PLANADVISER - May/June 2020 - 7
data points //
Apples vs. Oranges
For retirement plan participants, financial crises are not all the same
I
ndustry stakeholders have waited
to see what participants in defined
contribution (DC) plans would do
after markets plunged in March due to
COVID-19. Initial recordkeeper reports
suggested these investors had learned
to take a long-term view of their holdings.
However, the Alight Solutions
401(k) Index for March showed participants
were trading at record-high levels.
This is not the only way participants
may react in a market crash, as past
such events have shown. A look at our
PLANSPONSOR Defined Contribution
(DC) surveys from the Great Recession
and shortly after shows, for example,
that plan participation fell-from 73.8%
in 2008 to a low of 69.7% in 2011 before
rebounding to 72.6% in 2012.
" I don't believe past trends can be
implicative of what's occurring now, "
says Stacy Sandler, national leader for
Deloitte's retirement and wealth consulting
practice in San Francisco. It is
too soon to predict what will happen as
a result of COVID-19, she says.
One clear difference between the
current and that previous crisis is that
President Donald Trump declared a federal
emergency, and Congress passed
legislation allowing participants to take
from their plan account a penalty-free
distribution-i.e., a coronavirus-related
distribution (CRD)-and a loan larger
than the IRS-permitted maximum. No
similar provisions were enacted in 2008
through 2011.
At that time, the aggregate number
of participants with outstanding loans
jumped, from 12.8% in 2010 to 16.2% in
2011 and 14.2% in 2012, the DC surveys
found. The percentage of participants
who took hardship withdrawals, however,
declined from 2.7% in 2009 to 2.1%
in 2010, before rising to 3.6% in 2011.
Currently, withdrawals are more in
demand than loans, Sandler says providers
have told her. Some providers
also report more in-service withdrawals
than hardship withdrawals, she
says. -Rebecca Moore
12.8%
12.1%
2008
12.3%
2009
2010
Participants Who Took Hardship Withdrawals
3.6%
2.7%
2.1%
2.0%
2011
2012
DC Plan Participation Rate
73.8%
72.6%
72.3%
71.5%
69.7%
2008
2009
2010
Participants With Outstanding Loans
16.2%
14.2%
2011
2012
2009
2010
Source: 2019 PLANSPONSOR DC Survey: Plan Benchmarking
2011
2012
planadviser.com May-June 2020 | 7
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PLANADVISER - May/June 2020
Table of Contents for the Digital Edition of PLANADVISER - May/June 2020
2020 PLANADVISER DCIO Survey
All That Goes Into a Practice
Compliance When It's Tough
A Case For Both
The Alternative Workplace
Damage Control in a Downturn
An Uptick in Customer Arbitration?
Client Relationship Summary
Evaluating Reg BI Compliance
PLANADVISER - May/June 2020 - Cover1
PLANADVISER - May/June 2020 - Cover2
PLANADVISER - May/June 2020 - 1
PLANADVISER - May/June 2020 - 2
PLANADVISER - May/June 2020 - 3
PLANADVISER - May/June 2020 - 4
PLANADVISER - May/June 2020 - 5
PLANADVISER - May/June 2020 - 6
PLANADVISER - May/June 2020 - 7
PLANADVISER - May/June 2020 - 8
PLANADVISER - May/June 2020 - 9
PLANADVISER - May/June 2020 - 10
PLANADVISER - May/June 2020 - 11
PLANADVISER - May/June 2020 - 2020 PLANADVISER DCIO Survey
PLANADVISER - May/June 2020 - 13
PLANADVISER - May/June 2020 - 14
PLANADVISER - May/June 2020 - 15
PLANADVISER - May/June 2020 - 16
PLANADVISER - May/June 2020 - 17
PLANADVISER - May/June 2020 - 18
PLANADVISER - May/June 2020 - 19
PLANADVISER - May/June 2020 - All That Goes Into a Practice
PLANADVISER - May/June 2020 - 21
PLANADVISER - May/June 2020 - 22
PLANADVISER - May/June 2020 - 23
PLANADVISER - May/June 2020 - Compliance When It's Tough
PLANADVISER - May/June 2020 - 25
PLANADVISER - May/June 2020 - 26
PLANADVISER - May/June 2020 - 27
PLANADVISER - May/June 2020 - A Case For Both
PLANADVISER - May/June 2020 - 29
PLANADVISER - May/June 2020 - The Alternative Workplace
PLANADVISER - May/June 2020 - 31
PLANADVISER - May/June 2020 - 32
PLANADVISER - May/June 2020 - 33
PLANADVISER - May/June 2020 - Damage Control in a Downturn
PLANADVISER - May/June 2020 - 35
PLANADVISER - May/June 2020 - 36
PLANADVISER - May/June 2020 - An Uptick in Customer Arbitration?
PLANADVISER - May/June 2020 - Client Relationship Summary
PLANADVISER - May/June 2020 - Evaluating Reg BI Compliance
PLANADVISER - May/June 2020 - 40
PLANADVISER - May/June 2020 - Cover3
PLANADVISER - May/June 2020 - Cover4
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