Revisiting the 2019 Retirement Plan Trends
A little over a year ago, I made predictions as to the 2019 hot trends for retirement plan sponsors. So, how did I do? Let’s take a look at how the predictions fared:
- An increased focus on non-savers — Verdict: No — I’m a bit annoyed that I struck out with this one, as it likely would have been an area of focus for plan sponsors if initiatives to improve overall financial wellness/independence initiatives hadn’t taken off in 2019. While I still believe that engaging a retirement plan’s unengaged will be an important component of an employer’s overall financial wellness/independence program, I missed the boat here. Student loan debt assistance and emergency savings funds were a much higher priority for plan sponsors in 2019 than those who are not saving for retirement.
- Locating missing participants — Verdict: Yes — This was a repeat issue from our 2018 predictions. I appear to have hit the mark on this one, as plan sponsors have made significant progress in this area through the use of technology and other means.
- The re-emergence of MEPs — Verdict: No — I likely missed this one due to the fact that the legislation that would have encouraged MEPs, known as the SECURE Act, was slated to become law in May, but actually did not become law until December. Thus, given the legislative uncertainty in 2019, plan sponsors were reluctant to join MEPs. Now that the uncertainty is over, we’ll see if my prediction that failed to come to fruition in 2019 was simply one year too early.
- Focus on recordkeeper value vs. cost — Verdict: Mixed — Although I’ve heard the term “value” mentioned more frequently by plan sponsors in 2019 than in previous years, for the most part, this has not translated into the action, and many sponsors are still choosing the cheapest recordkeepers in their vendor searches.
- Re-acquaintance with hardship distributions — Verdict: Yes — As predicted, the hardship distribution regulations were finalized in 2019, which made this issue the number one compliance focus among plan sponsors. Unfortunately, as the result of plan sponsor choices, at least one major recordkeeper has seen an increase in these retirement balance-destroying withdrawals. Hopefully, plan sponsors will address plan leakage going forward as they become more experienced with the new rule rules.
As with most predictions, some ring true and some don’t. While my mixed bag of results was not great, it certainly could have been worse. Interestingly enough, these results matched those from my 2018 predictions as well. Perhaps I should predict my prediction results for next year!
Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. Opinions expressed are those of the author, and do not necessarily represent the opinions of Cammack Retirement Group.
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