Saturday, June 17, 2017

What Plan Sponsors Want to Know About Financial Wellness

Several years back the concept of “wellness” crept into benefits planning. More recently, HR’s affinity for that wellness concept has been expanded upon by the concept of financial wellness. But as appealing as the notion is, a number of key questions linger.

With regard to wellness generally, the notion was simple: Rather than just treating the symptoms of poor health with insurance-funded trips to the doctor (or the hospital) after the damage was done, we’d get ahead of things by emphasizing healthy habit steps (smoking cessation, weight loss, etc.) programs that would reduce doctor bills (and insurance premiums).

As regards financial wellness, the notion is that bad financial health contributes to (and/or causes) a bevy of woes: stress, which can lead to things like lower productivity, bad health and higher absenteeism, and even a greater inclination toward workplace theft, not to mention deferred retirements by workers who tend to be higher salaried and who have higher health care costs.

But if the rationale is straightforward enough, and the interest somewhere between intrigued and highly committed, plan sponsors still have some questions that merit addressing.

What do you mean by ‘financial wellness’?

“Financial wellness” is a term widely bandied about these days, and by many different firms (and advisors). Unfortunately, it is a concept that is being applied somewhat inconsistently. I’ve heard stories of folks who affix it to practices that are little more than glorified enrollment meetings, to the simple inclusion of an “outcomes” analysis to the retirement plan report, to a full-blown series of workplace seminars on topics ranging from budgeting to estate planning.

So, the first question that needs to be answered is “What do you mean by financial wellness?”

What difference will it make?

The answer to the first question will, of course, have a great deal of bearing on this one. Naturally, the more modest the scope and scale, the less impact, but a lot depends on what issues the program attempts to address, not to mention the demographics (and overall financial well-being) of the workforce to which it is being applied.

Still, even if a comprehensive impact assessment can’t be completed without the collaboration of the plan sponsor, it’s important to be able to at least quantify an estimate of the potential impact(s), whether it be increased participation, improved deferral rates, or even just higher satisfaction with the program(s).

How long will it take/last?

Common sense suggests that financial wellness is a process, not an event, and one that, run well, may well run for some time following its introduction. Nonetheless, plan sponsors will, if not at the outset, at some point during the program, have some interest in knowing just how long until they can expect to see results.

How much will it cost?

Obviously, there will be a relationship between the nature and scope of the program and its cost. Anecdotally, there seems to be a fair amount of skepticism among plan sponsors – particularly on the HR side – of the cost-effectiveness of these programs. It is therefore worthy remembering that there is an “I” in ROI, and that plan sponsors will be interested in knowing what it is (or might be).

Who pays for it?

Once again, while the answer may well depend on the program envisioned, to the extent this represents new expenditures, how it will be paid for may well impact the scope and/or timing. Plan sponsors may be able to consider covering it out of general funds, but, depending on the nature of the program components, it might also be appropriate to consider tapping into health plan budgets, communications, or even retirement plan assets.

How will you measure success (or lack thereof)?

The good news is that ROI is increasingly the lead selling point in presenting these programs, and the “return” will almost certainly include some quantification, some combination of measurable deliverables. Of course, some of the deliverables of a financial wellness program are less quantifiable, but even in those situations, worker surveys can provide insights.

The bottom line is that a shared understanding and appreciation of the desired outcomes will go a long way toward achieving not only financial wellness – but customer relation wellness as well.

- Nevin E. Adams, JD

Saturday, May 06, 2017

5 Things People Get Wrong About ERISA Fidelity Bonds

One of the most important – and, in my experience, least understood – aspects of plan administration is the requirement that those who handle plan funds and other property be covered by a fidelity bond.

While ERISA requires the bond to protect the plan from losses resulting from acts of fraud or dishonesty, fiduciaries often confuse that coverage with insurance that is designed to protect them from liability.

Here are five things you (or your client) may not know about ERISA fidelity bonding – and that, as a result, they may be getting wrong.

An ERISA fidelity bond is not the same thing as fiduciary liability insurance.

The fidelity bond required under ERISA specifically insures a plan against losses due to fraud or dishonesty (e.g., theft) by persons who handle plan funds or property. Fiduciary liability insurance, on the other hand, insures fiduciaries, and in some cases the plan, against losses caused by breaches of fiduciary responsibilities.

Although many plan fiduciaries may be covered by fiduciary liability insurance, it is not required and does not satisfy the fidelity bonding required by ERISA.

You can’t get an ERISA bond from just anybody.

Bonds must be obtained from a surety or reinsurer that is named on the Department of the Treasury’s Listing of Approved Sureties, Department Circular 570. Under certain conditions, bonds may also be obtained from underwriters at Lloyds of London. Neither the plan nor any interested party may have any control or significant financial interest, either directly or indirectly, in the surety or reinsurer, or in an agent or broker, through which the bond is obtained.

Not every fiduciary needs to be bonded.

Most fiduciaries have roles and responsibilities that involve handling plan funds or other property, and generally will need to be covered by a fidelity bond (unless they satisfy one of the exemptions in ERISA or the DOL’s regulations. However, technically an ERISA fidelity bond would not be required for a fiduciary who does not handle funds or other property of an employee benefit plan.

The plan can pay for the bond out of plan assets.

The purpose of ERISA’s bonding requirements is to protect the plan, and those bonds do not protect the person handling plan funds or other property or relieve them from their obligations to the plan, so the plan’s purchase of the bond is allowed.

You can purchase a fidelity bond for more than the legally required amount.

However, note that whether a plan should spend plan assets to purchase a bond in an amount greater than that required by ERISA is a fiduciary decision.

You can find out more about this topic here.

- Nevin E. Adams, JD

Saturday, April 29, 2017

5 Things You May Not Know About Roth 401(k)s

I made the switch to Roth for my retirement savings years ago – and I have long counseled younger workers, who were likely paying the lowest tax rates of their working lives, to do so as well.

Pre-tax treatment has, of course, been the norm in 401(k) plans since their introduction in the early 1980s. On the other hand, the Roth 401(k) wasn’t introduced until the Economic Growth and Tax Relief Reconciliation Act of 2001, and even in that legislation wasn’t slated to become effective until 2006 (and at that time was still slated to sunset in 2010).

Despite that late start, according to a variety of industry surveys (Plan Sponsor Council of America, Vanguard, PLANSPONSOR), roughly 60% of 401(k) plans now offer a Roth 401(k) option, and PSCA data shows that 28.6% of 403(b) plans already allow for Roth contributions. Participant take-up, which just a few years ago hovered in the single digits, is now in the 15-20% range.

Here are five other things you may not know about the Roth 401(k):

To allow designated Roth contributions, a plan also has to offer traditional pre-tax 401(k) contributions. 

A plan can only offer designated Roth contributions if it also offers traditional, pre-tax elective contributions. Oh, and they can be offered by either a 401(k), 403(b) or 457 plan.

You can auto-enroll designated Roth contributions. 

The plan must state how the automatic contributions will be allocated between the pre-tax elective contributions and designated Roth contributions.

You can “catch up” on a Roth basis. 

Individuals can make age-50 catch-up contributions as a designated Roth contribution to a designated Roth account.

You have to include Roth contributions in the 401(k) plan annual nondiscrimination testing. 

Designated Roth contributions are treated the same as traditional, pre-tax elective contributions when performing annual nondiscrimination testing. Moreover, just like other elective deferral, they must be included when calculating the top-heavy ratio each year. You cannot allocate forfeitures, matching or any other employer contributions to any designated Roth accounts.

You can take loans from designated Roth accounts. 

As long as the plan permits, you can identify from which account(s) in your 401(k), 403(b) or governmental 457(b) plan you wish to draw your loan, including from a designated Roth account.

Retirement plan education has long had as a basic tenet that individuals will be paying lower tax rates in their retirement future. Of course, tax rates – and future income levels – are hard to predict. Both can rise more than anticipated in the future – and a Roth option can provide some essential flexibility to diversify tax treatment, as well as investments.

- Nevin E. Adams, JD

For more information, see Retirement Plans FAQs on Designated Roth Accounts from the IRS.

Saturday, April 22, 2017

Here We Go Again ...

What were you doing in 1986?

It was a big year in my life. I got married, hit one of those birthdays with a zero in it, watched my-then hometown Chicago Bears dominate Super Bowl XX, and picked up and moved my new bride (and our menagerie) several hundred miles south to take on a new job heading up a recordkeeping operation.

Before the end of that year, that recordkeeping operation (and, thanks to a recent bank acquisition, the seven different platforms it was running on) would be struggling to understand, implement and communicate a wide array of sweeping changes associated with the Tax Reform Act of 1986. Even though it came during a period when tax code changes (ERTA, TEFRA, DEFRA, REA), were being thrown at us about every 18 months, on average, it’s still difficult to absorb the scope and breadth of the work it took to implement the changes that came with TRA 86.

For all the work that had to go into complying with the new regulatory regimen that came with TRA 86, its real impact would come in the years that followed, via the newly established 402(g) limit (back then we simply called it the $7,000 limit), not to mention the multiple iterations of the nondiscrimination testing that often produced problematic refunds for the highly compensated group. There’s little question that those changes (and others) did what they were designed to do – generate additional tax revenue in the here-and-now by limiting the deferral of taxes.

Yes, the talk is all about tax reform, but the motivation is generally tax cuts, and with a $20 trillion debt, Uncle Sam will need to find some way to offset the projected loss in revenue – and that’s where the tax incentives to establish, fund and contribute to a workplace retirement plan inevitably find themselves in the budgetary crosshairs.

While those paying attention to such things realize that most of those tax preferences are temporary – that is, taxes will be paid on those employer, pre-tax contributions and the earnings thereon when they are withdrawn – the government bean counters look at revenues and expenditures within a 10-year window, and since the payment of most retirement benefits occurs outside that window, the amount of taxes postponed looks, from a budgetary standpoint, to be taxes permanently foregone. And, on that basis, even though the retirement preferences are completely different from other tax deductions, from a budgetary scoring standpoint, it’s a big, juicy target.

We saw what that might mean as recently as 2014 when then-Chairman of the House Ways and Means Committee Rep. Dave Camp (R-Mich.) put forth a proposal that would pay for tax reform (or at least some of it) by freezing the COLA limits that apply to defined contribution plans for a decade and limiting the annual ceilings on elective deferrals so that only half could be made on pre-tax basis (weirdly, this would have applied only to employers with more than 100 workers). The first part of the proposal was deemed to raise $63.4 billion in revenue over 10 years, the latter an additional $144 billion, by basically forcing workers who would otherwise have taken advantage of pre-tax savings to pay taxes on those contributions upfront. And let’s not forget that those burdens would have fallen particularly harshly on those who decide to offer these plans in the first place and to match employee contributions.

For those of us who remember 1986 – or perhaps the years in between that and EGTRRA – the references to TRA 86 as a model for Tax Reform 2017 are a bit chilling. Because when it comes to winners and losers in tax reform – and make no mistake, tax reform is all about winners and losers – more often than not, retirement comes out on the short end. And every time it does, it feels more than a little bit like having to bail out your brother-in-law with a loan from your 401(k) – again.

For months now we’ve been talking about tax reform, and the potential implications for retirement policy. It was a focus at this year’s NAPA 401(k) Summit, and it will be front-and-center at this year’s NAPA DC Fly-In Forum. The reason is obvious: If you’re going to lower tax rates and be revenue neutral, the money to offset those tax reductions has to come from somewhere. And traditionally, the tax preferences that foster the growth and expansion of retirement plans and retirement savings have been a “go to” source, perhaps never more so than a generation ago with TRA 86.

The road ahead could be rocky, particularly as it comes in the wake of the application of the Labor Department’s fiduciary regulation, whether delayed or not, and perhaps modified. It’s said that being forewarned is being forearmed, and we’ve certainly worked to do that over the last several months.
If you are not already, you’ll want to stay connected on these issues in the weeks ahead.

Get informed. Get involved. Before it’s too late.

- Nevin E. Adams, JD

Saturday, April 01, 2017

View "Points"

By any measure, the just-concluded NAPA 401(k) Summit was an incredible, record-breaking success – with so much good content and networking that it was hard to choose between sessions. For those who weren’t able to be there – or who were unable to be everywhere at once – here are some random thoughts, insights and perspectives from that event.

Health savings accounts could wind up being a big deal.

One man’s loophole is another man’s incredibly important tax preference.

The most important thing is not what happened, it’s what’s going to happen.

Online gambling didn’t kill Vegas – and robo-advisors won’t kill 401(k) advice.

In tax reform, everything is about trade-offs.

84% of Millennials surveyed want their investments to make the world better.

Retirement plans are about 1/50th of what a plan sponsor does.

Fees are still a major factor in landing a new client.

Most people want to do the right thing, but they don’t know how to do it.

When the market goes down, lawsuits go up.

Claiming Social Security before age 66 permanently reduces a client’s retirement benefit. Almost
75% of Americans claim Social Security before their Full Retirement Age.

After 66, Social Security retirement benefits grow by 8% per year.

All PEPs are MEPs but not all MEPs are PEPs.

People want to be financially secure. They know what to do to become financially secure. Yet, they are not financially secure.

What do you have “in your head” that’s not on your website?

In 1835 the normal retirement age was… death.

The DOL’s been very clear that “QDIA protection evaporates” under certain circumstances.

President Trump is like a tech stock – he could fly high, or he could be a train wreck.

For a plan committee, especially when it comes to investment changes, doing nothing is often best.

For prospects, at the end of the day, client references are the ultimate value message.

Repeatability is an important key to building a practice.

Plan sponsor: “Don’t assume what’s obvious to you is obvious to me.”

So, how are you going to top this?

We heard the latter a number of times during the course of the 2017 NAPA 401(k) Summit – which admittedly set a whole new standard for what has become the nation’s retirement plan advisor convention. But we also heard that after the 2016 NAPA 401(k) Summit, and I think we managed to do so. Thanks again to our sponsors, our presenters and facilitators, and most particularly those who supported the event with your attendance and participation – who were all part of a remarkable experience!

If you were there, tell a friend. And whether you were there or not, make plans now to attend the 2018 NAPA 401(k) Summit – and see how we’ll top this year’s!

Sign up for updates at

- Nevin E. Adams, JD

Saturday, March 18, 2017

Preparing for the Storm

If you live (or were travelling to) the upper east coast of the U.S. this week, odds are you spent some time making preparations for what looked to be (and by the time you read this likely is) a big winter storm.

We don’t always get that much time to prepare, of course – and sometimes when we do, those big storms don’t turn out to be very big after all. But you can generally count on lots of frenzied weather forecasters predicting snow-mageddon (even if they do offer some caveats), and at least one shot of the inside of a local grocery showing empty bread and milk aisles. Because, after all, who could go 48 hours without bread and milk?

Life is full of surprises – and though most of those are unaccompanied by a friendly meteorologist to help us anticipate them, one might well wonder why we let them “sneak” up on us without making better preparations.

Perhaps the most obvious is the topic of retirement preparation. Any day now the queen mother of retirement confidence assessments – the Employee Benefit Research Institute’s Retirement Confidence Survey (RCS) – will likely, as it has for more than a quarter-century now, tell us that Americans are, writ large, uncomfortable, uncertain, and unprepared for retirement. Nor is this some external assessment based on an objective evaluation of retirement preparations and needs. Rather, this survey, as are most of the industry survey progeny it has since inspired, is a self-reflection by survey respondents. Respondents including some who do not save, and others who do not save “enough,” and many, probably most, who haven’t even tried to guess at how much “enough” might be. Most will likely be concerned about their prospects for a financially secure retirement – but apparently not concerned enough to do very much about it.

Indeed, if history is a fair guide, I think it’s fair to say that the media coverage will likely rival that of an impending environmental apocalypse. Despite the researchers best efforts to provide some perspective on the findings, you can almost certainly count on an obsession as to how many haven’t yet accumulated $1,000 in savings – albeit without regard to their age, their income, or whether they have the encouragement and incentives of a retirement plan at work. If the report finds a drop in confidence, it will almost certainly be cited as a lack of confidence in a system that isn’t working. If, on the other hand, the report finds a surge in confidence – well, then you can expect reports that talk about how unfounded the confidence is.

As complicated as weather forecasting can be, it pales in comparison to trying to figure out what the financial “weather” for the next 30 years is going to be. Little wonder that those already in retirement tend to be more confident than those with decades of preparation still ahead. Still, what all too often gets lost in our criticisms of the current system is just how well it works.

Perhaps only three-of-four eligible to participate in such programs choose to do so, but on an employer-by-employer basis, participation rates north of 90% are not impossible to find – and that’s before the adoption of mechanisms like automatic enrollment, where those kinds of rates are common. Target-date funds have, in incredibly short order, gained the favor of plan sponsors and participants alike – with as yet incalculable benefits for those retirement investments. Those, and a whole new generation of retirement income alternatives are coming to market – alternatives that, unlike the prior generation, will benefit from the scrutiny of plan fiduciaries trying to make sure that a lifetime of accumulation isn’t decimated in a single moment. These innovations have come to light, and to market, because of the employer-sponsored system. By comparison, what kinds of innovations have been brought to those disciplined enough to set aside money in a retail IRA?

In the real world, a lucky few know how to save and invest properly; somewhat more have access to the counsel and advice of a trusted adviser. But for most of us, the workplace retirement program is our first and only “investment” account. It is the one place where even those with relatively small balances can have access to professional advice, alongside the opportunity to gain the purchasing power of a group.

None of which would be possible without the involvement of their employer, the funding of that company match, and the tax incentives that underpin a structure that gets workers of modest means to do what never seems to come naturally to human beings – to prepare for the storm before it’s upon us.

For those of you in the path of this storm, stay safe – and I look forward to seeing hundreds of you in Las Vegas at the 16th Annual NAPA 401(k) Summit!

- Nevin E. Adams, JD

this post originally appeared here.

Saturday, February 25, 2017

Is the Prudent Man Standard Good Enough?

It’s often said that ERISA’s prudent man rule is the highest duty known to law. But is that enough?

Don’t get me wrong – any law that holds human beings to the standards of an expert in any field is a pretty high standard, and one that can be difficult to meet even with the ablest of expert assistance.

I started thinking about this recently when a friend was asking my advice on what he should do regarding the options in his new 401(k) plan. I did what I often do, outlining the pros and cons of various alternatives, helping him to make what I considered to be a well informed – or at least better informed – decision.

I had stepped through all the options and considerations with his plan, a pretty standard combination of automatic enrollment provisions. But then, after asking questions throughout, when I was finished, he didn’t ask what I thought he should do. Instead, he asked what I had done with my own retirement savings.

The process of stepping through my decisions with my friend wasn’t without its limitations. It wasn’t an apples-to-apples comparison, for one thing; my plan didn’t have the same options available to him, nor were our specific financial and familial situations identical.  But it got me to thinking...

Plan fiduciaries have long been reluctant to superimpose their judgments on the participants whose benefit they are charged with overseeing, and with good cause. The financial decisions attendant to participating in a plan (including the decision to participate in the first place) are fraught with the potential for significant disruption, particularly in view of the panoply of personal circumstances that ought to be considered. And while there are doubtless situations in life for which we must do so – the imposition of our best judgments for loved ones not old enough, or no longer able, to do so – most of us have our hands full just keeping up with our own slate of critical determinations.

While we have made significant strides in implementing “automatic” plan designs that help participants get off to a better start than they might have if left to their own devices, it still seems that most fiduciaries gravitate toward the “first, do no harm” standard generally associated with the medical profession’s Hippocratic Oath.

A higher standard might arguably be the so-called “Golden Rule,” which sets as its marker that you do to others how you would like them to do to you. How might that apply to retirement plan designs?
  • If you, as a participant, wouldn’t think of setting aside only 3% of pay, even as a starting point, why would you let others do so?
  • If you, as a participant, wouldn’t think of contributing to a level that doesn’t give you the full benefit of that company match, why would you let others do so?
  • If you, as a participant, would (and do) willingly accelerate your rate of contribution annually, why do you let others pass up that opportunity?
  • If you take advantage of a qualified default investment alternative to help ensure that your investments are diversified and rebalanced on an ongoing basis, and particularly if you use that as a default option for new hires, why wouldn’t you do the same for current hires?
  • If you think overinvestment in company stock is dangerous, why do you let participants do it?
  • If you think participants need help making retirement planning decisions, why don’t you accommodate it?
I realize the answers to some, and perhaps all, of these questions are complicated. “My boss wants us to” is surely the answer in some cases, while “Because I am worried I/we will get sued” comes up frequently. The answer I hear most from plan sponsors is, “I don’t know enough about their individual situations to make the right decision,” though one might also reasonably reply, “Because I’m not required, even as an ERISA fiduciary, to do so.”

But as I said, my conversation about a friend’s new 401(k) got me to thinking about the prudent man standard, and how it’s generally applied to plan design standards.

After all, can it really be in the best interests of plan participants, if it isn’t good enough for you?

- Nevin E. Adams, JD

End Note
The original prudent man rule dates back to the common law, specifically the 1830 Massachusetts case of Harvard College v. Amory. From that case came the notion that trustees were directed “to observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.” In the absence of specific directions in the trust agreement, the trustee was to invest as he would invest his own property, taking into account the needs of beneficiaries, the need to preserve the estate (or corpus of the trust), and the amount and regularity of income.
ERISA’s prudent man rule goes further, requiring that a fiduciary must perform its duties “with the care, skill, prudence and diligence under the circumstances then prevailing, that a prudent man acting in like capacity and familiar with such matters would use…”

Saturday, February 18, 2017

6 Assumptions That Can Wreck a Retirement

The future is an uncertain thing, and planning for uncertainty inevitably involves making some assumptions.

Here are six that, done improperly, can wreck your retirement.

How Long You’ll Live

The good news we are living longer – but that means that retirements can last longer, and medical costs can run higher. But while we’re living longer, studies indicate that we tend to underestimate how much longer we will live.

The Social Security Administration notes that a man reaching age 65 today can expect to live, on average, until age 84.3, a woman turning age 65 today can expect to live, on average, until age 86.6.

But those are just averages. About one out of every four 65-year-olds today will live past age 90, and 1 out of 10 will live past age 95.

How Long You’ll Work

Perhaps the most important assumption is when you plan to quit working; today most Americans are doing so at 62, though 65 seems to be the most common assumption – and while using 70 (or later) will surely boost your projected outcomes (it both gives you more time to save, and reduces the time that you will be drawing down those savings), it may not be realistic for many individuals.
Indeed, the 2016 Retirement Confidence Survey from the nonpartisan Employee Benefit Research Institute (EBRI) notes that the age at which workers expect to retire has been slowly rising. In 1991, just 11% of workers expected to retire after age 65. Twenty-five years later, in 2016, that number had more than tripled; 37% of workers now report that they expect to retire after age 65, and 6% say they don’t plan to retire at all. At the same time, the percentage of workers who say they expect to retire before age 65 has dropped by half, from 50% in 1991 to 24% in 2016.

However, the RCS has consistently found that a large percentage of retirees leave the workforce earlier than planned – nearly half (46%) in 2016, in fact. Many who retired earlier than planned say they did so because of a hardship, such as a health problem or disability (55%), or changes at their employer such as downsizing or closure.

The bottom line: Even if you plan to work longer, the timing of your “retirement” may not be your choice.

How Fast You’ll Withdraw

For years, financial planners had touted the 4% “rule,” a rule of thumb for how much money can be withdrawn from retirement savings every year (generally adjusted for inflation) without running out of money. There’s no real magic to the 4% rule, of course – it’s just the math that allows for a systematic withdrawal of funds roughly timed to coincide with the expected lifespan of the individual. Portfolio returns can impact this, of course, so much so that that factor, coupled with the increased longevity, has these days led some to call instead for a 3% rule.

But whatever formula you use, it’s important to remember that while a low rate of withdrawals might help preserve your portfolio, it might not produce a very comfortable living.

How Much You’ll Earn on What You Save

Let’s face it – if you could predict future market returns, you probably wouldn’t have to be worrying about retirement. But as we all know – and have seen proven time and again over the past couple of decades, markets frequently defy even the expectations of experts.

There are bad investments that can cost you money, and good investments that can help your account grow faster.

So, what should a non-expert assume? It’s generally best to be conservative – one of the biggest mistakes individuals make is assuming outsized returns on their savings. But make sure that assumption is consistent with how your savings is invested. For example, if you have all your savings invested in a money market fund, it’s highly unlikely (some would say impossible in the current environment) for you to actually get an 8% return.

How Much More Things Will Cost

Twenty or 30 years from now, prices are likely to change, and for many, those prices will increase. Consider that, overall, the average inflation rate for 2016 was 1.3%. In 2015, inflation climbed 0.7% with an average running pace of 0.1%, with gasoline prices plunging that year. It’s not that all prices will always go up – but they often do, and might increase faster than your income.

There’s a calculator that you might find interesting at

How Much Differently You’ll Spend

This has two components. Some costs (notably medical) frequently increase in retirement, particularly with the longevity trends noted above. Others – such as commuting costs, and even the “cost” of saving – decrease.

But think – 10 years ago would a “fit bit” have even been on your radar, much less your arm? New products and services continue to emerge – some will make your retirement budget more manageable – others may well strain it.

With all the uncertainty and variables to consider – there is one key assumption about retirement saving that you can, to some extent, control – and that’s “How Much You’ll Save.” Because what really matters in achieving financial security for retirement is how much you save (including the amount of the employer match, if any), and some help in making solid, reality-based assumptions.

Chances are, your 401(k) plan has some resources that will help you do the calculation. If not, or if you’d like a “second opinion,” try the free Ballpark E$timate at Even better, if you don’t know what you’re doing, get help – and if there’s a professional advisor working with your 401(k) plan, that’s a great place to start.

- Nevin E. Adams, JD

Saturday, February 11, 2017

3 Ways to Get Your Automatic Enrollment Plan Out of its Rut

Inertia is a powerful force in nature, and in human behavior. Even the most proactive and engaged plan designs (and plan designers) can, over time, slide from being in a groove to being in a rut.

Here are three ways to reinvigorate automatic plan designs.

1. Auto-enroll all Eligible Participants

Over the past decade a growing number of plans have embraced automatic enrollment, in the process not only simplifying and streamlining the process, but also expanding the number of individuals who are saving for retirement. These days, new hires, regardless of their age, are routinely defaulted not only into the plan itself, but also into some type of qualified default investment alternative, whether it be a managed account, target-date fund, or balanced fund.

However, those who have been employed for some time are often not accorded that convenience. Instead, perhaps because they are presumed to have previously made a decision not to participate, it is assumed that if they were to have changed their mind, or have changed circumstances, they would take it upon themselves to enroll on their own. Or perhaps in some cases, the very success of automatic enrollment gives pause because adding all those existing workers to the plan (along with matching employer contributions) brings with it financial consequences.

Regardless, and certainly if the plan has had automatic enrollment in place for new hires for a time, the better way, it seems to me, is to offer the same opportunity to all eligible workers.

2. Auto-escalate Employee Contributions

While there is evidence that this is changing, for nearly as long as there have been automatic enrollment plans (and it goes back to the early 1980s at least), the default contribution rate has been 3%. Now, regardless of how that became the default of record, eventually becoming ensconced in the auto-enroll safe harbor of the Pension Protection Act of 2006, there’s one thing on which nearly everyone will agree: a 3% rate of savings is almost certainly not enough.

Having embraced the automatic enrollment design (and, with luck, extended that to all eligible workers), you can make automatic enrollment better by helping participants save more by automatically increasing their rate of savings by 1% or 2% per year. There is some evidence that, with a three- to four-year lag, plans that have adopted automatic enrollment do move on to add auto-escalation as an option. But think of the missed retirement savings and security in the interim.

3. Reenroll at Least Once – and Maybe More

A common practice in moving from one recordkeeper to another has been to “map” similar fund options from the old platform to comparable (if not identical) funds on the new platform. In recent years, this mapping process has been improved by not just copying over existing fund choices (which may not be optimal, and may not have been reviewed or updated in a long time), but by reenrolling everybody in the plan to an age-appropriate asset allocation fund, such as a target-date fund.

Reenrollment has some logistical and communications issues, of course. It is a bit like moving every year, and if not nearly as complicated (or costly) as actually changing recordkeepers, it can be challenging to explain, particularly to participants who themselves have slipped into a rut. And you might well be advised to leave participants who have voluntarily elected to opt out of the reenrollment once (or twice) where they elected to be.

But if as a plan sponsor/fiduciary you have liability for the fund choices participants have made (and, outside of a 404(c) safe harbor, you do), wouldn’t you want to take advantage of the opportunity to help participants invest their retirement savings in a fund that is overseen by professionals, rebalanced on a regular basis and invested with some sensitivity to their retirement timing?

Or, as the foregoing suggest, at least have a process in place that not only reminds them of the advantages – but nudges them toward a better result.

- Nevin E. Adams, JD

See also:

Saturday, February 04, 2017

What Does the Super Bowl Portend for Your Portfolio?

Will your portfolio fly with the Falcons, or might it be pummeled by the Patriots?

That’s what adherents of the so-called Super Bowl Theory would likely conclude. The Super Bowl Theory holds that when a team from the old National Football League wins the Super Bowl, the S&P 500 will rise, and when a team from the old American Football League prevails, stock prices will fall.

It’s a “theory” that has been found to be correct nearly 80% of the time — for 40 of the 50 Super Bowls, in fact.

Granted, for most of 2016 it might have looked as though it would be right again, following the AFC’s (and original AFL) Broncos 24-10 victory over the Carolina Panthers, who represented the NFC.

It was an usual break in the streak that was sustained in 2015 following Super Bowl XLIX, when the New England Patriots (yes, those same Patriots) bested the Seattle Seahawks 28-24 to earn their fourth Super Bowl title. It also “worked” in 2014, when the Seahawks bumped off the Denver Broncos, a legacy AFL team, and in 2013, when a dramatic fourth-quarter comeback rescued a victory by the Baltimore Ravens — who, though representing the AFC, are technically a legacy NFL team via their Cleveland Browns roots. Admittedly, the fact that the markets fared well in 2013 was hardly a true test of the Super Bowl Theory since, as it turned out, both teams in Super Bowl XLVII — the Ravens and the San Francisco 49ers — were NFL legacy teams.

However, consider that in 2012 a team from the old NFL (the New York Giants) took on — and took down — one from the old AFL (the New England Patriots, who once were the AFL’s Boston Patriots). And, in fact, 2012 was a pretty good year for stocks.

Steel ‘Curtains’?

On the other hand, the year before that, the Pittsburgh Steelers (representing the American Football Conference) took on the National Football Conference’s Green Bay Packers — two teams that had some of the oldest, deepest and, yes, most “storied” NFL roots, with the Steelers formed in 1933 (as the Pittsburgh Pirates) and the Packers founded in 1919. So, according to the Super Bowl Theory, 2011 should have been a good year for stocks (because, regardless of who won, an NFL team would prevail). But as you may recall, while the Dow gained ground for the year, the S&P 500 was, well, flat.

There was the string of Super Bowls where the contests were all between legacy NFL teams:
  • 2006, when the Steelers bested the Seattle Seahawks;
  • 2007, when the Indianapolis Colts beat the Chicago Bears 29-17;
  • 2009, when the Pittsburgh Steelers took on the Arizona Cardinals, who had once been the NFL’s St. Louis Cardinals; and
  • 2010, when the New Orleans Saints bested the Indianapolis Colts, who had roots back to the NFL legacy Baltimore Colts.
Sure enough, the markets were higher in each of those years.

As for 2008? Well, that was the year that the NFC’s New York Giants upended the hopes of the AFL-legacy Patriots for a perfect season, but it didn’t do any favors for the stock market. In fact, that was the last time that the Super Bowl Theory didn’t “work” (until this past year).

Patriot Gains

Times were better for Patriots fans in 2005, when they bested the NFC’s Philadelphia Eagles 24-21. According to the Super Bowl Theory, the markets should have been down that year. However, the S&P 500 climbed 2.55%. Of course, Super Bowl Theory proponents would tell you that the 2002 win by those same New England Patriots accurately foretold the continuation of the bear market into a third year (at the time, the first accurate result in five years). But the Patriots’ 2004 Super Bowl win against the Carolina Panthers (the one that nobody except Patriots fans remember because it was overshadowed by Janet Jackson’s infamous “wardrobe malfunction”) failed to anticipate a fall rally that helped push the S&P 500 to a near 9% gain that year, sacking the indicator for another loss.

Bronco ‘Busters’

Consider also that, despite victories by the AFL-legacy Denver Broncos in 1998 and 1999, the S&P 500 continued its winning ways, while victories by the NFL-legacy St. Louis (by way of Los Angeles) Rams and the Baltimore Ravens did nothing to dispel the bear markets of 2000 and 2001, respectively.

In fact, the Super Bowl Theory “worked” 28 times between 1967 and 1997, then went 0-4 between 1998 and 2001, only to get back on track from 2002 on (purists still dispute how to interpret Tampa Bay’s 2003 victory, since the Buccaneers spent their first NFL season in the AFC before moving to the NFC).

Indeed, the Buccaneers’ move to the NFC was part of a swap with the Seattle Seahawks, who did, in fact, enter the NFL as an NFC team in 1976 but shuttled quickly over to the AFC (where they remained through 2001) before returning to the NFC (see below). And, not having entered the league until 1976, regardless of when they began, can the Seahawks truly be considered a “legacy” NFL squad? Bear in mind as well, that in 2006, when the Seahawks made their first Super Bowl appearance — and lost — the S&P 500 gained nearly 16%.

As for Sunday’s contest, the Patriots have been here before (to put it mildly), the Falcons just once — and that back in 1999 (in fact, the entire Falcons roster put together has fewer Super Bowl appearances than Tom Brady alone). The Patriots will be wearing white (11 of the last 12 Super Bowl winners were wearing white jerseys, according to CBS News — guess who the exception was? HINT: Their jerseys were green). The Patriots are a slight (3 point) favorite, but then a year ago, the Panthers headed into the game favored by 6.

All in all, it looks like it will be a good game. And that — whether you are a proponent of the Super Bowl Theory or not — would be one in which regardless of which team wins, we all do (but my portfolio is with the Falcons)!

- Nevin E. Adams, JD

Editor’s Note: Seattle is the only team to have played in both the AFC and NFC Championship Games, having relocated from the AFC to the NFC during league realignment prior to the 2002 season. The Seahawks are the only NFL team to switch conferences twice in the post-merger era. The franchise began play in 1976 in the NFC West division but switched conferences with the Buccaneers after one season and joined the AFC West.

Why You Shouldn’t Hire Your Brother-in-Law as Your Plan’s Advisor

Last week an advisor reached out to me looking for an article on a topic that comes up with remarkable frequency.

Specifically, this advisor was dealing with a situation where a client was considering hiring their brother-in-law as the plan advisor, and wondered if we had ever written an article dealing with that situation. It’s not the first time I have been asked that, though sometimes it’s a cousin, a friend, a friend’s cousin, or a cousin’s friend.

When that situation comes up – and come up it will – this is what I would tell them:

If you’re a plan sponsor, you’re an ERISA fiduciary.

If you have discretion in administering and managing the plan, or if you control the plan’s assets (such as choosing the investment options or choosing the firm that chooses those options), you are a fiduciary to the extent of that discretion or control. Ditto if you are able to hire individuals to control those assets – including your brother-in-law.

Plan decisions you make as an ERISA fiduciary – including hiring those who provide plan services – must meet certain criteria.

As an ERISA fiduciary you have a legal obligation to act solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them. Does hiring your brother-in-law meet that test? Would it look that way to a judge?

As an ERISA fiduciary, you’re expected to be an expert — or to hire help that is.

You may not have been told this when you were given this responsibility, but when you, as an ERISA fiduciary, act for the exclusive purpose of providing benefits, you are legally bound to do so at the level of a hypothetical expert. Lacking that level of expertise, the Labor Department says that “a fiduciary will want to hire someone with that professional knowledge to carry out the investment and other functions.” Like your brother-in-law?

As an ERISA fiduciary, you’re expected to fire help that isn’t expert.

The flip side of hiring an expert is being able to terminate that relationship if they aren’t fulfilling their obligations. Think how awkward Thanksgiving dinner will be if you fire your brother-in-law. Think how awkward it will be standing in front of a judge if you should have – and don’t.

Your liability as an ERISA fiduciary is personal.

There are any number of things that can go wrong in running a workplace retirement plan. That’s why it’s important to hire experts – and to keep an eye on them. But don’t forget that ERISA fiduciaries can be held personally liable to restore any losses to the plan, or to restore any profits made through improper use of the plan’s assets resulting from their actions.

It is, of course, possible that your brother-in-law is an expert in such matters, that he brings real value to your plan and the participants and beneficiaries it serves, and that your decision to engage his services is based solely on your desire to fulfill your fiduciary obligations.

If so, by all means proceed – just take care to make sure – as you should with any such hire – to document the rationale behind that decision.

Your brother-in-law will understand.

- Nevin E. Adams, JD

Saturday, January 28, 2017

Your Money’s Worth

It’s time to put your money where your mouth is.

In just a few weeks, many of you will be at the NAPA 401(k) Summit in Las Vegas. This will be my third Summit since joining the organization, though I have been to, and spoken at, a good number of them over the years.

This year, as in years past, the steering committee, agenda team and NAPA leadership have been hard at work for months, developing the program, fleshing out the agenda, lining up speakers, and this year assigning session “owners” to make sure that you get maximum bang for your buck in terms of information and session quality.

We’ve taken your feedback on topics and format, expanded the peer-to-peer networking, and added a brand new component called “super” sessions. We’ve got some amazing keynote speakers, enhanced our plan sponsor panel, and, for the first time ever, incorporated a new networking opportunity called “Summit After Dark” which will include some incredible entertainment in world-class environs. Sure, you’ve been to the Summit, sure you’ve been to Vegas – you may even have been to Vegas for the 401(k) Summit. But I promise you this one will be different, “better” in terms of focus, depth of information, and interaction, and certainly bigger. While we try to remind folks that it is the only retirement plan advisor conference developed by plan advisors for plan advisors. The proof of that is, quite literally, in the program that has been developed for you.

What’s (Really) Different

Beyond all those important reasons, there are two other major considerations for you in attending this year’s NAPA 401(k) Summit. First is the issue of tax reform. This is something that we have been writing about on NAPA Net for months now, but with the 2016 election having given control of Congress and the White House to a single party, the odds for significant change – change on the order of the Tax Reform Act of 1986 – is significantly higher than we might have otherwise expected. Those consequences could be enormous on workplace retirement savings in the months to come – they certainly have been in the past. You will want – and need – to know what is afoot, and there is no better place for you to do that than the NAPA 401(k) Summit, particularly with the insights you’ll get from our “From the Hill to the Summit” keynote.

The other consideration is related, but it is not something we generally push. While the number of quality advisor events has certainly declined over the years, I know you still have several to choose between. For some, that choice is based on location, for others timing, and for still others cost. For some, of course, it can be all or more than one of the above – all
are valid considerations.

But among all the things that really set the NAPA 401(k) Summit apart – one thing stands out, this year more than most. Quite simply, it is that – and unlike every other advisor conference out there – your NAPA 401(k) Summit registration helps support the activities of NAPA – your advocacy, information and education organization – not the bottom line of some corporate media organization or some private equity firm.

That’s right – in addition to the insights, information, networking that you may get at some other events, your attendance at the NAPA 401(k) Summit is a unique investment in your future – and the future of your profession.

It is, quite simply, a great way – perhaps the best way – to put your money where your mouth is.

I hope to see you in Vegas! Register today (if you haven’t already) at

- Nevin E. Adams, JD

Saturday, January 21, 2017

The ‘Free’ Retirement Money Many Overlook

People often talk about the significance of the “free” money associated with the company match in retirement savings – but there’s another source of “free” money that is often overlooked.

I’m talking about the so-called Saver’s Credit, more precisely the Retirement Savings Contributions Credit. It’s a credit, not a deduction – a dollar-for-dollar reduction of tax liability.

Income Limits

For those who qualify, in addition to the customary benefits of workplace retirement savings, it could mean a $1,000 break on their taxes — twice that if married and file a joint return. In fact, for a moderate income saver, it can offset 50%, 20% or 10% of retirement plan or IRA contributions up to $2,000 ($4,000 if married filing jointly), depending on adjusted gross income.

Speaking of which, the Saver’s Credit can be claimed by:
  • married couples filing jointly with incomes up to $61,500 in 2016;
  • heads of households with incomes up to $46,125 in 2016;
  • married individuals filing separately; and
  • singles with incomes up to $30,750 in 2016.
Additionally, in order to claim the credit, individuals must be 18 years or older, must not be a full-time student, and cannot be claimed as a dependent on another person’s return.

5 Things You May Not Know

Here are five things you may not know about the Saver’s Credit:
  • It applies to a variety of retirement savings. The Saver’s Credit can be taken for contributions to a traditional or Roth IRA (including myRA), a 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18) or governmental 457(b) plan, as well as voluntary after-tax employee contributions to qualified retirement and 403(b) plans.
  • There are two deadlines for contributions. To qualify for the Saver’s Credit, contributions must be made to 401(k)s, 403(b)s, 457s or the federal government’s Thrift Savings Plan by the end of the calendar year. However, taxpayers have until April 18, the due date for filing a 2016 tax return, to set up a new individual retirement arrangement or add money to an existing plan for 2016.
  • Rollover contributions aren’t eligible for the Saver’s Credit. Eligible contributions may be reduced by any recent distributions (for 2015, distributions received after 2012, and before the due date of the 2015 return, including extensions) from a retirement plan or IRA (a list of these distributions is available here.)
  • You have to file Form 1040, Form 1040A, or Form 1040NR to claim the credit. The Saver’s Credit is (still) not available via the 1040-EZ form (though there have been legislative attempts to remedy that situation). However, if you use tax software, such as TaxAct or TurboTax, it should calculate the credit for you if you report your retirement contributions. Look for a completed Form 8880 in the attachments that your tax software provides.
  • You only get the credit if you file for it. Just 24% of American workers with annual household incomes of less than $50,000 are aware of the credit, according to the 15th Annual Transamerica Retirement Survey.
However, it’s not too late to save and get “credit” for doing so – make sure the participants you work with, and plan sponsors you work for – are aware.

- Nevin E. Adams, JD

See also:

Saturday, January 14, 2017

"Things" Remembered

It is something of a tradition this time of year to look back, to reminisce about past events and lessons learned, and sometimes to look ahead. Here are some insights – nearly 80 – from columns past that should help lay the groundwork for a productive and prosperous 2017.

3 Things Retirement Savers Can Learn from Pokémon Go

Here are some things that will help you in Pokémon Go and saving for retirement.

4 Things You Should Know About Social Media

Whether you are fully engaged in social media, just thinking about how to get started, or somewhere in between, here are four things to keep in mind.

4 ‘Sure’ Things About Saving for Retirement That Aren’t

Sometimes life takes unexpected turns, upending even the most “certain” outcomes. These so-called “sure” things sometimes turn out to be anything but that – and those that have relied on those assumptions, these “conventional wisdoms” as “givens” can wind up being disappointed – and ill-prepared for financing retirement.

4 Things That the ‘Common Wisdom’ About Millennials Gets Wrong

To judge by the headlines, if there’s anybody in more trouble when it comes to retirement planning than Boomers, it’s Millennials. But are they really?

4 Things That Make Me Go ‘Huh?’

Ours is a business where surveys and trends often shape not only perceptions, but policy – though sometimes the conclusions drawn, and even the premise itself – make me go “huh?”

4 Things Plan Sponsors Are Scared of – and 3 More They Should Be

Halloween is the time of year when one’s thoughts turn to trick-or-treat, ghosts and goblins, and things that go bump in the night. But what are the things plan sponsors are scared about?

4 Things Plan Fiduciaries Have in Common With the Second Continental Congress

There are things that today’s investment/plan committee share with, and can learn from, the experience of those forefathers who crafted and signed the document declaring our nation’s independence.

Oliver’s ‘Twist’: 5 Takeaways

I’ve long enjoyed John Oliver’s take on the world. He has a gift for bringing humor to subjects that aren’t generally seen as funny, and in the process not only helps make complex topics more approachable, he gives voice to the frustration that millions surely feel at the world around us. That said, when he decides to weigh in with his style of biting commentary on your profession – well, let’s just say that you’re likely to be in for a bumpy ride.

5 Things the DOL Wants You to Know About TDFs – That You May Have Overlooked

Target-date funds continue to expand in usage and popularity – but there are some things the Labor Department wants you to know about TDFs that you may have overlooked.

5 Things That Retirement Calculator Won’t Tell You

Have you seen that commercial about the couple who will do just about anything to avoid doing a retirement needs calculation? Well, here are five things that individuals should know about sitting down and doing that retirement plan – that might overcome those fears.

6 Things People Who Need to Save for Retirement Need to Know About Saving for Retirement

When it comes to retirement, Americans seem to be a pretty insecure bunch. But then maybe it’s because they don’t know all the things they need to know.

6 Things You Should Know About Those Millennial Participants

During my recent vacation, I had the chance to check in with some “real” people about their retirement accounts.

6 Stocking Stuffers for Retirement Participants

In the spirit of the holiday season, here are some “presents” that I hope participants find in their retirement plan “stockings” during the coming year.

The 7 Highly Effective Habits of Highly Effective 401(k) Plans

Every so often someone puts out a list of what are said to be the “best” 401(k) plans, based on varied benefits and plan design structure criteria. But for my money, here’s what the best plans do.

10 Ways the Class of 2020’s Retirement Plans Will Be Different

Each year the good folks at Beloit College produce a “Mindset List” providing a look at the cultural touchstones that shape the lives of students about to enter college. So, in what ways will their retirement plans differ from those of their parents?

- Nevin E. Adams, JD

Saturday, January 07, 2017

Lamenters of the 401(k) Revolution

The 2017 media-bashing of the 401(k) is off to an early start.

The most recent is a Wall Street Journal article (subscription required) whose headline notes that “The Champions1 of the 401(k) Lament the Revolution They Started” (the third-most read article on the WSJ site as I write this).

It’s fair to say, I think, that their regrets aren’t so much about the 401(k) itself, but their sense that the existence of the 401(k) – which transformed the notion of retirement savings in so-called savings and thrift plans by allowing regular workers to defer paying taxes on money they set aside for retirement – led to the demise of the traditional defined benefit plan.

Well, maybe.

Trust me, I “get” the affection for the promise of a DB plan. Who wouldn’t like a plan that is funded (and paid for) by your employer, invested by your employer, and at retirement, produces regular, predictable distributions without you having to do anything except making sure they know where to send the check(s)?

That, of course, assumes that you had one. Even in their heyday, DB plans not only weren’t available to everyone, they weren’t even available to most workers in the private sector. The WSJ article acknowledges that just 38% of all private-sector workers had a traditional pension in 1979 (13% do today). Where were the headlines in 1979 about fewer than 4 in 10 workers being covered by a pension plan?

And that was just being “covered.” While coverage like that in the WSJ article tends to equate coverage with receiving benefits, that’s just not the way it was. To get that full benefit from that DB plan back in their heyday, you’d likely have had to work there at least 10 years, if not 15. And while we seem to think that 40 years ago Americans worked for a single employer their whole career, that wasn’t the case in the private sector, even in the DB’s heyday (and certainly today) didn’t.2

The data show that for the very most part we have long been a nation of relatively short-tenured workers. How short? Well, the median job tenure in the United States — how long workers stay at one job — has hovered around five years for the past three decades. Indeed, according to the nonpartisan Employee Benefit Research Institute (EBRI), in recent years it has ticked up, to about 5.5 years, but that’s because women are staying in their jobs longer; job tenure for men has actually been dropping.

What that means is that even workers who were “covered” by a pension plan in the private sector weren’t working with that employer long enough to get much – or any – of that promised pension benefit.

That doesn’t mean that those who were, and those who continue to be, covered by DB plans shouldn’t be grateful. But it’s time to stop lamenting the demise of DB plans – and it’s well past time to stop blaming the 401(k) as the culprit. Let’s be honest: It was changes in accounting rules, fueled by the occasional market turmoil, and exacerbated by artificially constrained interest rates over a prolonged period, done no good by the stricter (though well-intentioned) funding requirements in the ironically named Pension Protection Act of 2006. Not to mention, though some may dispute this, a workforce that, writ large, never seemed to fully understand or appreciate the value of these programs (perhaps because so many of them left before vesting).

As for those who want to blame the 401(k) for the nation’s retirement readiness – well, as has been said before, that’s a bit like blaming the well for the drought.

There is little question that the reality of the 401(k) struggles to live up to the myth of the defined benefit plan. No doubt that the voluntary design (even with auto-encouragements), sporadic availability among smaller employers, and the inherent complexity of individual savings and investment decisions provide challenges.

Regardless, and despite a plethora of media coverage and academic hand-wringing that suggests they are wasting their time, the American public has, through thick and thin, largely hung in there – when they are given the opportunity to do so.

The good news is that far many more American workers have that opportunity today than ever before. But not everyone.

And that really is lamentable.

- Nevin E. Adams, JD

  1. Who are these champions? The real surprise is the article’s framing of the New School’s Teresa Ghilarducci as a former champion of the 401(k) concept (she claims to have once told unions that people only needed to save 3%, assuming 7% returns. Her position may have changed, but her math doesn’t appear to have – see “Rescuing Retirement from the ‘Rescuers’.”
  2. A 2013 analysis by EBRI reveals that a defined benefit is not always “better,” at least not defined as providing financial resources in retirement. In fact, if historical rates of return are assumed, as well as annuity purchase prices reflecting average bond rates over the last 27 years, the median comparisons show a strong outcome advantage for voluntary enrollment 401(k) plans over both stylized, final average DB plan and cash balance plan designs.