PLANADVISER - March/April 2021 - 27

plan design in the two years leading up to Fidelity Investments'
2020 Plan Sponsor Attitudes Study. Small to midsize
plans in particular have been turning to advisers for help,
recognizing the growing complexity of the options available-and
need for expert guidance on best practices-
while minding the specific needs of their company and
budgetary constraints.
" Advisers can help plan sponsors look at their participant
data and see how participants use the plan, and whether
they're fully engaged and have healthy deferral
levels, "
Shamburger says. " That will help the sponsor diagnose
whether there are things it needs to be solving for. "
If clients hesitate to make changes to plan design, their
adviser should talk to them to pinpoint the source of the
reluctance, Shamburger says. Typically, the issue is workloads,
cost or competing business objectives, he says. " If
that's the case, then those things are addressable. "
One way to help, he says, is by setting up a schedule and
calendar-basically, a simplified project plan-for the client.
This makes a new process more manageable, establishing
what needs to be done and who can do it, he says. " People
are generally change-averse, so formalizing a written timeline
can help them feel more in control. It can also help the
adviser uncover any unvoiced concerns or hesitancy with
moving forward. " For financial issues, he suggests further
cost-benefits analysis and projecting costs into the future. " A
savvy adviser can add some real value by offering solutions. "
Given the turbulence of the past year, retirement plan
committees have been more active, holding 20% more meetings
in 2020 than in 2019, Callan's Defined Contribution
Survey shows. Consequently, advisers have had more opportunities
to engage with their committees-which may have
been less motivated to make changes in the past or may have
kicked the can down the road on solidifying a decision.
Here is a look at several factors that advisers should
discuss with their committees to determine whether
refreshing their plan's design and documents-as well as
committing to make the adjustments-makes sense.
Regulatory Changes
Many regulatory changes have come along in recent years
that influence plan design, so it is important for plan sponsors
to understand not only whether their plan remains
compliant, but also whether they may now have access to
plan features they previously did not. The Setting Every
Community Up for Retirement Enhancement (SECURE)
Act, which passed in 2019, for example, eased the way for
employers to offer in-plan annuities.
" As the law changes, it's important for employers to look
at what they're offering and make sure it gives them the
best benefit, " says Kristin Bulat, senior vice president, strategic
resources, at NFP in New York City. " A well-designed,
well-thought-out plan provides benefits to both employers
and the employees. When you can have a win-win situation
like that, you want to make sure it's the best plan for both. "
The SECURE Act also required that most sponsors
permit part-time employees to participate in the company
retirement plan once they have worked at least 500 hours
for three consecutive years. This mandate may require an
update for sponsors that previously had more restrictive
plan eligibility requirements.
Additional pertinent legislation may be coming soon,
too, as a bill dubbed " SECURE Act 2.0 " keeps gaining support.
One provision lets participants receive match money on
student loan payments and save it in their retirement
account; another could change rules for required minimum
distributions (RMDs), says Jerry Patterson, senior vice president
of retirement and income solutions at Principal Financial
Group in Des Moines, Iowa.
For plan sponsors still not
sold on adjusting their plan,
their adviser can create
models to show the potential
impact if they did ...
Shifting Business Priorities
One reason that companies have a 401(k) plan, besides to help
employees save for retirement, is that it can help them meet
their own business objectives. As those objectives change,
the sponsor might need to adjust the plan accordingly; here,
advisers can offer guidance, Shamburger says.
For example, an employer focused primarily on worker
retention might look at a longer-term vesting schedule, to
incentivize employees to stay longer than they would otherwise,
or it might offer a larger match, says Jolene Workman,
vice president of customer care at Principal, also in the Des
Moines office. Those who hire many new graduates might
decide on a student loan repayment program.
Smaller businesses that want to maximize the amount
they contribute on behalf of higher-paid employees might
consider a safe harbor plan, which eliminates compliance
testing, Shamburger says.
" A company might look at key employees and think
about 'How do we make sure we retain these individuals?' "
Bulat says. " Maybe it's launching a new product line or some
initiative, and it recognizes these people will be crucial.
Then it looks for a plan that aligns with a five- or seven-year
goal to try to keep them. "
Business priorities for some employers might be more
employee focused. Plan sponsors concerned that personal
financial issues are affecting employee productivity might
consider a holistic financial wellness programs or plan
designs that incorporate participant education. Discussing
such benefits may also help illustrate the value of plan design
changes to uncertain employers, Shamburger says.
" Most changes are aimed at improving the performance of
the plan or the participants over time, " he says. " Advisers can
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PLANADVISER - March/April 2021

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