Like other types of defined contribution plans, Taft-Hartley Defined Contribution (DC) participant loans are an optional plan provision that a plan sponsor can choose to offer participants. Plan sponsors should ensure that participant loan provisions in a Taft-Hartley DC retirement plan be thoroughly vetted and in compliance. Milliman’s John Donohue and Jinnie Olson provide more perspective in this article.
Milliman announced today that we have added the Painters and Allied Trades District Council 82 DC Plan as a defined contribution client. The plan covers collectively bargained members in the states of Minnesota, Wisconsin, and North Dakota with approximately 2,300 participants and $155 million in plan assets.
Milliman is providing recordkeeping, consulting, and communication services for the District Council 82 defined contribution plan.
We are thrilled that the Trustees of the Painters and Allied Trades District Council 82 DC Plan chose to hire Milliman. The Trustees decided to merge two different plans together and it was necessary they had a solid solution in place for their members. The Trustees were confident in our reputation for client service and the solution and approach we discussed resonated with them.
Milliman today announced it has added the Iowa Sheet Metal Workers Local Union No. 263 as a defined contribution client. The plan covers collectively bargained members in the state of Iowa, with approximately 450 participants and $20 million in plan assets.
Milliman is providing recordkeeping and communication services for the union’s retirement savings plan. DiMeo Schneider provides investment consulting services and Benefits Management Group, Inc. provides administration for the plan. Both assisted with the search.
Milliman is committed to the Taft-Hartley community, and everything about our business model revolves around strong client service. We believe this has a lot of appeal to plan trustees. Our value proposition is more than a commodity service, and the trustees clearly appreciated our client support team.
Implementing a daily-valued Taft-Hartley defined contribution (DC) plan that participants can self-direct offers advantages to both trustees and participants. Milliman’s John Donohue explains some of the advantage in his Multiemployer Review article “Taking the Taft-Hartley defined contribution plan to the next level.”
Here’s an excerpt:
When participants have been working in their occupations for 20 to 30 years, it is likely they have accumulated sizable account balances. Allowing them to self-direct their accounts during the early to middle years of their careers can have a significant impact in helping them achieve their retirement goals. For those participants who have little interest in choosing their investments or are too busy to pay attention to the benefit, investing their money into a qualified default investment alternative (QDIA), such as a target date fund, allows for an investment strategy that aligns the participant’s retirement date with his or her investment risk (i.e., portfolios shift to a more conservative allocation as the member gets older). A QDIA is a default fund for participants who do not make an election, and as long as certain criteria are met it affords plan trustees fiduciary protection under ERISA §404(c). Moving to self-direction enables additional fiduciary protection for trustees attempting to manage an investment allocation that provides expected returns for the long-term retirement horizon of a 20-year-old participant while mitigating the volatility risk of a 60-year-old participant nearing retirement. These two objectives fall on opposite sides of the investment spectrum and highlight a significant challenge that is extremely difficult to achieve.
As participants approach retirement, an important component of retirement planning is the ability to develop a holistic view of all benefits accrued: defined benefit, defined contribution, Social Security, etc. When a defined contribution plan is not valued daily, the participant is viewing dated information that does not take into account market fluctuations and contributions for the current period. Allowing the plan to be valued daily will enable them to view their account balances or request current information about their accounts. Therefore, the participant will have a better understanding of his or her retirement needs.
In the same regard, bringing increased visibility to the defined contribution plan for apprentices and journeymen allows them to create a strategy for how to invest their accounts. Based on their individual situations, participants can invest their balances more conservatively or more aggressively. There are also professionally managed investment tools and programs that can take into consideration all of the participant’s retirement accounts, such as outside assets, spousal accounts, etc. These tools can assist members with providing investment allocations of their defined contribution plans based on these other benefits.