401(k) Specialist Issue 1 - 2021 - 4

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timely insight on the issues that matter to 401(k) advisors from the biggest
names in the retirement market. A few recent guests? How about Morningstar's
David Blanchett, Empower Retirement's Ed Murphy, NAPA's Nevin
Adams and noted retirement expert Alicia Munnell. Access all the pod(k)
asts from the 401(k) Specialist website or wherever you listen to podcasts!
401(k) PRACTICE MANAGEMENT
Why Recent CAA Legislation is a MAJOR Opportunity for 401k Advisors
The Consolidated Appropriations Act of 2021, signed into law at the end of December, brings significant
changes with it-for health insurance brokers.
A Feb. 10 article posted on 401(k) Specialist shows how this provides a big opportunity for 401(k)
advisors who can take their knowledge of ERISA and establish processes and the same kind of framework
around the health care space.
" Top tier retirement advisors have perfected running a fiduciary procurement play. This is exactly
what the future of healthcare consulting will require. The aggregators with proper execution have a huge
opportunity to gain market share, " said Hugh O'Toole, CEO of data analytics firm Innovu.
It could be a new business line for retirement plan advisors who take their knowledge of ERISA and
establish processes and the same kind of framework around the health care space.
401(k) FIDUCIARY
How Employers Can Tackle the Student Debt Issue
The pause on federal student loan payments has been extended into September 2021, and this past
December's stimulus package included the extension of a provision for employers to help their employees
pay down student loan debt.
Originally introduced as part of the CARES Act in April, the provision was slated to expire at the end of
2020 and has been extended for five years, until December 31, 2025. It allows employers to contribute
up to $5,250 tax-free to an employee's student loans each year, meaning the money paid is considered
tax-free to both employee and employer. The provision modernizes a longstanding tax exclusion for
tuition reimbursement by now offering the $5,250 as a combined tax-free limit, one that can be applied
for student debt repayment, tuition reimbursement-or both.
Fidelity's benefits team, which adopted the new tax treatment in April 2020, estimates the provision
will save each Fidelity employee participant an average of about $500 in tax relief, totaling more than
$2 million in estimated annual savings cumulatively across approximately 4,500 employees.
401(k) INVESTMENTS
Few 401(k) Plans Currently Offer Alternatives Within TDFs
According to recent research from PGIM, only about one in 10 401(k) plans offer alternative investment
options as part of their target-date funds (TDFs) and just about one-quarter (24%) of plan sponsors have
taken action to incorporate environmental, social and governance (ESG) investing into their plan over the
last three years.
Why aren't plan sponsors choosing to bring in more sophisticated investment options at institutional
pricing? The research found the most common reason for not including alternatives as an investment
option is the need for enhanced participant education (67%). This is followed by operational challenges
(34%), the perceived litigation risk (33%) and cost (27%).
Almost one-quarter (24%) of plan sponsors indicate they have taken action to incorporate ESG
approaches into the plan over the last three years, while more than half (52%) said they have not. An
additional 23% were neutral on the matter. Directionally, there is greater interest in incorporating ESG
approaches among mid-sized plans with $500 million to $999 million in AUM.
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ISSUE 1 2021 | 401kSpecialist.com
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ADVISORY BOARD MEMBERS
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Bill Thomas, ActiveETF Partners, LLC.
Bud Verfaillie, Victory Fiduciary Consulting
Ashley Verfaillie-Rosser, Victory Asset Management
Victory Fiduciary Consulting
Don Trone, Founder and CEO, 3ethos
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401(k) Specialist Issue 1 - 2021

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