Mega Employers Uninterested in Alternatives
Only a few mega defined contribution (DC) plan sponsors have included alternative investments in their target-date fund (TDFs) lineup.
Findings from a Callan DC Trends Survey show that just one in five respondents, which include 80 mega employers, offer a TDF series with private market exposure. This mainly includes private real estate, Callan reports.
Only 14% of respondents have evaluated private markets as a glidepath component, with 7% who considered a guaranteed lifetime income option within a TDF structure. When asked what actions they took regarding the target-date fund suite, 79% of plan sponsors said they analyzed the suitability of the glidepath, while 77% looked at the suitability of underlying funds.
Despite hesitancy from plan sponsors, studies show a mounting interest in private market assets. A 2026 survey from Lansons Team Farner found that 48% of respondents expressed an interest in alternative investments, even as employers expressed concerns with fraud, credibility, government approval, and backing from reputable banks and brokerages.
Recent proposed regulation from the Department of Labor (DOL) may also move some employers to consider the funds, although experts continue to question the fiduciary process in analyzing funds and the risks associated.
Employers unhappy with individual services
Callan’s report surveyed plan sponsors on their advisory partner’s services and found that many were dissatisfied with their firm’s one-on-one assistances.
Others reported disappointment with their partner’s managed accounts offerings, even as half offered these services to employees. Fifty-nine percent say their managed account provider actively solicited or campaigned to encourage employee participation in this service.
Most respondents monitored or benchmarked their managed accounts service, with 90% reviewing participant usage and interaction and 80% analyzing fees and services.
When asked about their highest levels of satisfaction with offerings, respondents listed financial planning and guidance as their top benefit, followed by investment advisory services.
Popular SECURE 2.0 Provisions
Catch-up contributions were reported by plan sponsors as the most utilized provision under SECURE 2.0, with 90% of mega employers offering it to employees ages 60 to 63. Under SECURE 2.0, starting in 2026, all catch-up contributions must be made in a Roth account for participants who earn $145,000 or more yearly.
Callan’s report also reported self-certification of hardship withdrawals as a popular provision among mega plan sponsors, with 66% who provide it to employees.
Well over half (60%) of respondents to Callan’s survey opted out of offering in-plan emergency savings accounts to participants, but 34% have allowed for emergency withdrawals to savings accounts.
Finally, while student loan debt continues to be a major hurdle for participants struggling to save for retirement, only 16% of respondents offer a match to employees repaying student debt.
Even less (7%) have enabled automatic portability of safe harbor individual retirement accounts (IRAs) into their current plan.
Additional findings on Callan’s DC survey can be found at this link.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news.