Products December 7, 2023

Product & Service Launches – 12/7/23

Vanguard expands ETF lineup with 2 active bond ETFs; Mutual of America Capital Management expands MoA Funds availability; DFPG Investments announces launch of Diversify Advisor Network; and more.

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Vanguard Expands ETF Lineup With 2 Active Bond ETFs

Vanguard launched the Vanguard Core-Plus Bond ETF and announced that the Vanguard Core Bond ETF will launch before the end of the year. These two actively managed bond ETFs are intended to offer clients diversified fixed-income exposure with low equity correlation and the potential to outperform broad bond benchmarks over the long term.

“Vanguard Core Bond ETF and Vanguard Core-Plus Bond ETF offer clients diversified single-fund fixed income portfolios offering exposure to a range of sectors, qualities, and maturities,” Sara Devereux, global head of fixed income for and a principal in the Vanguard Group, said in a statement. “Offering these strategies through the convenience and flexibility of the ETF structure meets clients’ growing preference for ETFs and further expands access to our experienced and talented active fixed income team.”

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The Vanguard Core-Plus Bond ETF offers exposure primarily to U.S. investment-grade securities but will have flexibility to add allocations in other sectors, such as U.S. high-yield corporates and emerging markets debt, according to the announcement.

The Vanguard Core Bond ETF will offer similar exposure to the Core-Plus Bond ETF but will have more modest allocations to riskier sectors, such as U.S. high-yield corporates and emerging markets debt.

Mutual of America Capital Management Expands MoA Funds Availability

Mutual of America Capital Management LLC announced that MoA Funds are now available to the financial adviser channel and investors outside of Mutual of America’s retirement plans.

“The MoA Funds are a hidden gem, and we are excited to introduce them to the broader investing public,” Stephen Rich, Mutual of America Capital Management’s chairman and CEO, said in a statement. “We’ve been serving our retirement plan participants through our MoA Funds for 30 years, building a $21 billion fund family, which, until today, investors outside our plans couldn’t access.”

Funds now available to investors as part of MoA Funds include its target-date series, now known as the MoA Clear Passage Funds, which focuse on diversification and minimizing volatility. They feature strategic investment allocations leading up to a specified retirement date as well as a 10-year glide path beyond that date.

“MoA Funds employ a conservative, long-term approach and have a strong track record of success that has served investors well throughout the years,” Joseph Gaffoglio, Mutual of America Capital Management’s president, said in a statement. “We look forward to expanding our reach into the intermediary channels with quality investment solutions and working with the financial adviser community.”

DFPG Investments Announces Launch of Diversify Advisor Network

DFPG Investments LLC, an independent wealth management firm, announced the launch of Diversify Advisor Network as part of its long-term growth strategy to offer advisers expanded affiliation options.

“This company was built by advisers, and we have an innate understanding of what advisers are seeking,” Ryan Smith, DFPG Investments’ chief commercial officer and the co-founder and CEO of Diversify, said in a statement. “As you’ll see in coming months, we’re creating a multi-chassis affiliation model that is focused on maintaining a selective and boutique culture, while still providing institutional quality resources.”

The Diversify Advisor Network is planned to eventually comprise three affiliation solutions:

  • DFPG Investments — A full-service independent broker/dealer, with expertise in alternative investments, providing broker/dealer-based solutions for advisers of Diversify;
  • Diversify Advisory Services — An independent RIA platform that provides institutional-quality services and resources to independent investment advisers; and
  • Diversify Wealth Management —an affiliation model (to launch later this year) for independent advisers looking to monetize their practice and take a direct equity partnership in Diversify.

IRAR Trust Establishes Partnership With National Association of Realtors

IRAR Trust Co. unveiled its latest retirement savings initiative exclusively designed for National Association of Realtors members.

Serving as the preferred provider for self-directed retirement plans under NAR Realtor Benefits, IRAR extends discounted offerings for self-directed IRAs and solo 401(k) accounts to NAR Members, their families and association staff at the national, state and local levels.

“We are thrilled to announce the collaboration between IRAR Trust and NAR, to introduce a retirement platform for NAR Members,” said Liane Bathey, IRAR’s founder and CEO, in a statement. “This partnership is geared towards empowering members not only in savings but also in cultivating business growth.”

NAR members can also benefit from exclusive discounted fees, with an agreement offering a flat annual fee of $299 for self-directed IRAs and $799 for solo 401(k) accounts. These accounts provide NAR members with significant tax advantages, enabling them to invest in real estate with tax-deferred retirement dollars; reduce taxable income through contributions; and accelerate business growth by assisting IRA investors with transactions.

Compliance December 7, 2023

Congress Publishes SECURE 2.0 Corrections Draft Legislation

The bill would correct errors related to catch-ups, RMDs and Starter Plans.

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Members of the House of Representatives and the Senate Thursday issued a “discussion draft” for the much-anticipated bill applying technical corrections to the SECURE 2.0 Act of 2022.

Restoring Catch-Ups

The bill would make corrections to several mistakes made in the hallmark retirement law. First and foremost, it corrects the most egregious error of SECURE 2.0: accidentally removing catch-up contributions, starting in 2024. The drafters of SECURE 2.0 originally intended to create a higher catch-up limit for those aged 60 to 63, sometimes called super-catch-ups, and in the rush to pass a budget in December 2022, they made this now-infamous error. The corrections bill would make the original intent effective without removing catch-up contributions.

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In light of their original intent, the IRS announced in August it will permit catch-up contributions to be made into 2024, even though SECURE 2.0 technically removes the concept from the code. This means catch-ups would be safe, even if the corrections bill is passed after December 31.

Though not a technical error, strictly speaking, and more an error in judgment, the IRS announced in the same guidance that it would extend to January 1, 2026, from January 1, 2024, the effective date for employees making $145,000 or more to make catch-up contribution on a Roth, or after-tax, basis. The corrections bill does not speak to this issue, presumably because the IRS has already addressed it through guidance.

Matching Starter 401(k) Limits to IRAs

The corrections bill would also explicitly tie the maximum contribution amount for Starter 401(k) plans to the annual maximum for individual retirement accounts. SECURE 2.0 previously set the maximum for Starter plans at $6,000 indexed, which was the IRA limit in 2022, but that provision was not set to take effect until 2024, when the IRA limit is set to become $7,000, effectively making the Starter limit both less than and divorced from the IRA limit. The correction effectively says that the Starter limit will match the IRA limit.

Additionally, the provision in SECURE 2.0 changing required mandatory distributions would also be corrected to reflect the intent of the drafters, which was to increase the age to 73 starting on January 1, 2023, and age 75 starting on January 1, 2033.

Further, the legislation would change the effective date for the 15% ceiling on automatic escalation found in Section 101 of SECURE 2.0. Plans started since SECURE 2.0’s passage must adopt auto-enrollment at 3% to 10%, then escalate by 1% to an end range between 10% and 15%, unless the participant elects otherwise. The corrections bill would move the date for the 15% ceiling on escalation to January 1, 2026, instead of 2025, leaving the ceiling at 10% in the meantime.

Other provisions in SECURE 2.0 received minor clerical corrections, including the Saver’s Match and plan lost and found.

Timing Dependent on Budget—Again

Michael Kreps, a principal in and chair of Groom Law Group’s retirement services group, says, “There was some hope from industry that there would be a more comprehensive ‘fix-it’ package, but there does not appear to be an appetite on Capitol Hill to relitigate substantive issues.”

Substantive issues, such as the decision to permit 403(b) plans to use collective investment trusts, are not part of the bill because their omission was not technical in character. The Retirement Fairness for Charities and Educational Institutions Act would address it, but no action has been taken since it passed the House Committee on Financial Services in May.

Assuming the corrections bill is attached to a budget bill, it will have two opportunities to pass, given the staggered nature of the expirations of the November continuing resolutions that extended federal spending to January 19 and February 2.

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