Tag Archives: defined contribution

Milliman Adds Morningstar Advisor Managed Accounts to Retirement Administration Services

Milliman announced that it has added Morningstar advisor managed accounts to its retirement plan administration services. Advisor managed accounts allows a plan’s registered investment adviser (RIA) to create personalized investment portfolios for participants through Morningstar Investment Management LLC’s technology platform. Milliman has integrated the platform into its recordkeeping system using single-sign-on for a seamless participant experience and will brand it for the respective RIA firm.

We are pleased to be one of the first recordkeepers to add this new service offering. With advisor managed accounts, plan sponsors and participants gain access to personalized investment advice, while RIAs gain a broader platform to deliver individual service directly to participants. Our goal is to help participants achieve healthier financial outcomes, and this service adds another layer of support to help them do just that.

CAPTRUST Financial Advisors is one of the first RIAs to use the new platform, and is partnering with Milliman to introduce the new service to their joint clients. CAPTRUST has branded their version of advisor managed accounts as “Blueprint Managed Advice”.

“We’re excited to offer our managed account program, Blueprint Managed Advice, to our Milliman clients. Delivering personalized, one-on-one advice to participants is a core part of what we do at CAPTRUST and we look forward to working with Milliman to improve the retirement readiness and financial wellbeing of our shared participants,” said Jennifer Doss, Director and Defined Contribution Practice Leader, CAPTRUST.

“The beauty of advisor managed accounts is it was designed to allow RIAs to offer a managed accounts service across different recordkeepers with consistency and without the technology build out,” added Brock Johnson, President, Global Retirement & Workplace Solutions, Morningstar Investment Management LLC. “The addition of Milliman to our recordkeeping network is significant as it allows advisors to scale their retirement books of business across more plans— and in turn help more participants save for the retirement they want.”

Critical Point explores retirement plan implications of CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act has many provisions that will affect both defined benefit plans and defined contribution plans. In this episode of Critical Point, Milliman’s Charles Clark and Ginny Boggs talk about the CARES Act and its implications for retirement plans.

To hear past episodes of Critical Point, click here.

The No. 1 question 401(k) participants are asking during the COVID-19 market swings—and how to respond

Should I make a change? That’s the No. 1 question 401(k) plan participants are asking Milliman Retirement Educators during the COVID-19 market downturn.

Other frequent questions we are hearing in participant one-on-one virtual consultations during the COVID-19 pandemic include:

  • Should I move my account to the stable value fund until this COVID-19 pandemic is over?
  • I’m 60―will I ever be able to recover from this market fall?
  • I was going to retire at the end of this year. Now what should I do?

So how do Milliman Retirement Educators—and how can you as a plan sponsor—respond to these questions without giving advice?

Very carefully. Sometimes answering a question with a question prompts participants to come to their own conclusions. The question to any of these questions is, “Have your retirement goals changed?” The answer is typically, “No.” We find that most people have the same time horizon and the same savings goal. So what do you do?

How to respond

Here are three tips to use when responding to participants’ questions. Have them think through these factors and answer these questions:

  1. Review your time horizon. At what age do you plan to retire? When do you plan to start taking money from this plan? What should someone who is about to retire do? If you retire this year, or within the next five years, it doesn’t mean you’re going to take out all of your money at that time. For most, this money will be spent over the next 20 to 30 years in retirement. If you have 10 or more years until retirement, time is on your side. Over 10 years is considered long-term when it comes to investing. For many, staying put, staying calm, and not rushing to move money to cash can help recoup the loss when the market rebounds. Milliman produced a short video, Responding to Market Volatility, that may help restore confidence in the market.
  2. Review your asset allocation. Based on your time horizon and risk tolerance, are you invested appropriately? If invested in a target date fund based on your anticipated retirement date, then you can take comfort in knowing the professionals are managing your money and making adjustments as needed as you near retirement. If you are a “do-it-yourselfer,” and are concerned that you are not in the right asset mix, then take a risk tolerance quiz or use an asset allocation tool on your 401(k) participant website. Make adjustments based on your results, not on emotion.
  3. Think positive in a negative market. During a market decline, remember that if you continue to save and invest, you are buying investment shares at lower prices, which will put you in position for the greatest gains when the market rebounds. Milliman has a podcast, What To Do When. . . The Market Declines, that may help you navigate today’s complex financial decisions. Generally speaking, those who continue investing during market corrections are more likely to achieve long-term success.

Therefore, the basic answer to the question, “Should I make a change in my retirement account?” is, “Have your retirement goals changed?” If not, then experience tells us that you’ll be better off if you hold steady and wait for the market to rebound, or even consider saving more to take advantage of low investment share prices. For employees nearing retirement and seeking investment advice, several resources are available to help research and select a Certified Financial PlannerTM, including http://www.cfp.net/ and http://www.finra.org/.

Deciding what to do with your retirement account is an important financial decision. Milliman cannot offer financial, investment, or tax advice. You may want to consult with a personal financial advisor or tax advisor before making your decision.

CARES Act summary

The following is a summary of the retirement plan provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Defined contribution (DC) plan provisions

Distribution and loan relief to “qualified individuals” means either:

  • Participants (or their spouses or dependents) who have been diagnosed with a coronavirus disease (SARS-CoV-2 or COVID-19)
  • Participants who have experienced adverse financial consequences due to the virus resulting from:
    • Being quarantined, furloughed, or laid off
    • Having their work hours reduced
    • Being unable to work due to lack of childcare
    • Closing or reducing hours of a business they owned or operated

Required minimum distributions (RMDs) for 2020 are waived for profit sharing, money purchase, 401(k), 403(b), and governmental 457(b) plans. This applies to all RMDs due during 2020, including 2019 initial RMDs due by April 1, 2020.

  • 2020 eligible rollover treatment. If any portion of a distribution made during 2020 would have been treated as a RMD absent this temporary waiver, it is eligible for rollover. However, the 20% federal income tax withholding can be ignored and the distribution is exempt from the Internal Revenue Code (IRC) Section 402(f) notice requirements (rollover rights explanation).

Single-employer defined benefit (DB) plan provisions

All single-employer funding obligations due during calendar year 2020 can be delayed until January 1, 2021. Accrued interest must be added to the delayed payment(s). There is no distinction as to which plan year the DB plan contributions are due.

A plan sponsor may elect to use the single-employer DB plan’s funded status for the 2019 plan year to determine whether benefit restrictions must be administered. Benefit restrictions prevent the plan sponsor from paying “accelerated forms of distribution” such as lump sums.

The CARES Act is silent on RMDs for defined benefit pension plans.

Plan compliance/federal forms and notice distributions

Plan amendments deadline for adopting any of the relief provided under the CARES Act would be no earlier than the last day of the first plan year beginning on or after January 1, 2022 (January 1, 2024, for governmental plans).

The U.S. Department of Labor (DOL) will have additional authority to postpone certain deadlines that apply to ERISA-covered plans for a public emergency declared by the U.S. Department of Health and Human Services (HHS), which would include the current public emergency for COVID-19. We believe this will apply to ERISA compliance deadlines, such as Form 5500, annual funding notice, quarterly (or other periodic) participant statements, and others. This is not an exhaustive list. We note that it is unclear whether the postponement authority for DOL extends to Treasury or the Internal Revenue Service (IRS) for compliance deadlines under IRS authority.

Milliman adds IBEW Local 405 as a retirement services client

Milliman has announced it has added the IBEW Local 405 Deferred Savings Plan as a defined contribution client. The plan includes 900 participants and $184 million in assets.

“We chose Milliman based on recommendations from other unions as well as our consultants,“ says Bill Hanes, Business Manager and Trustee. “Milliman’s reputation among labor unions and our peers in the industry is very good.”

Milliman will provide recordkeeping, communications, and ERISA consulting services for the plan.

We are excited to work with the IBEW Local 405. The trustees valued our independence and transparency, but it was also important that our viewpoints aligned regarding how to best serve the needs of their members. Our philosophies were consistent.

For information on Milliman’s employee benefit services, click here.

Retirement plan changes could make sponsors feel less SECURE

Retirement plan sponsors and their third-party administrator (TPA) business partners need to understand the implications of two SECURE Act provisions involving complex changes to human resources (HR) administration systems and savings plan calculation engines. One is a mandatory change concerning long-time part-time employees who may qualify to participate in an employer’s retirement plan if they meet the requisite hours worked for three consecutive years. The second is a voluntary change related to qualified birth or adoption distributions.

In this article, Milliman consultants Charles Clark and Deborah Lachner explain some of the complexities resulting from these provisions and highlight actions plan sponsors can take to avoid being caught off guard.