Data & Research June 28, 2024

Fidelity Reveals Top 5 Optional Provisions Plan Sponsors Are Most Likely to Adopt

Survey shows plan sponsors are most likely to adopt increased catch-up contribution limits for participants aged 60 through 63.

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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 of 2022 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.”

Among plan sponsors who considered raising the catch-up contribution limit for participants aged 60 through 63, 88% are likely to adopt this provision when it becomes available for plan years starting in 2025, expressing a strong interest in enabling additional savings features.

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Meanwhile, 88% of plan sponsors who have considered self-certification of hardships and unforeseeable emergency distributions as well as withdrawals for federally declared disasters said they were likely to adopt these provisions.

The full responses via Fidelity were:

Six months or more is how long respondents (60%) said they anticipate taking to adopt the optional provisions they have chosen. Four in five respondents thought about utilizing at least one of Fidelity’s own solutions—auto portability, self-certification, and/or student debt match—to facilitate the adoption of SECURE 2.0, according to the country’s largest recordkeeper.

Ninety percent of those surveyed expressed interest in implementing some optional elements, with the greatest interest in implementing provisions in the large and tax-exempt plan areas. Fidelity anticipates that plan sponsors that manage smaller plans will have the lowest adoption rates of provisions.

Employer contributions as a Roth also scored in the top five among plan sponsors of smaller plans, surpassing eligible distributions for victims of domestic violence. The top two categories were withdrawals for emergency needs.

Auto-portability was selected as the best choice by plan sponsors in the manufacturing and finance sectors, while professional, technical and scientific services plan sponsors were more interested in unenrolled member disclosures and withdrawals for emergency expenses.

Fidelity’s surveyed over 300 plan sponsors representing a range of employer sizes and industries.
Compliance June 27, 2024

SPARK To Host Workshops On SECURE 2.0 Implementation

SPARK Institute and Vangaurd will host the workshops to focus on collaboration between retirement plan recordkeepers and payroll providers on SECURE 2.0 mandates and provisions.

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The Society of Professional Asset Managers and Recordkeepers Institute announced that Vanguard will host on July 16 a workshop  focused on how providers to retirement plans can work together to implement critical provisions introduced in the SECURE 2.0 Act of 2022.

The goal of the workshop is to foster “collaboration between retirement plan recordkeepers and payroll providers,” with special emphasis on the Roth catch-up and super catch-up contributions, according to SPARK.

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The workshop will bring together industry leaders and experts to address the key changes that SECURE 2.0 mandates for retirement plans. Attendees will be able to share insights into the implications of these changes and learn about the necessary steps to ensure seamless integration and compliance.

The workshop will be held at Vanguard’s headquarters in Malvern, Pennsylvania.

The following key topics will be discussed:

  • Roth catch-up contributions: Understanding the new requirements for catch-up contributions and their tax implications for participants.
  • Super catch-up contributions: Exploring the opportunities for participants over 60 to maximize their retirement savings through enhanced catch-up contributions.
  • Integration and compliance: Strategies for effective collaboration between recordkeepers and payroll providers to implement these changes efficiently and accurately.
  • Operational challenges and solutions: Identifying and addressing potential operational hurdles in the wake of SECURE 2.0’s new mandates.

“We are thrilled to partner with Vanguard, a SPARK member, to host this important workshop,” said Tim Rouse, executive director of the SPARK Institute, in a press release. “As the retirement landscape evolves, it is crucial for industry stakeholders to come together and ensure that these significant changes are implemented smoothly. This workshop will provide a platform to include all stakeholders and make the implementation process as efficient as possible.”

The workshop is an opportunity for professionals in the retirement planning and payroll sector to stay ahead of regulatory changes and ensure their systems and processes are up-to-date and compliant, according to SPARK. It comes at a time when recordkeepers are juggling competing priorities from the new law and other efforts to support retirement income, personalization and financial wellness programs on their firms’ platforms.

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