PLANSPONSOR - December 2022-February 2023 - 11

TIDBITS
The Transferability of HSAs
Besides receiving health savings accounts' triple tax advantages, participants may
transfer or roll over their HSA deposits and employer match to an outside HSA they like
better-no change of employers necessary. Sponsors play a limited role with HSAs, merely
transferring money from payroll to the accounts, which are held by an HSA administrator.
METHOD
Transfer
Rollover
Self
ACCOUNT FUNDING
Payroll deduction
Payroll deduction
Self-funded
Source: Morningstar
TRANSFER MECHANISM
Provider to provider
Provider to provider
Employee to provider
TAX IMPLICATIONS
None
Potentially
Yes
FREQUENCY ALLOWED
As needed
Once every 12 months
As needed
Older Participants Face Income Shortfalls
NEAR-RETIREES and retirees could face a
retirement-income shortfall, according to a
white paper, published in November, from
the Defined Contribution Institutional
Investment Association. A decade of low
interest rates plus current high inflation
may be eroding the success of retirement
income planning, with retirees at risk of
turning to savings faster than expected,
the authors wrote in the report.
" If inflation continues to hold at rates
higher than prevailing bond yields, retirees
may suffer prolonged and possibly permanent
loss of purchasing power if they are
forced to withdraw larger amounts from
their savings to fund their retirement
expenses, " the DCIIA authors wrote.
Target-date funds, which gradually
shift savers into more conservative, fixedincome
assets, are a key reason for this
potential shortfall, DCIIA found.
While investing in TDFs has been an
effective strategy for accumulating assets,
their success in providing regular income
in
retirement-i.e.,
the
decumulation
phase-has not been tested, DCIIA wrote.
That has led to an industrywide effort
by asset managers, recordkeepers and
insurers to create products that can link
TDFs with income-focused strategies to
help retirees and near-retirees.
According to DCIIA,
sponsors are
more frequently giving " retirement-tier "
participants some options, though each has
its own limitation in the current financial
environment. The most popular include:
Fixed-income annuities. These insurance
contracts are a popular way to provide
regular payments in retirement. However,
they tend to mirror bond interest rates and
so, if purchased in a low-interest-rate environment,
will return lower yields than
their historical average, the authors wrote.
Bond laddering. This strategy
involves buying multiple bonds with
different maturity dates, then reinvesting
the principal into new bonds if those offer
higher rates. This strategy can be difficult
to personalize within a defined contribution
plan, the paper says.
Systematic withdrawal. In this basic
approach, the retiree withdraws a specific
amount of money, adjusted for inflation,
out of his retirement plan savings each
year. Here again, providing a solution that
can withdraw the correct amount can be
hard to personalize within a DC plan.
The limitations of these offerings
have kicked off increased innovation in DC
plans, DCIIA wrote. One result is deferred
fixed annuities attached to a TDF series.
This strategy automatically shifts a TDF's
glide path to an income option. It puts the
saver's money into an annuity that offers a
regular paycheck when she retires.
A guaranteed lifetime withdrawal
benefit attached to a TDF series is a second
strategy. This one uses a variable annuity
within a TDF, enabling participants to take
part in growth when markets rise, while
also baking in a floor to protect them to a
certain level when markets decline.
Social Security can be optimized
through a bridge strategy. If a person
delays taking the benefit, that can increase
payments by about 8% a year. This strategy
has people tap their DC assets as a " bridge "
to a higher payout. -Alex Ortolani
PLANSPONSOR.COM December 2022 - February 2023 11
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PLANSPONSOR - December 2022-February 2023

Table of Contents for the Digital Edition of PLANSPONSOR - December 2022-February 2023

INSIGHTS
RULES & REGULATIONS
PARTICIPANT ANALYSIS
UPFRONT
Risk Protection
Benchmarking Beyond Fees
Exploring ESG Investing
In Case of Emergency
Employee-Owned
FIDUCIARY FORUM
INSIDE ANGLE
PLAN PROFILE
PLANSPONSOR - December 2022-February 2023 - Cover1
PLANSPONSOR - December 2022-February 2023 - Cover2
PLANSPONSOR - December 2022-February 2023 - 1
PLANSPONSOR - December 2022-February 2023 - INSIGHTS
PLANSPONSOR - December 2022-February 2023 - 3
PLANSPONSOR - December 2022-February 2023 - RULES & REGULATIONS
PLANSPONSOR - December 2022-February 2023 - 5
PLANSPONSOR - December 2022-February 2023 - 6
PLANSPONSOR - December 2022-February 2023 - PARTICIPANT ANALYSIS
PLANSPONSOR - December 2022-February 2023 - UPFRONT
PLANSPONSOR - December 2022-February 2023 - 9
PLANSPONSOR - December 2022-February 2023 - 10
PLANSPONSOR - December 2022-February 2023 - 11
PLANSPONSOR - December 2022-February 2023 - 12
PLANSPONSOR - December 2022-February 2023 - 13
PLANSPONSOR - December 2022-February 2023 - Risk Protection
PLANSPONSOR - December 2022-February 2023 - 15
PLANSPONSOR - December 2022-February 2023 - 16
PLANSPONSOR - December 2022-February 2023 - 17
PLANSPONSOR - December 2022-February 2023 - Benchmarking Beyond Fees
PLANSPONSOR - December 2022-February 2023 - 19
PLANSPONSOR - December 2022-February 2023 - 20
PLANSPONSOR - December 2022-February 2023 - 21
PLANSPONSOR - December 2022-February 2023 - 22
PLANSPONSOR - December 2022-February 2023 - 23
PLANSPONSOR - December 2022-February 2023 - 24
PLANSPONSOR - December 2022-February 2023 - 25
PLANSPONSOR - December 2022-February 2023 - 26
PLANSPONSOR - December 2022-February 2023 - 27
PLANSPONSOR - December 2022-February 2023 - Exploring ESG Investing
PLANSPONSOR - December 2022-February 2023 - 29
PLANSPONSOR - December 2022-February 2023 - 30
PLANSPONSOR - December 2022-February 2023 - 31
PLANSPONSOR - December 2022-February 2023 - 32
PLANSPONSOR - December 2022-February 2023 - 33
PLANSPONSOR - December 2022-February 2023 - In Case of Emergency
PLANSPONSOR - December 2022-February 2023 - 35
PLANSPONSOR - December 2022-February 2023 - Employee-Owned
PLANSPONSOR - December 2022-February 2023 - 37
PLANSPONSOR - December 2022-February 2023 - FIDUCIARY FORUM
PLANSPONSOR - December 2022-February 2023 - INSIDE ANGLE
PLANSPONSOR - December 2022-February 2023 - PLAN PROFILE
PLANSPONSOR - December 2022-February 2023 - Cover3
PLANSPONSOR - December 2022-February 2023 - Cover4
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