5 Competing Priorities for Retirement Plan Sponsors in 2024
1. Personalization & Data Accessibility
In 2024, personalization and data accessibility will take center stage as retirement plan sponsors strive to meet the evolving needs of their participants. With advancements in technology, sponsors have unprecedented ability to meet their employees needs specifically, easily, and directly with varied education topics, methods of delivery, and individual touches for meeting life events. While the benefits for allowing for more personalized retirement planning experiences can be numerous, and by leveraging data analytics and innovative tools, sponsors can tailor communication and investment options to better meet the diverse needs of their workforce, are there downsides about allowing the participant data to be collected by their service vendor partners? What if the employees didn't consent to their collective data being shared & commoditized? Is there an obligation for the organization's Retirement Committee to consider these questions proactively?
2. Industry Landscape: Litigation
Learning from the retirement plan legal landscape continues to be a top priority for retirement plan sponsors in 2024. While increased scrutiny from regulators and the threat of litigation loom, many small Plan Sponsors can use the cases that are raised by their larger company counterparts to consider and ensure compliance with fiduciary responsibilities and stay abreast of changing regulations. 2023 litigation tended to develop in clusters: Target Date Fund cost and performance; Excessive plan fees; and Forfeiture usage. Proactive measures such as conducting regular plan reviews and engaging specialized Retirement Plan Advisory teams may help guide Retirement Committees in mitigating the risk of costly litigation.
3. Plan Investment Options: Managed Accounts & Retirement Income
As participants approach retirement, the demand for de-cumulation solutions continues to grow. The most commonly mentioned solutions today are Managed Accounts and Retirement Income (Annuitization) solutions. In 2024, engaged Retirement Plan Sponsors will need to learn about investment options that include managed accounts and annuities, that may provide participants with greater flexibility and security in retirement planning. They would also need to be informed about how those options operated at their service vendors, and the potential limitations of bringing these solutions, today, to their employees.
4. Small Businesses and State IRA Requirements
For small businesses, navigating state IRA requirements remains a significant challenge in 2024. With several states implementing mandatory IRA programs for employees without access to employer-sponsored retirement plans, small business sponsors must carefully evaluate their options and ensure compliance with state regulations. The State IRA programs look enticing - very low employer cost, very little employer responsibility. But, is this the best solution for the business? Partnering with a trusted retirement plan provider can help small businesses navigate this complex landscape and offer affordable retirement savings options to their employees.
5. What's Going on in Washington: The 2024 Version
In Washington, knowledgeable retirement plan sponsors will need to stay mindful as policymakers consider new legislation that could impact retirement plans. From continued guidance from Treasury and Labor on the now year-old SECURE 2.0 bill, to the proposed RSAA (Retirement Savings for American Act) that supports moving to a federal retirement plan with employers terminating their personal plans. Another bipartisan possibility being evaluated is RISE Act (Retirement Investment in Small Employers) which scales downward the tax credits and benefits for establishing a plan in SECURE 2.0 to micro-sized businesses. Most importantly, the Federal Government needs to continue to operate. While they recently passed short-term funding, how many more potentially impeding events will occur in 2024, with these limited funding resolutions?
A too early to tell? Is the writing on the wall with IBM bringing back their Defined Benefit style plan? A beacon for other organizations, or an exceptional employer doing what they feel is best? We're watching to see which way their peers indicate their consideration.
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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