PLANADVISER - Spring 2023 - 28

Roundtable
and reflective of their lives and aspirations.
They're just as likely to cite one or more healthy-agingrelated
reasons as financial reasons. Many want to stay
active, involved, keep their brain alert, enjoy what they do
and the sense of purpose that comes with working, and this
strikes me as a whole new frontier for plan advisers and
plan sponsors. Because, in our research and anecdotally,
talking to as many people as I can about this, many plan
sponsors are just not yet thinking in these terms and about
how they could potentially tailor their benefits offerings to
complement this desire for a flexible retirement.
PA: Let's talk about the people who don't have enough
saved, or who are afraid they'll draw down what they do
have saved, then have nothing left.
Catherine, you've written about the saver's tax credit,
which is one of several resources the industry may
really want to tap into, particularly as we now have state
" The saver's tax credit was
what I'd call a nothing
burger because it never
really applied. "
KIM COCHRAN
mandates in some cases or incentives for businesses to
offer retirement plans. Do you think there will be more of
these tax credits and potentially more ability to use them?
Collinson: I love this question because we have, societally,
so many opportunities to save for retirement on a taxadvantaged
basis. And we'll start with the saver's credit.
Transamerica Center for Retirement has been focused on
raising awareness of the saver's credit pretty much since it
was enacted in 2001 as part of EGTRRA [Economic Growth
and Tax Relief Reconciliation Act] and then made permanent
in 2006 as part of the Pension Protection Act.
What we found is that awareness really helps, and the
landscape has changed over the years. Once upon a time,
[through 2018,] the IRS had the 1040EZ form, and people
eligible for the saver's credit were more likely to use that
form, which didn't include the saver's credit. Since then,
the IRS has addressed that through instructions-and now
its Free File program.
The saver's credit is a tax credit for eligible savers who
save for retirement in a qualified retirement plan or individual
retirement account. The income eligibility limits are
designed to be equitable so to help people who have less
income available to save, to give them a little boost.
We've learned a lot both through our research and the
broader economic research that's gone on with the saver's
credit.
There was one major issue that prevented it from really
addressing its audience, and that was that it's not refundable.
You had to have a tax liability to be able to claim it.
And, especially as income levels have changed over the years
and tax laws have changed, there are many more tax filers
now who don't have a tax liability because of their income
bracket. They fall in at the lower end of the spectrum; therefore,
they're not fully benefiting. We have to wait till 2027
when the saver's match begins, which will be available to
everyone who contributes to a retirement plan or IRA and
meets the income eligibility requirements-regardless of
whether they have a tax liability or not. So this is something
that's really exciting to talk about for advisers,
for plan sponsors; there's much goodwill to be
generated from it. And still fewer than half of
workers are aware that it exists.
Another benefit people need to hear about
is the catch-up contribution. Those have been
around for over 20 years. As people grow
older and become eligible for things, there'll
always be a new audience and something to
talk about and to help people take advantage
of these opportunities they might otherwise
not be aware of.
PA: Yes, and to your point about the saver's
credit, there's a way for the industry to generate goodwill
with it, to talk about it. But also, as we talk about really
addressing the retirement gap and expanding the pool of
people who are able to save, there's money on the table
[that people could know about].
Cochran: Catherine, you hit the nail on the head. The saver's
tax credit was what I'd call a nothing burger because it
never really applied. You never really had a scenario where
employees said, " Hey, I can afford to save $1,000, and I'm
gonna get the credit because there are no other credits
invalidating it. " So, now we're moving forward. We need to
really put it in place when it's available.
PA: There's a movement now toward holistic retirement
planning. How should advisers work with plan sponsors on
financial wellness solutions, and when should they move
into product areas such as managed accounts, annuities for
guaranteed income or just general wealth management?
Cochran: There are great tools out there. There have always
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