A recent HUB International report looks at the top trends expected for 2024, from new provisions offered by SECURE 2.0, to the impact of managed accounts on retirement readiness.
While SECURE 2.0 was signed into law in 2022, the legislation’s more than 90 provisions means that retirement plan advisors, employers, and plan participants can expect to see changes within workplace plans across the next several years. For 2024, new provisions allow employers to make matching contributions to a participant’s retirement plan based on their student loan debt; withdrawals for emergency expenses; the availability of short-term emergency savings accounts; tax credits for small businesses launching workplace retirement plans; and more.
An increase on Roth catch-up contribution limits, originally set to begin in 2024 as outlined in SECURE 2.0, has now been delayed by the Internal Revenue Service (IRS) to 2025.
In its report, HUB identifies how not making the most of SECURE 2.0’s newest provisions could impact the effectiveness of a retirement plan. According to HUB’s 2024 Outlook Executive Survey, 53% of respondents are planning to update their retirement plan or strategy because of regulatory changes.
Embracing financial wellness
As more employees look to their workplace for financial guidance due to high inflation and a challenging market, employers have been increasingly highlighting savings strategies and financial wellness.
However, HUB’s report finds a potential divide between how much employers value different financial wellness benefits versus how much organizations actually emphasize them to participants. For example, while 98% of respondents in HUB’s survey say they are implementing a moderate-to-strong focus on their financial wellbeing programs, only 32% see their retirement plan benefit as a core component and top priority, with 18% calling the benefit a “supplementary offering,” and not a primary benefit.
Managed accounts for retirement readiness
While SECURE 2.0 offers changes to retirement plan features, it’s employers who are going to have to revolutionize the way they manage plans with different investment vehicles, says HUB in its report.
Features like managed accounts, which personalize each investment portfolio to the participant, could help participants reach their retirement plan objectives, adds HUB.
Due to its features, managed accounts have realized more growth than any other investment product in the past two years, according to research from Hearts & Wallets.
The firm argues that implementing such vehicles could not only help workers retire on time but drive engagement among those not saving at all. According to HUB’s survey, 60% of employees ages 55 to 64 participate in a retirement plan.
“Managed account options will spur participation and have also shown to improve retirement readiness,” writes HUB in its report. “As important, managed accounts help mitigate participant squeamishness in the event of market downturns. With a managed account, a plan participant is less likely to make rash decisions about moving money around indiscriminately between investments.”
SEE ALSO:
- Financial Savings Strategies Among Leading Resolutions for 2024
- 6 SECURE 2.0 Changes Coming to Retirement Plans in 2024
- Managed Accounts See Highest Growth While TDRFs Sit Still
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.