an employer doesn’t feel comfortable getting directly involved in student debt repayment, DeBello encouraged offering education and coaching to help those employees struggling to manage their student debt. Of the options employers have to help, he said, the downside is that this will likely have the least direct impact on employees’ student debt levels, and have the least influence on employee attraction and retention.
The upside of offering education and coaching is that it’s often integral to helping people deal with their student debt issues, DeBello said. In a lot of cases. people who feel they can’t make their student loan repayments actually do have enough income to make those payments, but they need to work with an adviser who can help them see how to cut back spending in other areas to afford the student loan repayments. The need to reduce some spending isn’t a message that many people enjoy receiving, he acknowledged.
“It’s very much an issue of today, a lot of people are living outside their means, and spending more than they should,” DeBello continued. “It’s almost the American way of life: We are a nation of spenders. Getting this help with budgeting is not an enjoyable conversation. It’s like going to the dentist: You know it’s a good thing for you to do, but you’re going to do everything you can to avoid it. However, this kind of education, for those people who are willing to sit down with us and receive it, can make a big difference in people’s lives.”
Judy Ward is a freelance writer specializing in retirement planrelated subjects.
by Will Hansen
Can HSA Funds Pay for Fitness Activities?
Fitness can be an important part of one’s overall health goals, but is it a qualified HSA expense?
RECENTLY, I WAS OFFERED THE OPPORTUNITY TO UTILIZE A SERVICE THAT WOULD POTENTIALLY ALLOW ME TO PAY FOR MY GYM MEMBERSHIP USING FUNDS FROM MY HEALTH SAVINGS ACCOUNT (HSA). My interest was peaked. I’ll admit, I have always been under the impression that you cannot use HSA funds for gym membership. In fact, one of my first jobs in the benefits arena was at the US Department of Treasury as an intern who helped to draft some of the initial Q&As on HSAs (circa 2005). But, I figured why not pay a few bucks and see what this service is all about.
The service asks a few questions about your own health concerns and diagnoses as well as family medical history. I answered the questions truthfully and within a few minutes had a document from a medical professional stating that it was of medical necessity for me to engage in fitness activities to treat the concerns stated in my questionnaire. If I’m being honest, while it was a very efficient process, the benefits nerd in me was questioning whether it was a valid process that would protect me, legally, if I went forward with using HSA funds to pay for my gym membership (note, I have not and will not). Before we dive in and review this topic in more detail, let’s take a step back and discuss HSAs.
WHAT IS AN HSA?
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals save for medical expenses. To be eligible for an HSA, you must be enrolled in a high-deductible health plan (HDHP). Contributions to an HSA are tax-deductible, and the funds can be used tax-free for qualified medical expenses. HSAs carry a number of benefits, such as: (a) tax advantages; (b) flexibility (funds can be used for a wide range of medical expenses; (c) rollover (unused funds roll over from year to year, allowing you to build a substantial savings over time); and (d) portability (the account is yours to keep, even if you change jobs or health insurance plans).
QUALIFIED MEDICAL EXPENSES
The Internal Revenue Service (IRS) sets the guidelines for what constitutes a qualified medical expense under an HSA. Generally, these expenses are those that diagnose, cure, mitigate, treat, or prevent disease, or affect any part or function of the body. Examples include doctor visits, prescription medications, medical procedures, dental care, and vision care.
Fitness Activities: Are They Covered?
As a general rule, fitness activities such as gym memberships, exercise classes, and personal training sessions are not considered qualified medical expenses by the IRS. This means that you cannot use HSA funds to pay for these activities without incurring taxes and penalties. There are some exceptions where fitness-related expenses may qualify for HSA reimbursement:
1. Medical Necessity: If a doctor prescribes a fitness activity as part of a treatment plan for a specific medical condition, the expense may be considered qualified. For example, if a doctor prescribes swimming to help treat arthritis, the cost of the pool membership may be covered.
2. Rehabilitation Programs: Programs that are part of a prescribed physical therapy regimen can be covered. For instance, if you are recovering from surgery and your doctor recommends specific exercises or a rehabilitation program, these expenses may qualify.
3. Weight Loss Programs: If a doctor prescribes a weight loss program to treat obesity or another health condition, some associated costs might be eligible for HSA reimbursement. This typically requires documentation from a healthcare provider.
To qualify for these exceptions, it is crucial to have proper documentation from a healthcare provider. This documentation should include:
• A diagnosis of the medical condition.
• A prescribed treatment plan that includes the fitness activity.
• An explanation of how the fitness activity will help treat the condition.
The service I used is zeroing in on “medical necessity.” The document I received from the service was a Letter of Medical Necessity. Since the time I received this document, I’ve learned that several major fitness brands have embraced this service and have advertised it to those who use the fitness brand as a way to pay-for membership.
I wasn’t the only one that noticed that several fitness brands started to promote this new service of receiving a letter of medical necessity. The IRS also noticed and a few months ago issued a news alert to remind the general public that personal expenses associated with health and fitness are not considered medical expenses under the tax law. The IRS is concerned that certain
companies are misleading consumers into believing that fitness memberships are a medical expense.
EMPLOYEE RESOURCES
Ultimately, the decision on what expenses can be paid for from the HSA are up to the individual employee/participant. As an HR professional, you should not provide individual tax advice. But, that doesn’t mean you shouldn’t be providing resources to your employees to help them make the decision.
The IRS provides a number of resources (including the recent news alert) that can help an individual determine if a specific expense might be reimbursed from the HSA. In addition, your HSA administrator most likely has resources of a similar nature.
If your employees inquire about how the employer can assist with fitness, a few ideas: (1) implement a program in which the company reimburses/covers the cost of a gym membership; (2) engage with vendors or directly with a gym to provide a discount to employees; (3) develop a resource that lists local gyms or other fitness programs in the area; (4) develop a resource that provides
online/mobile fitness programs; (5) bring fitness instructors to your workplace for at-work programming (e.g., yoga hour); and/ or (6) ask your vendors for recommendations on providing fitness resources.
While the direct use of HSA funds for fitness activities is limited, being informed about the regulations and exceptions is important to ensure you are providing the right resources to your employees for them to make a decision on how to correctly use their HSA.
A letter of medical necessity, while it seems like it would ensure that an individual could have their gym membership reimbursed from their HSA, is definitely open for interpretation depending on the individual circumstances. With the number of gyms/fitness programs that are advertising it as a potentially reimbursable expense, understanding how to communicate to your employees a response, if asked, is important – and I hope this article helped.
Will Hansen is the Executive Director of PSCA and the Chief Government Affairs Officer for the American Retirement Association.
by Mike Webb
Collective Investment Trusts: The Future of Retirement Plan Investing?
CITs have gained popularity in recent years as investment options in retirement plans – what are they and why should they be considered?
IN RECENT YEARS, COLLECTIVE INVESTMENT TRUSTS, OR CITS, HAVE TAKEN 401(K) PLANS BY STORM, ACCOUNTING FOR 37 PERCENT OF TOTAL 401(K) PLAN ASSETS IN 2022. This marks a 50 percent increase in market share over the last five years, according to Cerulli.
At the current pace of growth, CITs could be the most popular investment in 401(k) plans, surpassing mutual funds, by the end of the decade.
Among the most popular types of retirement plan investments, CIT growth has been even greater. According to the Morningstar’s “2024 Target-Date Landscape Report,” target-date strategies raked in $156 billion in assets in 2023. CITs led the way, absorbing $104.5 billion—or 67 percent—of the year’s net inflows.
CITs made up 49 percent of target-date strategy assets at the end of 2023 and are poised to become the most popular targetdate vehicle by the end of 2024.
But what, exactly, are CITs? And do they merit the level of inclusion they are experiencing in 401(k) and other retirement plans?
CITS: THE BASICS
CITs, also known as comingled funds or collective investment funds, have been around for many years but are less well known than other types of retirement plan investments, such as mutual funds and exchange-traded funds (ETFs). This is likely because they are not available directly to the public. Instead, CITs are available only to retirement plan sponsors.
They are underwritten by a bank or trust company and then supervised by the Comptroller of the Currency or by state banking agencies, including the Department of Labor in ERISA plans.
CITs pool assets from multiple retirement plans into one investment fund, like a mutual fund. However, unlike mutual funds, CITs are exempt from registration with the Securities and Exchange Commission (SEC), and thus do not have a fund
THE PRIMARY
ADVANTAGE OF
CITS OVER OTHER INVESTMENT TYPES IS THE ABILITY TO NEGOTIATE PRICING, WHICH ENABLES PLAN SPONSORS TO ENJOY ECONOMIES OF SCALE AND THUS OBTAIN INVESTMENTS FOR LOWER FEES THAN THEY MIGHT OTHERWISE BE ABLE TO OBTAIN ON THEIR OWN.
prospectus. CITs do not have a ticker symbol either, though they often have what is called a CUSIP number that serves to identify each fund.
ADVANTAGES AND CONSIDERATIONS
The primary advantage of CITs over other investment types is the ability to negotiate pricing, which enables plan sponsors to enjoy economies of scale and thus obtain investments for lower fees than they might otherwise be able to obtain on their own.
The primary disadvantage of CITs is that, unlike exchangetraded funds (ETFs) and mutual funds, they are not publicly traded. This means that the bulk of information available to mutual fund and ETF investors is not available for CIT investors about their CITs.
In addition, few CITs are registered as mutual funds, so they are generally not an option for 403(b) plan sponsors. However, the 2022 passage of the SECURE 2.0 Act has opened the door for CITs to be included in 403(b)s in the future.
CITs are also not permitted in 457(f) plans, nonqualified deferred compensation plans, or IRAs, although they are permitted in most other defined contribution retirement plans, as well as defined benefit plans.
Finally, CITs sometimes have minimum investment requirements, although those minimums are starting to decline.
Despite these potential considerations, eligible retirement plan sponsors should certainly have CITs on their radars as a possible low-cost alternative to mutual funds.
Mike Webb is a Senior Manager, Retirement Plan Consulting, for CAPTRUST Financial.
by Shannon Edwards and Emily Halbach
LTPTE: Long-Term Planning, Tricky Execution
Handling LTPTE rules can be challenging—discover practical solutions to streamline administration and ensure compliance with the SECURE Act.
HAVE YOU EVER WAITED EXCITEDLY FOR A SURPRISE? YOU EXPECTED IT TO BE AMAZING, LIKE THE BEST GIFT SANTA CLAUS EVER BROUGHT YOU AS A CHILD. THEN YOU WOKE UP ONE MORNING, AND THE SURPRISE HAD BEEN DELIVERED.
You race to open it and realize that someone thought it was Halloween instead of Christmas and left you a trick instead of a treat. Well, that’s how most of us in the retirement plan industry felt on Black Friday when we opened the guidance the IRS released on Long-Term PartTime Employees (LTPTEs). We waited patiently for almost two years for guidance we thought would surely make this new law easy to administer and understand. We believed the IRS guidance would mesh with the spirit of the law and allow us to open the floodgates. Of course, they would let all employees make 401(k) contributions to the plan without having to give them employer contributions or lose certain exemptions our plans had enjoyed from required employer contributions.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act, signed into law in December 2019, brought
significant changes to retirement planning for working Americans and plan sponsors. Among its many provisions, one key area of focus was closing the “retirement savings gap” in America. Previously, plans could exclude from qualified retirement plans employees who had never performed 1,000 hours of service in a year. This changed with SECURE, adding limited coverage for LTPTEs. This change has multifaceted repercussions for employers and employees. While the inclusion of LTPTEs in retirement plans under SECURE has broad implications for retirement plan sponsors, it also offers the opportunity for retirement security to a sector of the workforce that was often excluded from saving for retirement. A whole new group of employees can save for their future and benefit from employer-sponsored retirement plans. Research
has proven that an employee is far more likely to save for retirement if they have the opportunity to save in an employer-sponsored payroll deduction plan than if they do not. If they take advantage of this new opportunity, it will improve their overall financial security for the future.
LTPTE STATUS DETERMINATION
In case you missed it in the thousands of articles previously published, under SECURE, a long-term parttime employee is defined as an individual who is age 21, has never completed at least 1,000 hours of service for an employer in a year but has completed at least 500 hours of service for the employer for three consecutive years (reduced to two in 2025). On the surface, this seems easy to track. However, how plan sponsors track their employees’ hours worked makes a huge difference in determining which employees are eligible under the new rule. This issue is compounded by the fact that many thirdparty administrators and recordkeepers were not
tracking actual hours worked from year to year. Plan design also plays a large part in how or if hours are tracked as well. Some plans use elapsed time and others use equivalencies when actual hours are not available. All these considerations together make determining who qualifies as a long-term part-time employee more difficult than it sounds. Participants who become eligible under the LTPTE rules can make their own salary deferral contributions to the plan. However, the employer does not have to make them eligible for company contributions. If the plan requires that an employee work at least 1,000 hours of service in a year to be eligible for an employer contribution, the plan can continue to use that rule. There is a catch, though. LTPTEs earn a year of service for vesting for each plan year in which they work 500 hours, even if participants who came into the plan under the 1,000 hours of service rule must work 1,000 hours of service each year to earn a year of service for vesting. As an industry, our first reaction to this vesting rule
and the difference in the hours requirement for LTPTEs vs. standard plan participants was that it was irrelevant.
LTPTEs wouldn’t be eligible for employer contributions, so vesting would not be an issue. It was widely assumed that if they met the 1,000 hours of service rule for eligibility for employer
contributions, they would then begin earning years of service for vesting using the 1,000 hours of service rule like the other participants. This was the first trick (instead of a treat) in the proposed regulations. The IRS interpreted the legislation to say that once an employee entered the plan as an LTPTE
and began earning years of service for vesting at a rate of 500 hours per year (instead of 1,000 hours of service), even if they became a former LTPTE, they would continue earning years of service for vesting at a rate of 500 hours per year. This means that their status as an LTPTE would have to be
tracked indefinitely (even if they leave and later come back as a rehire). This piece of guidance created the most complexity with the rule because of the requirement to track the status as an LTPTE in perpetuity.
The IRS proposed regulation regarding LTPTEs also made clear that if an
PLANS WHO PREVIOUSLY WERE “OWNER ONLY” 401(K) PLANS BECAUSE NONE OF THEIR EMPLOYEES HAD EVER MET THE 1,000 HOURS OF SERVICE RULE MAY FIND THEMSELVES HAVING ELIGIBLE EMPLOYEES UNDER THE NEW LTPTE RULES.
employer with a safe harbor plan that relied on the topheavy minimum exemption wanted to avoid the LTPTE rules by making all employees immediately eligible to make salary deferrals, they would lose that exemption and be subject to the top-heavy rules. This was the second trick in the regulations, as many small employers use the safe harbor plan design and rely on the exemption from the top-heavy requirements. The result of this guidance is that employers must decide whether they would prefer to avoid these complicated rules altogether or avoid giving their LTPTEs an employer contribution.
LESSONS LEARNED SINCE IMPLEMENTATION
First, while recordkeepers are working hard to modify their platforms to track LTPTE status, they aren’t fully ready. Many of them don’t have all the historical data required to determine who should be eligible as an LTPTE for the clients. If they do have the data required, re-tooling their systems to properly make the determination is more difficult than it sounds. Although some thought they had it figured out, there were still some hiccups. Compliance software we use also has difficulty running the
eligibility calculation, even when the historical data is in the system. Many people who should have been enrolled on January 1 were inadvertently missed.
Next, the determination of eligibility is not as easy as looking at each of the three prior plan years to see who was part-time, had never worked over 1,000 hours, but had worked more than 500 hours in three consecutive years. If a plan uses the anniversary year for the first eligibility computation period, then switches to the plan year for the computation period, this can effectively cut the three consecutive years down to two or slightly more than two. It does not necessarily mean three full years. In 2025, when three years is reduced to two, it will effectively be slightly more than one. In theory, an employer could have an employee who works for them for 13 months and meets the two consecutive year requirement at the end of the 13 months.
PLAN DESIGN CHANGES TO CONSIDER
The inclusion of longterm part-time employees in retirement plans impacts employers, including the cost of consulting regarding needed adjustments to plan administration,
communication, and compliance. In addition, there may be a cost for the required amendments that come with this inclusion. Employers must ensure that their retirement plans comply with SECURE’s provisions and that eligible employees are provided with the necessary information to enroll and participate in the plan. Many plan sponsors are choosing to make changes to their plan to avoid adding complexities to the already complex rules that govern them, even if it results in making LTPTEs who otherwise would not have been eligible for employer contributions eligible for them. The LTPTE rules have effectively changed the maximum number of hours a plan uses for eligibility down from 1,000 to 500 if a plan sponsor wishes to avoid having the rules apply to their plan.
The complexity of these rules will likely result in errors as plan sponsors and recordkeepers develop a good process for tracking LTPTE status. There are going to be LTPTEs who were not properly enrolled on January 1. The good news is that under EPCRS these errors can be fixed, and if they were fixed before the end of the first quarter, the expense of correction was nothing.
There are additional challenges that should be addressed moving forward. When changing recordkeepers, plan sponsors need to ensure that historical data regarding LTPTEs is gathered. Plans who previously were “owner only” 401(k) plans because none of their employees had ever met the 1,000 hours of service rule may find themselves having eligible employees under the new LTPTE rules.
Overall, the LTPTE rules are good for increasing coverage and reducing the retirement savings gap. The IRS’s interpretation of the legislation in their proposed regulation added a lot of complexity to the rules, which no one was expecting. However, we have learned a lot over the past several months and will continue to learn more about how to live with these rules or amend them out of plans by reducing eligibility requirements. Either way, it is a win for working Americans who need to save for retirement.
Shannon M. Edwards, ERPA, QPA, QKC, QKA, is the President of TriStar Pension Consulting.
Emily Halbach, AKA, APA, QKA® is the Director of Defined Contribution Services for Retirement Plan Specialist.
OCTOBER
by Hattie Greenan
Quarterly Question Roundup
A summary of the QOTW responses for the second quarter of 2024.
PSCA’S QOTWS (WEEKLY QUESTION IN THE ICYMI NEWSLETTER) FOR THE SECOND QUARTER OF 2024 FOCUSED HEAVILY ON PLAN DESIGN QUESTIONS – MANY OF THESE proposed by members looking for peer input on design concerns. In addition, we asked about a variety of plan administration and regulatory concerns – many of them coming from articles in industry trade publications and one from the Government Accountability Office (GAO). A summary of the results follow.
PLAN DESIGN QUESTIONS
SECURE Distributions
There are several optional provisions in SECURE 2.0 (and one in SECURE 1.0) which allow participants to take a plan distribution without a penalty under specific circumstances – in the event of a natural disaster, in the event of the birth or adoption of a dependent, for victims of domestic violence, or if the participant is diagnosed with a terminal illness. These provisions, along with the optional emergency savings distributions and existing ability for hardship withdrawals and loans, give plan sponsors a lot of flexibility, and choice, in how their employees can access their retirement savings. With so many options to consider, sixty percent of plans are still determining which provisions best suit their employees and current plan design while 22 percent have adopted the natural disaster provision and 17 percent the domestic violence provision.
SECURE Act Optional Distribution Provisions
Hours or Years?
A question came up on a committee call about how plan sponsors calculate time for eligibility and vesting requirements – are they tracking hours, or using elapsed time (6 months, 1 year, etc.). One plan sponsor stated they had recently changed from calculating hours worked to elapsed time for ease of administration. This is not something we have ever asked about before so its too early to tell if there is a trend, but we did ask members last week how they calculate service for eligibility and vesting. A handful use both methods (6 percent) with nearly half (48 percent) using elapsed time and 44 percent used hours worked.
Money Sources for Loans and HSW
How much access plans allow to retirement assets during employment through loans and hardships is variable and sponsors are often trying to strike a balance between allowing access in emergencies and preserving assets for retirement. Knowing that they can access their money during emergencies can often help employees be more willing to save for retirement. For plans that allow loans, some limit the criteria under which participants can access a loan, some limit the number of loans allowed, some limit the dollar amount. But what about limiting the money sources for loans and hardships? Plans can limit it to participant contributions only, or participant contributions and vested amounts, or they can allow access to all money sources.
A third of plans do limit money sources for loans – 24 percent limit them to participant contributions only, while seven percent limit it to vested amounts only, and three percent have other limitations. More plans limit hardships to participants contributions only – 41 percent, with four percent limiting it to vested amounts and three percent with other limitations.
Direct Deposit for Cashouts
Uncashed checks from force out payments can be a headache for plan sponsors as they try to track down participants and addresses and get them to deposit their funds. A member reached out stating they are looking at the idea of direct depositing force out payments to bank account information on file, with permission, as a way of reducing the number of unclaimed checks and was curious if other plan sponsors have done this. We asked members if they use direct deposit for unclaimed checks or if it is something they are considering. A quarter of respondents indicated that it is something they are considering while 62 percent said they are not doing it or considering it, though many think it’s a good idea.
Considering QLACs
A recent article stated that plan sponsors are giving QLACs (Qualified Lifetime Annuity Contracts) another look as distribution options for retirees. PSCA’s 66th Annual Survey data shows 10 percent of plans offer annuities as distribution options and we were skeptical that this had made a big jump so asked in a QOTW. Only four percent of respondents currently offer one with 11 percent considering them and 85 percent not offering or considering them. One respondent stated “what even is this” so while QLACs are on the radar for some plan sponsors, it is still a (very) small percentage.
Reconsidering the TDF as the QDIA
Though target date funds (TDFs) are widely used (nearly 90 percent of plans) they have received some criticism in recent years for the one-size-fits-all approach that makes them easy to use but makes them less customized to individual situations. There have also been some lawsuits in recent years targeting TDF fees. Some
Plans That Limit Money Sources for Hardships
Plans That Limit Money Sources for Loans
MOST OF OUR EMPLOYEES DO NOT UNDERSTAND INVESTING. TDFs ARE THE PERFECT “SET IT AND FORGET IT” OPTION, AND IT DOESN’T CREATE STRESS DURING ENROLLMENT.
articles recently have wondered if TDFs are still the best option for the QDIA or if perhaps a hybrid or more customized fund would be a better default, such as a managed account. We asked members if they are considering moving away from TDFs as the default option in favor of something else and they overwhelmingly are not. Three percent of plans use something other than a TDF, and three percent are currently considering options – leaving 94 percent happy with a target date fund as their current QDIA.
PLAN ADMINISTRATION QUESTIONS
Retaining Retirees
There have been some recent articles discussing how more plan sponsors are encouraging participants to keep assets in the plan, and a discussion as to whether plan sponsors have enough investment options geared specifically towards those participants. We asked about this issue a few years ago and at the time, three quarters of respondents did not encourage retirees to stay in the plan. I was curious if this has changed and if plan
sponsors are adding investment options specifically designed for these participants. Only twelve percent of respondents stated they actively encourage participants to retain assets in the plan, while two-thirds state they are neutral on the topic – they provide education on options but don’t encourage either way. Thirty-six percent of respondents indicated that they have investment options geared specifically towards participants retaining assets in the plan.
Ranking Retirement
An article cited research stating that only 36% of plan sponsors would rate their 401(k) plan within their top three workplace benefits offered to employees. Knowing that our membership skews towards companies that are committed to their 401(k) plans, I expected our data to be a little higher than average, but only a third of companies ranking it in the top three didn’t ring true to me. We asked members how their company ranks their 401(k) plan in terms of their overall benefits offerings in thinking about recruitment and retainment. An overwhelming majority (91.6 percent) put it in the top three, with 40 percent ranking it second and half ranking it third (only 3 percent ranked it as number one). For a large percentage of respondents, healthcare is the primary benefit with overall compensation and PTO other top considerations for employees.
Fee Disclosure Discourse
About 15 years ago, the DOL mandated recordkeepers provide detailed fee disclosure reports to plan sponsors, and that plan sponsors do the same for participants. The belief was that participants did not understand fees associated with investment
WE ENCOURAGE PARTICIPANTS TO COMPARE FEES WHEN CONSIDERING A ROLLOVER FROM THE PLAN, AS OUR PLAN OFFERS AN EXTREMELY COMPETITIVE FEE STRUCTURE DUE TO THE AMOUNT OF PLAN ASSETS. OPTIONS INCLUDE A RETIREMENT TARGET DATE FUND, MONEY MARKET, AND STABLE VALUE FUND.
options in the 401(k) plan and this mandate was intended to help participants make informed choices about investing their money. Fifteen years later fee disclosures have become commonplace, and the GAO asked us if we thought the disclosures had been effective in increasing participants understanding. This is a bit hard to measure directly, but we asked plan sponsors if it seems that participants read them and understand them, and do they think they’re generally helpful. We also asked their thoughts on the disclosures they receive from recordkeepers.
Unsurprisingly, most respondents (three-quarters) stated that most participants don’t read them while six percent feel that participants read them and find them helpful, and 15 percent feel that they are confusing to participants. Some plan sponsors feel that participants do need the information, but the mandated format is not useful and hard to interpret. Others noted the increased administrative effort for what appears to be very little effect.
On the other hand, half of respondents stated that they find the reports from their recordkeeper easy to read and understand and helpful, while thirty percent find them confusing and hard to interpret. This could be recordkeeper dependent, or it could be experience – a few commented that they were initially hard to decipher but over time you learn how and become familiar with them.
RFP Redux
Issuing a Request for Proposal (RFP) for a plan service provider can be a daunting task, but its also necessary to review fees and services to ensure your plan is competitive to the market on an ongoing basis. There isn’t a standard timeframe that plan sponsor are required to issue full proposals, but there is often advice that plan sponsors should be reviewing this every few years as part of the sponsor’s fiduciary duty to ensure that fees are reasonable for the services provided. We asked members if they issue RFPs regularly, and if so, how frequently. More than forty percent stated they issue full RFPs every 3-5 years and 20 percent stated every 5-7 years, but nearly thirty percent stated they do not do it regularly. Some respondents stated that even though they aren’t doing RFPs regularly, they are using advisors to benchmark their plan fees and services annually to ensure it is competitive to the market.
Frequency of RFP
Cybersecurity and Plan Audits
A recent article mentioned that the DOL has indicated that cybersecurity policies will be a part of retirement plan audits going forward. In the past when we asked about cybersecurity, many plan sponsors indicated that they rely on their provider for this and many didn’t have their own written policy. We asked plan sponsors if cybersecurity has been a part of recent audits, and if they have a written policy.
Three percent indicated that they have been audited regarding cybersecurity in the past (though not sure these were DOL audits) and about half of those who wrote in answers do not have a written policy. If you are in the half that do not, it is something worth speaking to your advisor about to make sure you are compliant in the event of a DOL audit.
QOTW runs every Monday – if you have a question you would like us to ask, send it to research@psca.org.
Hattie Greenan is the Director of Research and Communications for PSCA.
PLAN SPONSOR PERSPECTIVES
by Hattie Greenan
Key Takeaways from PSCA National
Plan sponsors share their key takeaways from this year’s PSCA National Conference.
FOR THIS ISSUE, WE ASKED ATTENDEES AT THE RECENTLY HELD PSCA NATIONAL CONFERENCE WHAT THEIR KEY TAKEAWAYS WERE – ANYTHING THAT THEY LEARNED THAT THEY TOOK BACK TO IMPLEMENT AT THEIR ORGANIZATIONS, OR ANY SESSIONS THAT PARTICULARLY RESONATED WITH THEM. A few plan sponsors noted that general session with Michelle Singletary was inspiring and reignited their enthusiasm for helping their employees succeed. Others noted that the compliance and SECURE 2.0 sessions were extremely valuable and provided tangible items for them to go back and speak to their recordkeepers and advisors about. Others mentioned the ability to meet peers dealing with similar issues and being able to benchmark their plan against what others are doing. Select detailed responses follow.
A second-year attendee from a mid-size manufacturing company noted: It was my second year attending the conference
and I am even more jazzed about it than I was last year, and that was pretty jazzed!! Without going through my notes to review everything (definitely don’t want me to do that or this email would take a whole ream of paper to print), I can tell you for sure that the retirement readiness checklist session was really helpful. We’re currently not doing anything for our retirees and that’s an area where we can surely do better for them. I not only got some great ideas on how to do more for our retirees BUT also got some good questions for the recordkeeper RFP we’re doing. And, as always, any compliance sessions are infinitely helpful. It doesn’t matter how many times you hear the information – on a topic that important, it’s never enough.
A repeat attendee from a large government plan stated he was happy to learn they are not the only employer with plan participants who submit fraudulent supporting documentation with their hardship applications, and that he was able to get some good
I WAS VERY PLEASED BY THE NUMBER OF INFORMATIONAL SESSIONS AND THE QUALITY OF THE EDUCATION. I’VE BEEN IN HR AND BENEFITS
FOR MY ENTIRE CAREER AND I LEARNED THINGS I’D NOT PREVIOUSLY HAD MUCH EXPOSURE TO.
feedback on the steps other employers take to prevent or reduce fraudulent submissions. He was also surprised to learn that several employers permit in-service Roth Conversions within the plan for those under age 59½ as they only allow them over age 59½ and is now going to speak to his recordkeeper about it.
An attendee from a mid-size technology company stated he learned a lot in the Fiduciary session as well as the Cybersecurity session and that he enjoyed several of the sessions such as the auto features in plans and the asset allocation session.
An attendee from a large bank noted that the session on using AI to help participants and retirement plans stood out and that it will be interesting to see how AI in benefits plays out over time.
A member stated that she was reminded of National 401k Day on Sept 6 so they can build a communication plan in support of it. She also learned that her plan is out of date with their employer match, auto-enrollment percent, and no auto-escalation set up and will be working on those items this year to implement in 2025.
Another attendee stated she had so many take-aways that she can’t narrow it down to just one but the top two were:
1. Great wisdom from Michelle Singletary. She helped re-ignite my passion for helping our employees with their financial wellness/retirement readiness.
2. The roundtable discussion by employer size was incredibly helpful. Again, I got many take-aways, but the most helpful was ideas on how to improve our process on finding participants who have uncashed checks.
Another first-time attendee stated that this was her inaugural journey to the conference and she will definitely be back. “I was very pleased by the number of informational sessions and the quality of the education. I’ve been in HR and benefits for my entire career and I learned things I’d not previously had much exposure to (retirement income, insuring the 401(k) plan for a catastrophic event, auditing of target date funds, the toolkits and templates available from PCSA and much more).”
A long-time attendee stated “what stuck in my mind was the session for large plan employers where I got to meet and get names of employers who also use the SAP system for payroll, and I was able to confirm that we need to implement the increased catchup limit for our employees. It was also very informative to hear about what is going on in Washington DC, and to hear from the panel discussion on compliance issues and fixes.”
Whether attendees were new to the conference or have been attending for years, new to retirement plans or working with them throughout their careers, there is something for everyone at every level at PSCA’s National Conference. Takeaways this year included learning about PSCA resources available to members to help administer their plans, practical tools such as compliance and retirement readiness checklists, SECURE 2.0 and other regulatory updates, and inspiration from an outstanding motivational speaker who had the entire room signing Lean on Me
Be sure to save the date for the 2025 conference – April 30-May 2nd in Las Vegas!
Hattie
Greenan is the Director of Research and Communications for PSCA.
by Nevin E. Adams, JD
Is Financial Wellness at a Turning Point?
Availably of Financial Wellness programs continues to increase, but use by participants remains low.
A RECENT SURVEY FINDS THAT WHILE FINANCIAL WELLBEING OFFERINGS ABOUND, THE TAKE-UP RATE IS – WELL, DISAPPOINTING.
Not that you’d know it from the exuberant voices in the advisor and provider communities – nearly all of whom are pretty consistently inclined to extol not only the merits, but the absolute essentiality of those programs
in helping assure financial security and even mental health on the part of American workers.
That said, Cerulli’s recent findings – participant usage rates of less than 20% –aren’t new. But considering
the breadth of time these offerings have been in the marketplace, and their push in the industry, it seems that the take-up rate is surprisingly tepid. Indeed, the Cerulli report claims that 71%i of 401(k) sponsors have adopted a financial wellness program. So, what might be holding financial wellness back?
NOBODY KNOWS WHAT ‘FINANCIAL WELLNESS’ REALLY MEANS
That’s a bit of an exaggeration, but let’s face it; “financial wellness” is a term (too?) widely bandied about these days. Unfortunately, it is a concept that is being applied somewhat inconsistently. I’ve heard stories of folks
BUT THE LARGER PROBLEM MIGHT WELL BE THAT, LEFT TO OUR OWN INDIVIDUAL DEFINITIONS OF WHAT FINANCIAL WELLNESS IS, IT SHOULD COME AS NO SURPRISE THAT THERE ARE WIDELY VARYING NOTIONS OF WHAT FINANCIAL WELLNESS ACCOMPLISHES.
who affix it to practices that are little more than glorified enrollment meetings, to the simple inclusion of an “outcomes” analysis to the retirement plan report, to a full-blown series of workplace seminars on topics ranging from budgeting to estate planning.
The reality is that the financial wellness “pitch” can mean a lot of things to a lot of people. And even if we have a sense of what achieving financial wellness means, the assorted paths to achieve it vary widely in terms of applications and/or timing. Which brings to mind the question: if you can’t consistently define the term, how reliable can the stats on take-up be?
NOBODY KNOWS WHAT ‘FINANCIAL WELLNESS’ ACTUALLY DOES
Once again, it’s not that you can’t find a definition – it’s that there doesn’t appear to be one that is consistently applied across all the offerings that are out there. And if you can’t even (consistently) define it, then identifying – much less quantifying – its results will be challenging, to say the least. But the larger problem might well be that, left to our own individual definitions of what financial wellness is, it should come as no surprise that there are widely varying notions of what financial wellness accomplishes.
It’s not helped by the reality that financial wellness (at least this writer’s definition) tends to be a very personal experience, not easily
quantified (at least not externally). Moreover, the usual ROI criteria of lower turnover/higher retention, reduced absenteeism, higher productivityii — well, in the best of circumstances, those can not only take months, or years to show up — they’re often impacted by a whole host of things, both inside and external to the workplace.
‘NOBODY’ TAKES ADVANTAGE OF FINANCIAL WELLNESS PROGRAMS
Well, 1 in 5 (as the Cerulli report notes) isn’t exactly “nobody,” though it’s surely less than its proponents would like, or that the workforce likely needs.iii And, in fairness, I’ve seen reports that indicate some programs enjoy greater success (nearly twice as much, in fact) — but even
those wind up attracting far less “action” than plan sponsors (or proponents) would expect/hope.
Sadly, the sense that the take-up rates are disappointing often winds up being cited as rationale for not offering the programs in the first place. Let’s face it, if there isn’t access, there surely won’t be adoption – or impact.
The Oxford Dictionary defines “turning point” as: the time when an important change takes place, usually with the result that a situation improves.
In that sense at least, it would seem that financial wellness is, or should indeed be, at a turning point.
Nevin E. Adams, JD is the former Chief Content Officer for the American Retirement Association
Footnotes
[i] The composition of this count by plan size in this survey is not known, though typically only the largest plan sponsors have actually adopted true financial wellness programs. Indeed, the 66th annual Survey of ProfitSharing and 401(k) Plans by the Plan Sponsor Council of America finds that just 24.3% of plans offer a “comprehensive financial wellness program, beyond a standard 401(k) education program,” though roughly half (54.3% of plans with 5,000 participants or more do).
[ii] A 2023 survey by the Employee Benefit Research Institute found that the top factors in measuring financial wellness initiatives’ success were increased employee productivity and improved overall worker satisfaction. The next two most cited factors were improved use of existing employee benefits and improved employee retention.
[iii] The Cerulli report notes that more than 4 in 10 (41%) of those who do use those services say they’re very helpful. Though then again, which service(s) isn’t clear, and as pointed our earlier, there is a lot of variety in these programs.
by James Locke
Lame Duck Retirement Legislation
A few retirement related policies may still get passed this year.
THERE ARE ONLY A FEW MORE MONTHS BEFORE CAPITOL HILL GRINDS TO A HALT AS LAWMAKERS HEAD BACK TO THEIR HOME DISTRICTS IN PREPARATION FOR ELECTION SEASON. This slowdown in legislative activity is particularly notable in presidential election years, and this year is no exception. What does that mean for retirement policy for the balance of 2024?
CONGRESS
As we head towards lame duck session (i.e., any meeting of Congress after election day), there may be an opportunity to advance several retirement bills before the next Congress. Accordingly, the ARA is working with lawmakers to identify the appropriate legislative vehicles to attach bills designed to fix some of SECURE 2.0’s drafting mistakes and allow 403(b) plans to include Collective Investment Trusts (CITs) in their slate of investment options.
SECURE 2.0 Technical Corrections
Late last year, lawmakers on Capitol Hill released a draft technical corrections bill designed to fix several glaring drafting errors contained in SECURE 2.0. For example, the technical corrections bill would restore a paragraph in the Internal Revenue Code that was erroneously removed by SECURE 2.0. The deletion of this paragraph makes it impossible for retirement savers to make catch-up contributions. Separately, the proposed language also fixes a drafting error that capped Starter-K and Safe Harbor 403(b) contribution limits at $6,000. Rather, Congress intended for them to equal the IRA contribution limit, which was increased to $7,000 in 2024. Fortunately, this draft language strikes the reference to the fixed $6,000 amount and instead directly ties these contribution limits for these plans to the IRA contribution limit.
Collective Investment Trusts (CITs)
In March, the House of Representatives passed H.R. 2799, the Expanding Access to Capital Act of 2023, which was amended to include language allowing 403(b) plan sponsors to offer CITs as investment options in their plans. Since CITs are exempt from SEC registration requirements, they typically have lower fees when compared to other investment options that are subject to SEC oversight (e.g., mutual funds). Moreover, CITs typically have lower administration, marketing, and distribution costs, which often result in cost savings that are passed onto plan sponsors and participants.
DEPARTMENT OF LABOR
In April, the Department of Labor (DOL) published its final Retirement Security Rule – colloquially referred to as the “Fiduciary Rule” – which updates the definition of an investment advice fiduciary under ERISA, closes the loophole for one-time advice, and provides robust protection to retirement savers.
Challenges
As was the case for previous iterations, the Rule has been met with strong opposition from both industry and certain lawmakers. In May, several industry stakeholders filed a lawsuit in the US Court for the Eastern District of Texas asking for the federal court to block the Rule from taking effect. Others in the industry have filed amicus briefs supporting the lawsuit.
Additionally, several lawmakers on Capitol Hill have voiced their opposition to the Rule and have even gone as far as introducing legislation to overturn it. In May, lawmakers in both the House and Senate introduced resolutions of disapproval under the Congressional Review Act to overturn the Rule.
LOOKING FORWARD
Despite strides made in advancing retirement policy, formidable challenges loom on the horizon. The clash between industry interests, regulatory initiatives, and political maneuvering underscores the complexity inherent in shaping the retirement landscape. As lawmakers brace for the imminent transition from legislative flurry to electoral fervor, retirement policy will remain front and center. The coming months will test the resilience of advocacy efforts, the efficacy of regulatory reforms, and the endurance of bipartisan cooperation in safeguarding the financial wellbeing of millions of Americans in their golden years.
James Locke is the American Retirement Association’s Director of Federal Government Affairs.
