- An economic downturn can be an opportunity to fine tune your employee benefit plan.
- This year’s contribution limit increases are some of the most substantial since they were introduced.
- Recognizing DEI differences can help achieve your goals when offering, communicating, and promoting your company’s retirement plan.
- Access additional insights spanning cybersecurity, SAS 136, proposed retirement reform bills, benchmarking investments, fiduciary duties, M&A, CARES Act, Consolidated Appropriations Act, and more in our annual industry summary.
Find out what you need to know as an employee benefit plan fiduciary.
Note: The SECURE Act 2.0 made changes to retirement savings rules beginning January 1, 2023. Read our latest article for more information.
Serving as a fiduciary on an employee benefit plan is an important responsibility. And with often-changing regulatory requirements, it can be challenging to stay on top of them all.
Consider new contribution limits, DEI considerations, and how to take advantage of an economic downturn.
Top four hot benefit plan topics
1. Taking advantage of economic downturn
With the downturn in the market, plan sponsors can use a few tools to fine tune their employee benefit plan. To take advantage of a decrease in account balances, work with your plan’s service provider to determine if there are any terminated account balances that have fallen below your automatic or rollover distribution thresholds. For some plans, this may create an opportunity to fall below the audit requirement of 100 participants.
Additionally, reconsider plan provisions to allow for pre-tax to Roth conversions. Due to the tax implications, we recommend plan sponsors encourage plan participants to seek counsel with their tax professional before conducting a Roth conversion. This may create a favorable opportunity for plan participants in planning for their retirement.
2. New contribution limits
In October 2022, the IRS released the 2023 contribution and income limits for retirement accounts. These limits typically increase annually to reflect cost-of-living adjustments. Given recent record levels of inflation, this year’s increases are some of the most substantial since they were introduced.
3. DEI considerations
Today’s workforce includes a variety of skills, profiles, and backgrounds that represent remarkable value. Taking time to understand and recognize these differences can help achieve your goals when offering, communicating, and promoting your company’s retirement plan.
Diversity, equity, and inclusion (DEI) is a critical part of a financial wellness program. A financial wellness program’s purpose is to assist employees in improving their overall financial situation. Gain an understanding of differences that may exist between diversity groups (e.g., age, race, ethnicity, gender), and view plan data to identify groups that could benefit from additional resources.
- Look at your company’s demographics to spot employees who aren’t saving enough (participation, contributions, asset allocation) and implement a targeted action plan to assist.
- Create a deeper understanding of your employees’ savings experience by expanding the retirement plan committee to mirror your workforce.
- Review your investment menu and consider how a DEI strategy could be reflected throughout your retirement plan’s offerings.
- Talk with your service providers to learn what resources are readily available (e.g., financial wellness programs, plan data, different language options).
- Automatic enrollment, escalation, and re-enrollment can help increase participation, encourage higher deferral rates, and re-engage employees who may have opted out of the plan.
- Automatic reallocations can help keep participants on track to achieve retirement goals.
- Automatic portability/rollovers can discourage employees from distributing funds when changing jobs.
- Adjusting eligibility requirements can open the plan to part-time employees or others.
- Use a variety of retirement education resources — brochures, emails, videos, infographics, articles, online calculators — to provide information to different demographic groups.
Retirement plans often hold millions of dollars or more in assets and maintain personal data on participants, which can make them attractive targets for cybercriminals. Plan governance/fiduciaries have the responsibility to maintain proper controls and practices to keep these assets safe.
The U.S. Department of Labor’s Employee Benefits Security Administration recommends including the following as part of your company’s cybersecurity plan:
- Cybersecurity program and awareness trainings
- Definition of roles and responsibilities regarding encryption of sensitive data, stored and in transit.
- Internal or third-party audits of the plan’s cybersecurity system
- Business resiliency or continuity program, disaster recovery, and incident response
- Third-party service provider contracts relating to the plan’s information security, cybersecurity, or security controls
How we can help
Stay abreast of your requirements as an EBP plan fiduciary. As 2022 comes to a close, we’ve compiled a basic summary of recent legislation, regulations, and trends within the employee benefit plan industry.
Download our new report 2022 Employee Benefit Plan Updates to learn the new regulations and insights you should know as a plan advisor.