Nevin's Data "Points"

   The primary difference between 403(b) plans and 401(k) plans is the type of employer offering the plan, but a couple of new surveys from the Plan Sponsor Council of America (PSCA) highlight some interesting design differences as well. Believe it or not, 403(b) plans have been around longer—since 1958. 401(k)s didn’t arrive until 1978 and really were not effective until 1981 (see  Talking Points: An ‘Unintended’ Consequence ).  Like its 401(k) cousin, it was initially created under part of the Internal Revenue Code (Section 403(b)!)., and—like the 401(k)—it was designed to allow employees of certain tax-exempt organizations, such as public schools, hospitals, and religious institutions, to contribute to retirement savings on a tax-deferred basis.  Over time, many of the things that differentiated the two (notably contribution limits) have been eliminated or at least narrowed. That said, their different histories and distinct employee populations mean that nota...

It is customary when sharing (or reading) the portents of a survey to focus on the actions that respondents say they have, or will undertake. But what about the things they say they will not  do? Human beings gravitate toward “norms,” of course. Plan sponsors, certainly those conscious of the personal liability that accompanies those responsibilities, can hardly be blamed for seeking the behavioral norms of their profession, drawing comfort from the collective movement of the “pack,” particularly with new and/or controversial ideas. Large ‘Charge’ This past weekend I was reviewing Alight Solution’s 2019 Hot Topics in Retirement and Financial Wellbeing report . But, while the positive trendlines on things like financial wellness were interesting, what struck me in reviewing this particular survey were the (relatively) strong percentage weighing in on things they said they were not likely to do, including: evaluate phased retirement alternatives (66% not likely...

RFPs, or requests for proposals, come in all shapes and sizes. Mostly they are long, drawn out affairs, frequently copied from templates drawn up to capture a broad sense of capabilities. The problem is, for most plan sponsors it’s akin to going shopping for a car armed with Chilton’s auto repair manual (that said, if you need one, a quick Google search on “401k RFP” will turn up plenty). So, aside from all the general information that you’ll want to get from every provider during the RFP process – the size of their business, the quality, tenure and turnover of their key staff, their capabilities, service structure, years and investment in “the business,” fees, services offered and references, there are some questions that aren’t in every RFP — but to which the answers can be enlightening. 1. What plan design changes would you recommend, and why? This question has two payoffs. First, in order to recommend changes, they have to know what your current plan looks like. Secondly, it...

Much to my surprise, my son went to prom this weekend. Now, I realize that a lot of kids go to prom—and I also realize that more don’t go than is generally appreciated by those who do. But my son, who at present isn’t in a relationship (and certainly not one serious enough to make prom attendance a “requirement”), has long been of the mindset that prom was just a lot of “bother,” and an expensive bother at that. Having committed himself to this event, however, we of course had to contend with all those things that constitute that “bother”: renting a tux, selecting flowers for his date, etc. Later there emerged items like the expectations around the table at which (and with whom) he and his date would sit and the gathering(s) beforehand—and afterwards. For the very most part, he dealt with each new “decision” calmly, though as time went on, you could see him taking deep breaths as he contemplated just how much more of this “bother” he would have to endure (girls seem to have a lot mo...