Reflecting on Retirement Plan Predictions for 2024: A Year in Review
I saw something on the internet-of-things recently that said on January 1st, 2025 we're closer to 2050 than 2000 and it made really stop and think. When I started in the retirement industry in 2006, target date funds were in their infancy and had just rolled out the 2045 vintage (by the way, that's what they're called - vintages), and now we have the 2070's vintages coming out for people born in the mid-Aughts (for reference, the Gen Z's: born between 1997 and 2012), and I'm just feeling old with another year concluding.
Here are the predictions for our 5 competing priorities for retirement plan sponsors in 2024 (link) we made at the beginning of the year about things that we felt were going to be a priority for 2024 and evaluate our speculations:
1. Personalization & Data Accessibility
Personalization of benefits messaging is, and will continue to be, a hot commodity in 2024 and on. Partially driven by the different generations in the workplace and how they expect to receive and consume information. Many systems, startups, and programs are coming online to be able to plug into your existing payroll and recordkeeping systems and provide emails, videos, texts, gamification, and all manner of communicating with participants based on their data slices (age, salary, risk comfort, etc.). The biggest hurdle, as always, is fighting with all the other constant barrage of messages to prioritize spending the brain time versus say, making purchases and all of the sales algorithm constantly at work in our emails and social media channels.
2. Industry Landscape: Litigation
Litigation continues to be a necessary industry irritant. 2024 intensified the conversation around forfeiture reallocation suits continuing from 2023. As court cases are still progressing, we do not have finite guidance on these case type, but do have some best practice, including ensuring that the plan document captures intention of forfeiture expenditures. Excessive fee and inappropriate investment selection lawsuits, both evergreen litigation areas, are requiring more that simple hindsight back of the envelope benchmarking to support claims.
3. Plan Investment Options: Managed Accounts & Retirement Income
Retirement Income moved into its toddler stage in 2024. The need for decumulation strategies (advance planning to draw down the assets in the account as individuals move into retirement) are still strongly desired, but while the industry appears to move in the direction of an Income-influenced future, being casually conversational with these solutions with sponsors and participants is still some time in the future.
4. Small Businesses and State IRA Requirements
As we wind down 2024, 12 states have implemented State IRA (including Maryland, Virginia, and Delaware; or other State driven retirement programs), with another ten with enacted legislation and four coming online in 2025. Reports show that State programs are the driving force behind many smaller employers considering, evaluating, and overwhelmingly implementing solutions including 401(k) plans, as well as SIMPLE or SEP IRA solutions that fulfill the state requirements for alternate solutions. When we walk through the cost of maintaining the plan, the benefits available for the employees as well as the business owners and executives, and the potential start up credits, many organizations are intrigued about what customizing a solution for their business could look like.
5. What's Going on in Washington: The 2024 Version
Continued rollout of SECURE 2.0, a presidential election, and now on the cusp of another party change, 2024 was decidedly mostly Washington normal. That said, my most favorite Washington moment in 2024 was a tweet saying "I hate Halloween in DC, what do you mean you're the ghost of Chevron deference" (IYKYK.)
The PS? The Defined Benefit-ization of the IBM retirement plan in late 2023 set off waves of 'What's Coming Next?!?' but we did not see an explosion of cash balances adoptions in 2024, although it was often part of the discussions, we had with Plan Sponsors around trends their peers considering.
If you're looking for a Retirement Plan Advisor to help you start or manage your retirement plan, or understanding how any of these priorities impact your plan currently, please send an email to us today, Christina.Tunison@lpl.com.
This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.
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