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Complementary accumulation and decumulation tools target retirement security for all

IRALOGIX, a leading retirement industry fintech provider, today announced a partnership with PensionPlus, an innovative decumulation solution that makes it easy for retirement plan participants to create a highly personalized retirement plan designed to last for their entire lives while keeping their current investments.

According to industry leader and PensionPlus CEO Shlomo Benartzi, “Collaborating with IRALOGIX will allow PensionPlus to further its goal of democratizing retirement income planning for all participants, including the tens of millions of Americans relying on IRA accounts.”

“We are honored to partner with Shlomo Benartzi and his team at PensionPlus as we integrate the most advanced post-retirement drawdown solution with the power of IRALOGIX’s groundbreaking IRA technology,” said David Bernard, Chief Executive Officer at IRALOGIX. “Together, we are creating fundamental change across the IRA and Wealth Management industries on behalf of every investor and all those who support them. PensionPlus gives IRA investors total control over their retirement savings and the opportunity to customize their retirement ‘paycheck’ for their specific needs.”

In 2024, 11,000 Americans are expected to celebrate their 65th birthday daily. Many struggle to convert their savings into a retirement paycheck that lasts the rest of their lives. Others are concerned about adhering to their income plan once in retirement and ensuring they don’t outlive their savings. Americans need a new and better way to create a personalized plan that matches their goals and preferences.

With PensionPlus, the benefits are clear: participants get a sustainable retirement paycheck while remaining in complete control of their investments (no transfer of assets required). In addition, PensionPlus monitors the plan (including spending and withdrawals) and adjusts the plan as needed based on portfolio performance and inflation. Additional features include an annual bonus payment and tax optimization. By creating an easy and affordable lifelong solution, PensionPlus aims to give all Americans the peace of mind they deserve in retirement.

Retirement Redefined as Gateway to Greater Flexibility, Not Necessarily an Exit from the Workforce

Millennials are Moderately Confident They’ll Have Sufficient Retirement Savings

Majority Won’t be Swayed by Taylor Swift’s Endorsement of a Presidential Candidate 

Pittsburgh, PA, March 11, 2024 – A new survey reveals how millennials are reshaping the retirement landscape, defining it by financial independence rather than an age-based benchmark. The study, which marks a new understanding of retirement planning’s shifting paradigms, surveyed millennials nationwide, shedding light on the evolving attitudes and behaviors surrounding their retirement readiness, retirement confidence, and consumer debt. The survey was commissioned by IRALOGIX, a retirement industry fintech provider, and took place in February 2024.

“Millennials are revolutionizing the traditional concept of retirement along with the very definition of the word itself, offering a fresh perspective unlike any other generation in the U.S.,” remarked Lowell M. Smith, Jr., co-founder of IRALOGIX and an expert on retirement matters. “The survey underscores a fundamental shift from what we previously understood: millennials don’t perceive retirement solely as a departure from the workforce. Instead, they define it as a stage of life characterized by enhanced career flexibility and an opportunity to pursue passion projects and hobbies, fostering personal fulfillment and making a meaningful social impact.”

Key findings follow below. 

Key Findings:

• 51% say retirement is defined not by age 65 but by financial independence where they can indulge their lifestyles without relying on traditional employment; 24% noted retirement at age 65 (i.e., ceasing all work) is a goal they’re highly focused on working towards; and 16% responded that retirement is not necessarily an exit from the workforce, but a time of greater flexibility in their lives.
• When asked if they see themselves retiring at some point, 47% of respondents said they will retire
  as soon as they can afford it,” and 22% will keep working, either because they “enjoy it or they don’t have sufficient retirement savings.”
• Millennials are moderately confident (47%) that they will accumulate sufficient savings to someday retire; 29% have no confidence in their ability to save enough to retire.
• When it comes to balancing short-term financial goals like vacations, buying a home, and paying down student loans/other debt with saving for retirement 62% indicated they try to “strike an even balance” between the two, and 29% are entirely focused on “living in the now” by focusing only on their short-term goals.
• Millennials appear to be able to contain their consumer debt reasonably well, with 55% saying they have between $0 and $20,000 in debt, excluding their mortgages; 18% have up to $35,000 in debt. Just 11% say their debt exceeds $65,000.
• The majority (55%) of respondents hold themselves accountable for ensuring they have sufficient retirement savings, while 25% say their employer is responsible, and 20% believe the government should provide their retirement savings.
• Of those who answered “employer” to the previous question, 37% said to make a comfortable retirement viable, employers should offer a robust retirement benefits package like a 401(k) or similar plan along with a competitive employee match; 24% want a traditional Defined Benefit plan with investments selected by investment professionals, where the employer assumes all the risk and is required to pay the employee a fixed monthly sum when they retire 

Other Takeaways

• When asked if they use technology like Robo-advisors, investment platforms, or AI to aid in their retirement planning, 60% said “no,” 28% answered “yes,” and 12% are “thinking about it.”
• 61% make regular monthly contributions to an employer-sponsored retirement plan like a 401(k), 403(b), SIMPLE IRA, or SEP IRA.
• When leaving an employer where they had a retirement plan in place, 25% rolled it over into their new employer’s plan; 27% rolled it into an IRA; 31% left it “untouched” with their former employer; and 16% withdrew the balance and spent it.
• Despite her fame and fortune, Taylor Swift doesn’t appear to hold much sway over millennials. When asked if her endorsement of a particular presidential candidate would have any influence on their vote, 71% said “no.” Just 29% answered “yes,” or “I haven’t given it any thought but I will.”

Methodology

The survey of 578 respondents was conducted online in February 2024 on behalf of IRALOGIX. Respondents, who skewed 56% female to 44% male, were drawn from a national sample of millennials, ages 28 – 43 with household incomes of $0 – $200,000 plus. To schedule an interview, or for a copy of the full survey results, please contact Scott Sunshine.

27-Year Wells Fargo Alum Brings deep participant-centric marketing expertise helping investors succeed financially

 Pittsburgh, PA, February 12, 2024 – IRALOGIX, a leading retirement industry fintech provider, today announced the appointment of Jennifer Plese as Director of Marketing. Plese assumed her new position February 5 and reports to Pete Littlejohn, Chief Revenue Officer.

“Jennifer has spent years building an exceptional career in the financial services sector, creating and executing marketing strategies for clients across diverse industries and assets under administration,” said Littlejohn. “Throughout her journey, Jennifer has demonstrated strategic innovation, unwavering client dedication, and inspirational team leadership. We are thrilled to welcome her to the IRALOGIX team, and eagerly anticipate the invaluable contributions her marketing expertise will bring as we drive forward with our expansion.”

Most recently, Plese served as Director of Marketing at Principal Financial Group (formerly Wells Fargo Institutional Retirement & Trust). In this capacity, she led participant communication strategy and execution. Before her role at Principal, Plese spent nearly 25 years as Vice President and Participant Experience Manager at Wells Fargo. During her tenure, she championed the delivery of exceptional participant experiences, crafting innovative solutions for over three million retirement plan participants.

“Many of my former colleagues have joined IRALOGIX, which is how I came to learn about the company and its pivotal role in the retirement space,” said Plese. “I’m delighted to reunite with my former co-workers and am eager to leverage my marketing expertise in support of IRALOGIX’s clients, products, and services.”

Plese’s philanthropic endeavors include roles on the Milwaukee Charitable Contributions Committee and the Minneapolis Community Funding Council. She was also recognized as a United Way Leader in Giving in the Greater Milwaukee Area.

Plese holds a B.A. degree in International Relations and Spanish from the University of Wisconsin-Madison and pursued Spanish studies at the University of Madrid, Spain.

The Department of Labor recently released a proposed regulation explaining a new exemption created by the SECURE 2.0 Act that allows specific providers to charge a fee for conducting “automatic portability transactions.” Although Auto-Portability is designed to help workers manage their retirement accounts when changing jobs, it’s crucial for plan sponsors and service providers to understand what Auto-Portability can and cannot do.

What It Is

An Auto-Portability transaction is a rollover from a Safe Harbor IRA to an employer’s retirement plan for an active participant who is given prior notice and has not opted-out of the rollover. These Auto-Portability transactions only apply to Safe Harbor IRA accountholders with balances between $1,000–$7,000 who have been unresponsive or missing.

A few assumptions need to take place to facilitate this transaction. It assumes that the Safe Harbor IRA accountholder is now re-employed and is participating in their new employer’s 401(k) or other defined contribution plan. It also assumes that the new plan has agreed to accept Auto-Portability rollovers and is with a recordkeeper that is in the Auto-Portability network. Lastly, it assumes that automatically moving the monies back to an employer plan is in the best interest of the IRA accountholder versus leaving it in an IRA and avoiding additional handling fees.

How It Works

The rules for automatic rollovers remain the same. Balances $7,000 and under may be rolled over to an IRA if the former employee doesn’t elect a direct distribution or rollover. Balances under $1,000 may also be rolled over based on the plan’s terms. If the plan sponsor follows DOL Safe Harbor rules, they are relieved of fiduciary responsibility when assets are automatically deposited into a Safe Harbor IRA.

After SECURE 2.0, if a Safe Harbor IRA is moved to an Auto-Portability Provider (APP), the APP will search for the account owner through the Auto-Portability network. If the account owner is participating in another employer’s plan within the network, the APP can roll over the IRA to the new plan and collect a fee after proper notice.

Benefits

• Reduces abandoned retirement accounts due to unresponsiveness or outdated contact information.
• Consolidates retirement savings into one account, potentially reducing fees.
• Ensures investments align with the participant’s choices in the new plan or the plan’s default investment.

Considerations

• This service is optional for plan sponsors and recordkeepers.
• Both the recordkeeper and plan sponsor must agree to share data with the Portability Services Network and accept automatic portability rollovers.
• Plan sponsors must prudently select the APP, considering fees, services, benefits, and risks.
• The APP acts as a fiduciary if the account owner does not consent to the rollover, subject to DOL’s proposed regulations.
• Currently, there’s only one APP active due to connectivity barriers across the recordkeeping industry.
• If a plan participant wants to roll over funds to a new employer, a direct distribution or rollover initiated by the accountholder from the Safe Harbor IRA provider would likely be a quicker transfer solution.
• IRALOGIX also believes that if DOL were to permit a Safe Harbor IRA default investment to include a qualified default investment alternative (QDIA) feature and require Safe Harbor IRA providers to offer quality diversification options, Auto-Portability and its expense and complication would not be necessary.

IRALOGIX Opportunities & Solutions

IRALOGIX builds institutional IRAs for its customers where the IRA in most cases is equal to or better than most 401(k) plans. We support innovation in the retirement industry and are exploring ways to participate in reducing abandoned retirement accounts.

IRALOGIX actively attempts to locate missing Safe Harbor IRA owners in order to give complete control to the IRA investor on what they want to do with monies. Additionally, individuals will soon be able to search for their lost retirement accounts, including those rolled over to Safe Harbor IRAs, through the “Retirement Savings Lost and Found” database created under SECURE 2.0 by the DOL/IRS.

Almost one year after the SECURE 2.0 Act passed into law, the IRS is issuing guidance to help employers, IRA owners, and service providers begin implementing some of the changes made by the Act. This guidance, Notice 2024-02, provides information on 12 provisions from SECURE 2.0, including the provision that allows employees to designate SEP or SIMPLE IRA plan contributions as after-tax Roth IRA contributions.

Although the option to treat SEP and SIMPLE IRA contributions as Roth was effective beginning in 2023, a lack of guidance on plan documents, tax issues, and timing has prevented IRA providers from being able to offer these enhanced features to SEP and SIMPLE IRA plans. While this notice provides insight on taxation and certain IRS reporting, much is left to the imagination as to how and when these provisions can be implemented. More detailed guidance is needed in the form of plan documents, IRA documents, model notices and timing, but here’s what we know today: 

Employers have options – Employers are not required to offer a Roth option in their SEP or SIMPLE IRA plan. If they choose to offer it, they can offer Roth treatment just for employee contributions, just for employer contributions, or for both.

Existing IRA documents can be used – The documents used to establish SEP and SIMPLE IRA plans—and the IRAs to hold plan contributions—need to be updated for several major law changes that have occurred since these documents were last published or approved by the IRS. Until the IRS issues new documents or other guidance, existing documents may be used without formal amendment. This clarifies that plan and IRA establishment documents do not need to be updated to allow the new provisions, and Roth contributions made for an employee under a SEP or SIMPLE IRA plan will be deposited into a Roth IRA.

Notice and elections are required – If an employer wants to offer a Roth option, the employer must make a written election. Employers must also give employees the same opportunity to make Roth contribution elections as is given for making pre-tax contribution elections for SIMPLE IRA plans, and SEP plans must provide an “effective opportunity.” These conditions may require additional adoption agreement-type elections for employers and additional notices for employees. Employees must elect in writing to treat contributions as Roth before the contributions are made to the plan. Employers cannot default employees into Roth contributions, such as with an automatic enrollment feature in a SIMPLE IRA plan.

Employee Roth deferrals require payroll changes – If an employee elects to treat their SIMPLE IRA salary deferral as Roth, the employer (or payroll provider) will calculate the deferral amount after calculating payroll taxes. In other words, these contributions are subject to income tax withholding, FICA, and FUTA taxes. Employees must include Roth deferrals in their taxable income for the same year in which the employee would have received the money as wages. These after-tax deferrals will be reported to the employee and the IRS by the employer on Form W-2, Wage and Tax Statement.

Employee Roth treatment of employer contributions is more complicated – If an employee elects to treat employer contributions under a SEP or SIMPLE IRA plan as Roth contributions, the employer will make and deduct the contribution in the same manner as they have historically done. However, a Form 1099-R must be generated to report the amount of employer contributions as a taxable conversion to the employee’s Roth IRA. This reporting will trigger taxation for the employee in the year the contribution is made (regardless of whether the contribution was made for the prior plan year.) Employees must be made aware of this timing distinction for tax planning purposes.

Next steps

The IRS has taken the first step in assisting employers, IRA owners, and service providers with understanding how SEP and SIMPLE Roth contributions may be made. But there are still many unanswered questions, such as whether providers will draft addendums to plan agreements to capture employer elections, the timing for notifying employees of new features and capturing their elections, when the features can be added to existing plans, and whether SIMPLE-Roth assets can be commingled with regular Roth assets.

IRALOGIX is working diligently to ensure our platform and procedures continue to assist our clients in navigating the regulatory framework and new opportunities. We will provide further updates in the months ahead.