PLANADVISER - July/August 2017 - 19

EMPLOYERS SUPPORT HSAs
Many think they should be offered independently of HDHPs
THE MAJORITY (75.3%) of the employers
responding to the Plan Sponsor Council
of America (PSCA) HSA (Health Savings
Account) Snapshot Survey view HSAs
as part of their retirement benefits
strategy.
Nearly 60% of the respondents
believe HSAs should replace flexible
spending accounts (FSAs), and nearly
three-fourths think HSAs should be
open to all employees, not just those
enrolled in a high-deductible health
plan (HDHP).
Based on the employer responses,
about 80% of employees are eligible to
participate in an HSA, when offered
by the employer. The average HSA
balance is $3,161. A little over 40% of
respondents indicated that up to 25%
of their participants use up their entire
HSA balance every year; an additional
35% of plans said that 26% to 50% of
their participants similarly deplete
their entire balance.
More than 80% of the employers
said that they contribute to the HSA,
whereas two-thirds provide a set dollar
amount based on the HDHP coverage
tier. Many plans (40%) front-load contributions
at the start of the year, while
30% contribute each payday.
More than half of the respondents
The Effect of HSA
Ownership on Savings
* Participants with an HSA contribute
more than 10% to their 401(k)
* Participants with HSAs have $119,000
more saved in their 401(k) than those
without HSAs
Source: Fidelity Investments
reported covering the cost of HSA
maintenance fees for active employees.
Only 21% of surveyed employers are
concerned about the fiduciary liability
of sponsoring an HSA-HDHP.
-Rebecca Moore
IRAs
SERVING
THEIR
PURPOSE
People use them
as both a savings and
a rollover vehicle
INDIVIDUAL retirement accounts (IRAs)
are doing what they were created to do,
according to the Investment Company
Institute (ICI), which has released
details about the demographics and
savings behavior of IRA investors.
" With $7.4 trillion in assets invested,
traditional and Roth IRAs are successfully
meeting their dual mission as
contributory savings vehicles and as a
place to transfer or consolidate assets
from employer-sponsored retirement
plans, " observes Sarah Holden, senior
director of retirement and investor
research at ICI.
Roth IRA investors tend to be
younger, which ICI attributes to the
fact that only recently have the rules
regarding Roth IRA contribution
limits, conversions and rollovers been
eased. At year-end 2015, 31% of these
investors were under age 40, whereas
only 16% of traditional IRA investors
were in that age bracket. Conversely,
25% of Roth IRA investors were 60 or
older, compared with 40% of traditional
IRA investors.
Eighty-five percent of traditional
IRAs initiated in 2015 were opened with
rollovers, whereas 71% of new Roth
IRAs were opened with contributions.
Those who invest in IRAs are
committed contributors, the ICI says,
noting that more than 70% of those who
made a traditional IRA contribution
in 2014 did so again in 2015. For Roth
IRA investors, that percentage rose to
80%. Roth IRA investors gravitate more
toward equities than do traditional IRA
investors, with 66% of Roth IRA assets
invested in equities. Roth IRAs also had
less allocated to bonds (7%) than did
traditional IRAs (16%). ICI says this is
because Roth IRA owners are younger
than traditional IRA owners.
-Lee Barney
RETIREMENT
SAVINGS
EXPECTATIONS
42%
Expect <$500k
to save
less than
$500k
20%
Expect to
save $1mm
to $2mm
$1.5mm
5%
Expect to
save more
than $5mm
>$5mm
Source: Spectrem Group
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PLANADVISER - July/August 2017

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