Insights: Trends, Research, Analysis, and White Papers

What Is the Real Revenue Cost of Retirement Tax Incentives?

The Joint Committee on Taxation has projected that defined contribution plans will lead to a $1.4 trillion loss in federal tax revenue over the next decade, a figure that is expected to be central in upcoming tax policy discussions. However, industry advocates, including the American Retirement Association, argue that this analysis is misleading. They contend that the cash flow approach used by the JCT overstates the long-term revenue impact of tax benefits like retirement plan tax deferrals. Proponents favor a net present value model, asserting that it better reflects the true costs of these tax expenditures, as retirement plans are designed for long-term savings and tax recoupment occurs over many years. They criticize the JCT's methodology as failing to accurately assess the value of tax benefits over the necessary time frame for retirement savings.

Source: Psca.org, December 2024

What the Crystal Ball Says for 2025 Retirement Industry Trends

As the new year begins, industry experts are sharing predictions for the retirement sector, with a key trend being the rise of in-plan retirement income solutions. The Institutional Retirement Income Council expects a significant wave of innovation and adoption of these solutions by 2025, driven by growing interest from plan sponsors, providers, and participants. Additionally, a report from Mercer highlights that retirees face challenges in managing their savings throughout retirement, particularly in dealing with unexpected financial issues and sustainable spending. The IRIC also identified a few additional trends it believes will have a significant impact on retirement plans and participants in 2025.

Source: Napa-net.org, December 2024

CAPTRUST's 2025 Retirement Plan Industry Predictions

The retirement plan landscape is expected to undergo significant changes due to legislative shifts, economic conditions, and trends in plan design and participant engagement. In 2024, with stabilized economic conditions and the Federal Reserve cutting interest rates, retirement plan sponsors are focused on enhancing participant experiences and outcomes. Existing trends are accelerating while new ones are emerging. As 2025 approaches, employers will need to remain adaptable to navigate changes in investment options, regulatory adjustments, and evolving employee needs. CAPTRUST leaders provide insights and predictions for these upcoming developments.

Source: Captrust.com, December 2024

401k Plans, 2025, and the 401k Plan Sponsor

The article reflects on the changes in the 401k plan business since the author started in 1998, noting how different it is today compared to the past. It emphasizes the importance for plan sponsors to stay ahead of potential changes in 401k plans. This publication provides detailed insights.

Source: Jdsupra.com, December 2024

Half of Women Retirees Say Retirement Is Pricier Than They Expected

A recent survey by Morning Consult for Corebridge Financial reveals that only 20% of retired women feel their retirement matches their expectations, while 25% find it completely different from what they anticipated. The primary surprise for these women is the cost of retirement, with 50% stating it has been more expensive than expected. Despite 51% reporting their financial health as good or very good, 63% wish they had started saving earlier. Corebridge Financial's retirement services president, Terri Fiedler, noted the disconnect between expectations and reality in retirement experiences.

Source: Hrdive.com, December 2024

Crypto Investments and Your 401k: What's Being Done to Protect Your Retirement Savings?

This article by the U.S. Government Accountability Office discusses the introduction of cryptocurrency investments in 401k plans and the associated risks and regulatory concerns. It makes six key points. The article advises that while crypto might offer potential high returns, the volatility and regulatory environment pose significant risks to retirement security. The GAO recommends better data collection and regulatory oversight to protect investors.

Source: Gao.gov, December 2024

2025 Is Right Around the Corner: What's Lurking There for You?

In the past five years, retirement plans have faced numerous legal and regulatory changes, and more are expected in 2025. The upcoming year will bring obligations due to new laws and government guidance that may impact existing options. This summary aims to highlight key issues that plan sponsors should prepare for in 2025.

Source: Ferenczylaw.com, December 2024

34% of Gen Z Canadians Relying on Inheritance to Meet Retirement Goals: Survey

A recent survey by Vanguard Group Inc. reveals differing perspectives on inheritance among Canadians. While 34% of Canadians aged 18 to 34 view an inheritance as crucial for retirement, only 31% of baby boomers expect to leave money for their children. Over half of Gen Z respondents anticipate receiving an inheritance, but 39% don't see asset transfer as important. Additionally, 35% of those 55 and older are worried about needing their assets for health care, extended retirement, or living costs.

Source: Benefitscanada.com, December 2024

Retirement Industry Trends to Look Out for in 2025

A recent report from the Institutional Retirement Income Council suggests that as we approach 2025, there will be a significant increase in the adoption and innovation of retirement income solutions. This trend stems from both employers and participants seeking guaranteed income options in response to rising costs and lower savings. According to a 2024 Invesco report, 54% of participants would prefer to remain in their employer's plan post-retirement if it included a monthly payout feature. However, a separate Allianz Life study reveals that only 44% of Americans currently have a strategy for generating retirement income, even as plan sponsors are beginning to incorporate guaranteed income options. With the decline of traditional pensions, there is an anticipated growth in the demand for these retirement income features.

Source: 401kspecialistmag.com, December 2024

TIAA Survey Sees Growing Demand for Lifetime Income in Retirement Plans

A recent survey by TIAA reveals that while there is a growing interest in lifetime income offerings like annuities among employers, a significant 63% of respondents struggle to understand their value and importance. The survey, titled "Building a Better Retirement 2024," highlights the potential for increased adoption of these products following the SECURE Act, which aimed to simplify retirement savings through annuities. However, the lack of "annuity fluency" among decision-makers may impede their broader implementation in defined contribution plans.

Source: Prnewswire.com, December 2024

The Role of Behavioral Finance in Retirement Plan Participation

Behavioral finance studies how human psychology affects financial decision-making and market movements. It posits that individuals often act irrationally, influenced by biases, cognitive shortcuts, and emotional behaviors, which can hinder their enrollment and success in retirement plans. By understanding these behavioral tendencies, plan sponsors can design retirement plans that better encourage employee participation and contributions, ultimately helping them achieve their savings goals.

Source: Planpilot.com, December 2024

Rothification, AI Advancements Among Expected Retirement Plan Trends for 2025

Looking ahead to 2025, Amber Brestowski from Vanguard discusses anticipated trends in retirement plans that plan sponsors should consider. Key predictions include a focus on tax efficiencies, the rise of Roth contributions -- expected to be included in nearly all plans by 2026 -- and the integration of artificial intelligence in retirement services. Brestowski highlights that AI will enhance the efficiency of call centers by providing service associates with valuable data insights into participants' financial needs, ultimately improving support for retirement savers.

Source: Plansponsor.com, December 2024

Annual Outlook Projects Compliance, Due Diligence, Well-Being Will Be Essential to Plan Success in 2025

In 2025, employers are expected to prioritize basic retirement plan administration and management, as highlighted in Hub International Ltd.'s "2025 Retirement & Private Wealth Outlook." The report emphasizes the importance of compliance and due diligence to mitigate risks of litigation, regulatory issues, and cybercrime, which are crucial for the long-term viability of retirement plans. Additionally, plan sponsors are shifting their focus not only on current employees but also on managing the trend of former employees remaining in the plan after leaving or retiring.

Source: Planadviser.com, December 2024

DC Advisers Interested in Retirement Income Solutions, but Still Hesitant

A recent report by Escalent Inc. highlights the growing trend among retirement plan advisers to recommend retirement income solutions. As of September, 30% of defined contribution plan advisers surveyed indicated they are currently recommending such solutions, a rise from 26% in 2023 and 21% in 2022. This percentage is expected to increase, with 40% planning to suggest these solutions in the future. Among the various options, systematic withdrawals are the most popular, with 40% of advisers endorsing them for providing a regular paycheck in retirement. Other recommended solutions include income-producing bond funds (33%), target-date funds that incorporate guaranteed income (33%), managed accounts with annuities (24%), out-of-plan annuities (22%), and in-plan immediate annuities (20%).

Source: Planadviser.com, December 2024

401k Plans: Industry Data Show Low Participant Use of Crypto Assets Although DOL's Data Limitations Persist

In 2022, U.S. retirement savings in 401k plans exceeded $6.7 trillion, and some investment firms began offering crypto asset options for participants, prompting regulatory and industry discussions. The Government Accountability Office was tasked with reviewing these crypto asset options within 401k plans. This report focuses on four key areas: 1. The availability of crypto asset investment options in 401k plans. 2. The potential impact of these assets on participant savings. 3. How fiduciaries comply with ERISA responsibilities when including crypto assets in plans. 4. The level of federal oversight regarding these investment options.

Source: Gao.gov, December 2024

Debt is Limiting American Retirement Savings

According to the 2024 Annual Retirement Study conducted by Allianz Life Insurance Company, a significant number of Americans are prioritizing debt repayment as they strive to secure their long-term financial goals. Notably, 55% of respondents are actively working to pay off debts, with Generation X leading this effort—64% of Gen Xers are focusing on debt reduction compared to 54% of both millennials and boomers. The article notes further that many Americans acknowledge that their debt is a barrier to retirement savings. Among those who wish they had saved more, 46% cite non-housing debts, such as car loans, credit cards, and student loans, as impediments to saving.

Source: Allianzlife.com, December 2024

Spending Retirement Savings is Keeping Americans Up at Night

According to the Alliance for Lifetime Income's 2024 Protected Retirement Income and Planning Study, nearly 46% of American retirees experience anxiety over spending their savings, and 32% are depleting their funds faster than expected. The study, which surveyed 2,516 individuals aged 45-75, identifies inflation (82%) and healthcare costs (70%) as primary concerns affecting retirees' spending and saving. Many retirees lack a clear strategy for withdrawing savings or generating income in retirement, with only 32% having a specific income plan.

Source: Prnewswire.com, November 2024

Advisor Insights: Navigating Retirement Income

In recent discussions, industry stakeholders have reached a consensus on the critical need to empower retirees with the ability to spend confidently. The focus has now shifted from merely identifying the challenges to actively exploring and implementing effective solutions. To gain insights into this topic, the author engaged with experts Jennifer Doss (National Practice Leader at Captrust), Kathleen Kelly (Managing Partner at Compass Financial Partners, a Marsh & McLennan Agency LLC Company), and Michael Kozemchack (Managing Director, Institutional Investment Consulting). They shared their perspectives on retirement income and the ongoing conversations they are having with plan sponsors to enhance the financial security of retirees.

Source: Blackrock.com, November 2024

Securing Retirement: 2025 Trends in DC Retirement Income Solutions

The executive director of the IRIC outlines expectations for defined contribution plans in 2025, emphasizing their evolution due to demographic changes, technological progress, and regulatory adjustments. With uncertainties surrounding Social Security, longer life expectancies, and the decline of traditional defined benefit plans, generating retirement income from DC plans is increasingly important for policymakers, employers, and participants. Key trends anticipated for 2025 will significantly influence retirement income strategies for millions of Americans.

Source: Plansponsor.com, November 2024

Principal's Houston Says Recordkeepers Must Go Beyond Scale, Innovate to Expand Service

At the PLANADVISER 360 conference in Scottsdale, Arizona, Dan Houston, chairman and CEO of Principal Financial Group, highlighted the significance of scale in the ongoing consolidation of recordkeeping companies. He emphasized that innovation and enhanced participant services will be crucial for sustained growth, as advisers leverage these advancements. Houston anticipates further acquisitions and consolidation among recordkeepers but believes that future success will demand greater customization for advisers and plan sponsors to better address participants' needs.

Source: Planadviser.com, November 2024

How to Establish Better Decumulation Options for Future DC Plans

During a session at PLANADVISER 360 in Scottsdale, Arizona, leaders from TIAA discussed the growing demand for lifetime income solutions in retirement plans and the shifting attitudes of plan sponsors. Tim Pitney, TIAA’s head of lifetime income default sales, emphasized that the retirement industry should prepare for innovation even without immediate regulatory changes. He highlighted that, historically, government support like the Pension Protection Act has driven advancements such as the rise of target-date funds, but many current challenges can be addressed without new regulations.

Source: Planadviser.com, November 2024

2024 Defined Contribution Consultant Study

T. Rowe Price's fourth annual Defined Contribution Consultant Study gathered insights from the defined contribution consultant and advisor community regarding current retirement perspectives. The study, conducted from January 12 to March 4, 2024, involved 35 leading consultant and advisor firms, which together manage over $7.5 trillion in assets. Key findings continued to highlight areas such as target date solutions, retirement income, investment trends, and financial wellness programs. New topics introduced this year included managed accounts, alternative investments, and comparisons of active versus passive management strategies.

Source: Troweprice.com, November 2024

One in Three Guilty of Overspending in Retirement: EBRI

A recent study by the Employee Benefits Research Institute reveals that 31% of retirees in 2024 are spending more than they can afford, a significant increase from 17% in 2020. The survey, conducted in the summer of 2024 and involving around 3,600 retirees aged 62 to 75, indicates a rising trend in unaffordable spending among retirees: 27% reported the same in 2022. Additionally, the study found that half of the respondents saved less than necessary for retirement, while one-third felt they saved the right amount, and 17% believed they saved more than needed.

Source: 401kspecialistmag.com, November 2024

Plan Design, Flexibility Outpace Employer Contributions Among Plan Sponsors' Priorities

A new survey by Willis Towers Watson reveals that plan sponsors are increasingly focused on improving the overall financial well-being of employees beyond just enhancing retirement benefits and 401k matching contributions. The 2024 WTW U.S. DC Survey, which involved 483 U.S.-defined contribution plan sponsors, found that only 12% plan to increase their contributions over the next two years. The median employer contribution currently stands at approximately 7.1% of pay, reflecting a decline from 11.4% in 2000, 9.5% in 2010, and 7.4% in 2020.

Source: Plansponsor.com, November 2024

Difficult Work Pushes More Blacks into Early Retirement

The article explores the factors leading to early retirement among Black workers. It highlights how challenging working conditions, including physically demanding jobs, workplace discrimination, and health disparities, contribute to a higher propensity for early retirement in this demographic. Overall, the article underscores the need to understand the specific challenges faced by Black workers in the retirement landscape.

Source: Bc.edu, November 2024

Americans Lack Plans for Retirement Income

According to the 2024 Annual Retirement Study by Allianz Life Insurance Company, many Americans are unprepared for retirement income planning. Less than half (44%) have a strategy for accessing their retirement savings, with Baby Boomers (67%) more likely to have a plan compared to Gen Xers (30%) and millennials (33%). Kelly LaVigne from Allianz Life emphasized that understanding how to withdraw from retirement assets is crucial for readiness. Additionally, nearly half of respondents (48%) expressed concerns about living too frugally and not fully enjoying their retirement.

Source: Allianzlife.com, October 2024

24 Facts That Illuminate Women's Precarious Retirement Prospects

The article highlights 24 facts that underscore the challenges women face regarding retirement security. It discusses issues such as gender pay gaps, longer life expectancies, and caregiving responsibilities, which contribute to women's precarious financial situations in retirement. Key data points illustrate disparities in savings, income, and pension access. The findings aim to raise awareness about the unique hurdles women encounter and advocate for policy changes to improve their retirement prospects.

Source: Prnewswire.com, October 2024

Plan Sponsors Show Rising Interest for Consultancy Services

Morgan Stanley's 2024 Retirement Plan Survey, which included nearly 200 plan sponsors with 401k plans worth at least $50 million, reveals a trend among employers to collaborate with plan consultants to enhance retirement benefits. Over 80% of respondents are currently working with a plan consultant, and there's an increase in the adoption of 3(38) relationships. Although 3(21) partnerships still dominate (55% vs. 27%), the gap is narrowing, with 48% of plan sponsors showing interest in partnering with a 3(38) investment manager.

Source: 401kspecialistmag.com, October 2024

Half of New Retirement Plan Adopters Opt for Pooled Plans

Transamerica's inaugural survey on pooled retirement plan adopters reveals that 47% of over 400 participating employers utilized a pooled plan to launch their first employee retirement plan. The findings highlight how these shared plans facilitate access to retirement savings, particularly for small to mid-sized organizations and startups that previously avoided offering retirement plans due to cost and administrative concerns.

Source: 401kspecialistmag.com, October 2024

More than 6 in 10 Retire Earlier Than Expected: John Hancock

A recent report from John Hancock Retirement reveals that 62% of U.S. retirees exited the workforce earlier than anticipated, which has led to a shorter savings period and prolonged retirement years. The findings are part of the John Hancock Financial Resilience and Longevity Report, based on a survey of U.S. retirement plan participants and retirees.

Source: 401kspecialistmag.com, October 2024

4 in 10 Taking Early 401k Withdrawals; 2 in 3 Not Paying It Back

Research from FinanceBuzz reveals that 40% of Americans with retirement accounts have made early withdrawals, with over 10% doing so multiple times. Additionally, two-thirds of those who withdrew have not repaid the full amount. The study, based on a survey of 1,000 U.S. adults, aimed to examine the prevalence of early withdrawals, the amounts taken out, and the reasons behind these financial decisions.

Source: 401kspecialistmag.com, October 2024

Three Ways Financial Guidance Adds Value for 401k Plan Participants and Employers

With five generations in the workforce and 75% of employees under 55, retirement plans are evolving. Employers must provide versatile retirement solutions to attract and retain talent, requiring strong plan features, education, and personal support. As the emphasis on effective retirement preparation increases, professional financial guidance is crucial. Tom Conlon of Morgan Stanley highlights how advisors and sponsors can enhance 401k engagement through financial guidance.

Source: 401kspecialistmag.com, October 2024

401k Student Loan Match Perk Hindered by Employer Hesitation

While offerings from administrators like Betterment, Fidelity, and SoFi have already been marketed as services to facilitate matching for student loan payments, plan sponsor uptake appears to be lagging. Companies have been slow to offer an enticing new perk because of compliance and logistical concerns even as the IRS cleared the way for employers to provide the benefit.

Source: Wagnerlawgroup.com, October 2024

American Voices: Public Policy Priorities for Retirement Security

Americans are now expected to self-fund a greater portion of their retirement income compared with prior generations. However, many are not fully equipped to take on this added responsibility. They need help from policymakers to fortify their future retirement. A new report from the Transamerica Center for Retirement Studies elevates America's diverse voices and illuminates their top public policy priorities for retirement security.

Source: Transamericainstitute.org, October 2024

Exploring the Benefits of Streamlining Retirement Plan Providers

In today's fast-paced, digital-first business environment, efficiency is key to maintaining a competitive edge. When it comes to managing retirement plans, consolidating your plan providers can offer more efficiency. Once you understand the roles and responsibilities within a plan, you can explore the benefits of potentially consolidating providers into just one or two organizations that can streamline the operations of your plan.

Source: Conradsiegel.com, September 2024

Guide for Retirement Plans: Transitioning from Balance Forward to Daily Recordkeeping

When managing retirement plans, the choice between daily and balance forward recordkeeping is an important consideration. Both methods have their advantages, but many modern-day plans are shifting towards daily recordkeeping for its distinct benefits. This article looks at the differences between the two, the potential advantages of daily recordkeeping, and what a transition process might look like.

Source: Conradsiegel.com, September 2024

The Rise of Collective Investment Trusts

Collective Investment Trusts, also known as CITs, have continued to make headlines in the retirement plan industry. In the evolving retirement plan landscape, CITs are gaining traction and are becoming increasingly popular among plan sponsors and participants due to their cost structure. This article takes a look at CITs, what they are, their advantages and disadvantages, and what plan sponsors need to know.

Source: Conradsiegel.com, September 2024

Alight Solutions 401k Index: August 2024 Observations

401k investors were active traders in early August when Wall Street had its worst day in nearly two years. Activity slowed significantly afterward with just three above-normal days, according to the Alight Solutions 401k Index. Investors favored fixed-income funds on 20 of 22 days in August. Stable value (43%) and bond (36%) funds saw the most inflows, while company stock (27%), large U.S. equity (25%), and target-date funds (16%) experienced the most outflows.

Source: Alight.com, September 2024

More Than Half of Plan Advisers Expect to Use AI

Artificial intelligence use may move from idea to reality in the next 12 months in plan advisement, with more than half (53%) of advisers planning to implement AI in some fashion, according to BlackRock's "2024 Read on Retirement: Advisor Outlook." If those predictions come true, it will be a significant jump from the 9% of advisers that report currently using AI tools in their practices.

Source: Planadviser.com, September 2024

It's Time to Rethink Retirement, Says T. Rowe Price

The conventional image of retirement -- in which workers stop working entirely at age 65 and exit the workforce for good -- is no longer the reality for most Americans. Yet decisions about employment, benefits, and savings often still assume this traditional path, says T. Rowe Price in their latest white paper. According to the white paper, employers should customize benefits for a "transitioning to retirement" workforce.

Source: Planadviser.com, September 2024

2025's Tax Sunset and DC Plans

This is the first article in this quarter's PLANADVISER In-Depth series. It considers the state of retirement in the U.S. and looks at the potential for policymakers to look at tax-deferred workplace programs to make up revenue.

Source: Planadviser.com, September 2024

ERISA at 50: No Midlife Crisis for ERISA Preemption

While ERISA is best known for regulating employer-sponsored retirement benefits, it also applies to employer-sponsored benefit plans more broadly, including employer-sponsored health plans. Significantly, ERISA effectively preempts state and local regulation of self-funded, employer-provided health benefits. The scope of this has generated some degree of debate. To better understand the value of ERISA preemption to large employers, the Employee Benefit Research Institute and American Benefits Council conducted roundtable discussions with over a dozen benefits executives at large companies. This 8-page report shares key insights from these discussions.

Source: Ebri.org, September 2024

Six Reasons to Consider Retirement Income

People are living longer. And we're also, for the most part, not choosing to put off retirement. More years to enjoy retirement should be a good thing if we can afford them. From financial security to mental fitness, here's how guaranteed income can benefit workers as they enter that next chapter.

Source: Blackrock.com, September 2024

Read on Retirement: Advisor Perspective

Retirement. It's deeply personal. And nobody knows this better than the retirement plan advisors working first-hand with sponsors to understand and address the challenges their savers face. Blackrock surveyed over 300 advisors as part of its annual "Read on Retirement®" research to better understand how they're enhancing outcomes and growing their practice. This is a 12-page report.

Source: Blackrock.com, September 2024

"Retirement Crisis" Debunked - Facts Versus Factoids, Part II

This is the second in a two-part series on Andrew Biggs' intriguing new white paper titled "America's 'Retirement Crisis': The Emperor Has No Clothes" that debunks the various claims that the nation faces a retirement savings crisis. "What the discussion over retirement policy needs is not factoids but facts -- that is, accurate answers to relevant questions that shed light on the underlying issues being examined," Biggs writes. "There is no need to turn upside down a retirement system that by objective measures is among the most successful in the world."

Source: Asppa-net.org, September 2024

Tips for Recordkeepers to Stay Competitive in a Changing Market

A new industry report today by Accenture highlights two routes for DC recordkeepers navigating a future competitive and consolidated environment. The report argues that recordkeepers will need to scale up on operational efficiency or specialize in serving unique market segments, as firms face a rapidly evolving $10.3 trillion DC market coupled with smaller margins, failing administration fees, and outdated digital platforms.

Source: 401kspecialistmag.com, September 2024

Despite Economic Challenges, Nearly Two-Thirds of Employees Feel on Track for Retirement

Amid today's economic challenges, American workers are showing remarkable confidence in their long-term financial and retirement plans, according to the fourth annual Protected Retirement survey from the Nationwide Retirement Institute®. More than six in ten (65%) of workers say they are on the right track when it comes to financial preparedness for retirement; this figure rises to 71% for 22-34-year-olds, a 15-point increase from 2023.

Source: Nationwide.com, September 2024

Still Work to Do on Retirement Plan Digital Experiences, Study Suggests

As more retirement plan participants come to rely on digital channels for their primary means of interaction, digital experiences will be critical in supporting them in reaching their retirement savings goals. However, according to J.D. Power's 2024 "U.S. Retirement Plan Digital Experience Study," most retirement plan digital experiences still have a lot of room for improvement. Just 21% of retirement websites and mobile apps are living up to customer expectations for a valuable digital experience, significantly lagging those of other industries and putting assets under management at risk, the study warns.

Source: Napa-net.org, September 2024

What are the Most Significant ERISA Developments Affecting Retirement Plans?

What are some of the most significant developments affecting retirement plans, and what role has ERISA played in allowing for the continued evolution and innovation of providing benefits? Barbara Marder, President and CEO of the Employee Benefit Research Institute asked this question of panelists during a presentation of the ERISA 50th Research Project at a symposium in Washington, D.C. Here are their responses.

Source: Napa-net.org, September 2024

U.S. Needs "Hybrid" Retirement Plan System: Report

The report by TIAA Institute says the best way to create a sustainable and secure retirement that addresses the challenges of longer lifespans and divergent working patterns is to develop a "hybrid" system consisting of the best elements from DB and DC plans, including diversified sources of income and a form of guaranteed income.

Source: 401kspecialistmag.com, September 2024

Student Loan Match: Repay Student Loans and Save For Retirement

On August 19, 2024, the IRS issued Notice 2024-63 for retirement plan sponsors that provide or may wish to provide, matching contributions based on qualified student loan payments made by their participating employees. The Notice goes far in addressing many administrative issues summarized below to get plan sponsors and recordkeepers started, but more guidance is coming with pending proposed regulations. This is an overview and review of the notice.

Source: Groom.com, September 2024

Passive Products Widen Lead on Active in DC Managed Assets

Passively managed investment products in defined contribution retirement plans have steadily increased their market share at the expense of actively managed products, according to recent research by ISS Market Intelligence. The trend toward passive in-plan investments is similar to the steady market share the strategy has made in overall investment management. The growth is particularly of note in DC plans, which usually lag the broader market.

Source: Planadviser.com, August 2024

Investors Like Annuities in 401ks, for Other People

The financial services industry has been working for years to get annuities into retirement plans and the good news is that people appear to like that idea. The bad news is that they like annuities for the sake of other people, they don't personally want them. That is according to the results of a focus group report by consumer research firm Hearts & Wallets that included comments from 70 people ages 45 to 74 with at least $500,000 in assets to invest.

Source: Investmentnews.com, August 2024

401k Plan Participants Continue to Benefit From Employer Contributions and Falling Fees: Report

The undeniable strength of the 401k system is seen in this report. Analyzing automatic enrollment, employer contributions, and participant loans, the report reveals the care with which employers set up their 401k plans, and how employer contributions and cost-effective investing bolster the success of the system in helping Americans save for retirement.

Source: Ici.org, August 2024

Survey Finds U.S. Employees' Average Retirement Savings Decreases in 2024

The average amount that U.S. adults have saved for retirement dropped slightly from US$89,300 in 2023 to $88,400 in 2024 and more than $10,000 from its five-year peak of $98,800 in 2021, according to a new survey by Northwestern Mutual Life Insurance Co. The survey, which polled more than 4,500 U.S. adults aged 18 or older, found a third (33%) said they don't feel financially secure, up from 27% in 2023.

Source: Benefitscanada.com, August 2024

Is the Retirement Picture for Millennials Looking Better?

Since 2019, the nation has experienced a global pandemic and economic disruption. At the same time, the government provided unprecedented fiscal support, employment remained strong, home values rose substantially, and the stock ended up significantly higher than in 2019. Using the Federal Reserve's 2022 Survey of Consumer Finances, the question addressed in this article is how all these factors affect the retirement preparedness of Millennials.

Source: Bc.edu, August 2024

Media's Role in Creating Retirement, Investing Stress

Misleading depictions of retirement on television can prevent Americans from focusing on and even achieving long-term financial goals. A Capital Group national accounts manager makes the case that simply turning off the TV may help boost financial wellness.

Source: Planadviser.com, August 2024

Why Are Employees Not Participating in Their 401ks?

To better understand the reasons behind low participation, the Principal surveyed people eligible for their workplace retirement plans but currently not contributing. Here are three roadblocks preventing retirement plan participation and ways to boost retirement plan participation among employees.

Source: Principal.com, August 2024

Plan Sponsor Satisfaction Driven by Advisor Services Beyond the 401k: Report

Plan sponsors are happier with the results when partnering with a retirement plan advisor. It's an obvious point, but a new Fidelity survey puts numbers to the feeling. The Boston-based investment behemoth's annual "Plan Sponsor Attitudes Study," now in its 15th year, found that "evolving advisor expertise is meeting sponsors' expanding needs and, in turn, driving positive plan results and record satisfaction amongst plan sponsors."

Source: Napa-net.org, August 2024

Why Do Employers Establish Retirement Savings Plans? Evidence From State "Auto-IRA" Plans

Several states have recently attempted to boost retirement savings by enacting "auto-IRA" plans that require employers not currently offering an employer-sponsored retirement plan (ESRP) to either (1) establish an ESRP or (2) enroll employees in state-facilitated Individual Retirement Accounts. This 63-page paper identifies the effect of these state retirement plan mandates on a firm's decisions to offer ESRPs, treating the gradual rollout of these policies across states and employer size categories as a series of "experiments."

Source: Nber.org, August 2024

The Average 401k Balance by Age

Here are the average and median balances for specific age groups at the end of 2023, according to Vanguard, which gathered data from about 5 million defined contribution plan participants across its recordkeeping business.

Source: Bankrate.com, August 2024

Americans Expect Inheritance to Fund Portion of Retirement

According to Northwestern Mutual's latest 2024 Planning & Progress Study, 50% say an inheritance would be integral to their long-term financial security and retirement planning, with 17% adding that it would be "highly critical." This was especially true for younger generations, as 54% of Gen Zers and 59% of Millennials touched on the significance an inheritance would have on their retirement.

Source: 401kspecialistmag.com, August 2024

Participant Pulse: Tracking the Financial Wellness of Plan Participants

The Participant Pulse is a quarterly report that tracks the confidence of plan participants. The report monitors plan participants' behavior in Bank of America's 401k recordkeeping and HSA clients' employee benefits programs, which comprise more than 4 million total participants. A two-page report.

Source: Bofa.com, August 2024

Americans' Retirement Savings Show Real Progress

Some articles highlight that the median 401k account balance is around $20,000, suggesting that the typical retiree will run out of money. But that figure is misleading. First, it captures the full range of account owners -- including, for instance, someone in their 20s with an entry-level job and a modest account balance -- instead of focusing on older participants with a longer savings history. In reality, 401k savers approaching retirement age are in a far better position.

Source: Ici.org, August 2024

A Mandate to Offer: The Future Path Forward for Expanding Access to Retirement Savings?

What is the best public policy for getting workers to save for retirement? Why is it important that they save? What works best: legal requirements that workers contribute to DB pensions or DC savings plans, or simple freedom of choice in a retirement system based on "everyone for themselves"? A third way -- the "mandate to offer" -- might define the future of retirement finance.

Source: Georgetown.edu, August 2024

2024 Fast Facts on 401k Plans

The American Benefits Council advocates for sponsors of employee benefit plans. In this role, they have assembled this collection of data to demonstrate the strength and vitality of 401k plans and the employer-sponsored retirement system.

Source: Americanbenefitscouncil.org, August 2024

401k Participation Significantly Lowers Risk of Retirement Shortfalls: Morningstar

A new Morningstar Model of U.S. Retirement Outcomes -- a simulation tool that considers individual characteristics, healthcare costs, and projected longevity to assess retirement income sufficiency -- finds that workers without future defined-contribution plan participation are over twice as likely to run short of money in retirement.

Source: 401kspecialistmag.com, August 2024

DC Lens 3rd Quater 2024: DC Market Insights and DC News Update

This 57-page report offers market insights and news updates written exclusively for defined contribution practitioners. Topics include ESG updates, Litigation summaries, Administrative/Legislative updates, Enhancing retirement readiness, Cyber attacks require a sound defense, and High profile cyber breaches have put a renewed focus.

Source: Schroders.com, July 2024

Workers Expect 401k to be Main Source of Retirement Income

401ks continue to dominate U.S. workers' retirement income plans, but adviser assistance may improve their confidence in managing the drawdown, according to new surveys from Charles Schwab and J.P. Morgan Asset Management. Employees anticipate that their 401k will become their main source of retirement income in the future, with Social Security benefits becoming less reliable, according to the "2024 401k Participant Study" recently released by Schwab.

Source: Planadviser.com, July 2024

More 401k Investors "Very Likely" to Reach Retirement Goals, Says Schwab

American workers investing in a 401k are more confident in reaching their retirement goals than they were last year, according to new research. The Charles Schwab survey conducted by Logica by users of plans from around 25 providers reveals that 43% are very likely to achieve their goals, up from 37% in 2023. The boost in sentiment comes as inflation and stock market volatility are less of a concern for respondents.

Source: Investmentnews.com, July 2024

Small Business "Bullishness" Helping to Drive 401k Growth

ADP Inc., Guideline Inc., and Human Interest were among the top recordkeepers in adding defined contribution retirement plans in 2023, with all three pointing toward continued growth in 2024, according to the 2024 PLANSPONSOR Recordkeeper Survey and executive interviews. Recordkeepers overall showed a strong year of DC plan additions in 2023, as compared with the prior year. Tailwinds including employer talent attraction and retention needs, SECURE 2.0 Act of 2022 tax incentives, and state mandates are all driving new plan growth, according to firm executives, with signs they may outdo themselves again by the end of 2024.

Source: Planadviser.com, July 2024

401k Mutual Fund Fees Have Fallen Dramatically Since 2000

401k plan participants have incurred substantially lower fees for holding mutual funds over the past two decades, according to new research released today from the Investment Company Institute. Their research shows that from 2000 to 2023, the average equity mutual fund expense ratio paid by 401k investors dropped by more than half (60%), offering them higher returns and higher balances in retirement. The average bond mutual fund expense ratio has dropped by 63%.

Source: 401kspecialistmag.com, July 2024

401k Investors Benefit as Mutual Fund Fees Cut in Half

The latest research from the Investment Company Institute shows that 401k plan participants have incurred substantially lower fees for holding mutual funds over the past two decades, offering them higher returns and higher balances in retirement. From 2000 to 2023, the average equity mutual fund expense ratio paid by 401k investors dropped by more than half.

Source: Ici.org, July 2024

Lies and Statistics -- What the 401k Data Actually Says: Podcast

Former high-ranking Social Security Administration official and retirement policy gadfly Andrew Biggs joins American Retirement Association CEO Brian Graff for a frank discussion about the data fueling the 401k debate. Biggs, a frequent financial media critic of "retirement crisis" sensationalism, explains the retirement readiness disconnect and why we get it so wrong.

Source: Asppa.org, July 2024

Making 401k Saving Hard to Avoid: Podcast

No matter how easy plan sponsors try to make it for employees to participate in their company-sponsored 401k plan, too many workers still aren't enrolling. Podcast guests on today have some ideas on dealing with this problem, centered on how instead of making it easy to participate, making it even harder to avoid enrolling in the plan in the first place.

Source: 401kspecialistmag.com, July 2024

Design Options: Building Strong Retirement Plans

Retirement plan design is increasingly focused on getting employees enrolled sooner, keeping them in longer, and providing more options for creating income people can rely on in retirement. The design elements plan sponsors are considering include immediate plan enrollment, lowering the eligibility age to contribute, larger arrays of product sets to accommodate decumulation, and providing participants with nonguaranteed and guaranteed investments and options to support, converting their accumulated retirement savings into a paycheck in retirement.

Source: Plansponsor.com, July 2024

Technology Integration "Linchpin" for In-Plan Retirement Income

Getting in-plan retirement income options to take hold will in large part rely on the technology making it possible, according to a recent recordkeeping survey by the Defined Contribution Institutional Investment Association's Retirement Research Center. Middleware providers that offer annuity incorporation and portability across retirement plan recordkeeping platforms will play a key role in uptake, says the DCIIA research group.

Source: Planadviser.com, July 2024

2024 Living in Retirement Report

Findings on the financial challenges and concerns of retired Americans from the Schroders 2024 US Retirement Survey. Study finds inflation taking a toll on retirees. The worst bout of inflation in decades is weighing heavily on the minds of retirees.

Source: Schroders.com, July 2024

2024 US Retirement Readiness Report

Schroders recently surveyed 2,000 US investors nationwide to learn more about the state of retirement readiness and planning, key concerns regarding retirement, and current sentiment among those who are already living in retirement.

Source: Schroders.com, July 2024

Are There "Hidden Costs" in Pension-to-401k Shift?

A recent analysis by the National Conference on Public Employee Retirement Systems links pension reforms to income inequality, claiming that middle-class participants could be paying more as the retirement industry shifts from DB-style plans to DC strategies.

Source: 401kspecialistmag.com, July 2024

Fidelity Reveals Top Five Optional Provisions Plan Sponsors Are Most Likely to Adopt

The increase in catch-up contribution cap for participants aged 60 to 63 and the expanded in-service distribution choices made possible by the SECURE 2.0 Act were among the top-ranked optional provisions that advisers might see plan sponsors wanting to adopt, according to respondents from a June survey by Fidelity Investments titled "SECURE 2.0 Optional Provisions Survey Insight."

Source: Planadviser.com, June 2024

SECURE 2.0 Optional Provisions Survey Insights

Fidelity recently invited over 2,000 clients to participate in an optional provision survey to obtain insight into client intentions. Top-ranked optional provisions reported by respondents include features such as the increased catch-up contribution limit for participants ages 60 to 63, as well as the new in-service distribution options made available under SECURE 2.0. Read this 5-page report to learn more about the emerging trends and considerations for plan sponsors as you evaluate SECURE 2.0 optional provisions.

Source: Fidelityworkplace.com, June 2024

Plaintiff Lawyers Can Now Use AI to Identify Potential Plan Issues

Tech and legal firm Darrow uses AI as a tool for ERISA lawsuit allegations such as underperforming plans and excessive fees. Attorney Levine, who often represents fiduciary defendants, says that the use of AI in this field of law is relatively new, but its use is "very much a data processing tool," and little else. Fiduciaries should generally follow the same principles as before, he says, but since AI models tend to focus on data procured from Form 5500s, sponsors should consider evaluating their Form 5500 reporting to be sure everything is accurate.

Source: Planadviser.com, June 2024

The Growing Trend of Collective Investment Trusts

Many plan fiduciaries express surprise when learning that Collective Investment Trusts have existed longer than their 40 Act Mutual Fund counterparts. Collective trusts are similar to mutual funds given investors in both pool assets with others and own a portion of the fund. Both vehicles are daily valued and provide investors with a Net Asset Value. Additionally, both vehicles are professionally managed, audited annually, and provide investors with periodically produced "fact sheets." However, there are several key differences between mutual funds and CITs.

Source: Fiducientadvisors.com, June 2024

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