PLANSPONSOR - February/March 2020 - 36

WELLNESS STRATEGIES
Ready
As It
Goes
An emergency
savings plan can
give employees
financial confidence
L
ack of emergency savings is one of
the biggest stress factors that John
Hancock plan participants encounter,
according to Patrick Murphy, CEO of
John Hancock Retirement Plan Services
in Boston.
During a six-year study by the firm,
participants responded that financial
issues keep them up at night. " The results
were clear to us: The top three issues are
retirement savings, emergency savings
and college savings, " he says.
The survey found that only about 25%
of respondents have emergency savings.
Forty percent cannot afford a $400 emergency,
and nearly 60%, a $2,000 emergency.
" If we're telling participants to maximize
their retirement savings and they
have no emergency savings, when things
do happen, they'll ultimately tap into their
retirement plan through a loan. And retirement
plan leakage ultimately hurts them
in the long term, " Murphy says.
Ken Verzella, head of financial
wellness at MassMutual in Enfield,
Connecticut, says, over the many years the
industry has been talking about financial
wellness, plan sponsors have clearly recognized
that, for participants to achieve their
long-term goals, they must address their
short-term needs. " The ability to plan for
the unforeseen is directly tied to long-term
financial goals, because if a participant
can't get easy access to money, he may have
36 PLANSPONSOR.COM February - March 2020
to turn to his retirement plan, " Verzella
says. " There is more understanding by
sponsors that if they want to reduce the
number of loans in their plans, emergency
savings is a critical component. "
Emergency Savings:
A Range of Choices
There are several means by which plan
sponsors can address participants' emergency
savings needs.
Emergency savings within a defined
contribution (DC) plan. Sponsors may
Art by John Cuneo
offer a non-Roth after-tax savings account
option, often called a sidecar account,
within their DC plan. Participants can save
both on a pre-tax and after-tax basis, or the
plan could be set up such that employee
deferrals go into the after-tax account first,
up to a certain dollar limit, and then into
the pre-tax account to save for retirement.
The latter solution requires planning
with the sponsor's payroll provider
and recordkeeper. After-tax contributions
accumulate earnings on a taxdeferred
basis, and an amount equal to

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PLANSPONSOR - February/March 2020

Table of Contents for the Digital Edition of PLANSPONSOR - February/March 2020

The Case for a Process
2020 PLANSPONSOR Best in Class 401(k) Plans
A Changed Perspective
Seize the Opportunity
Ready As It Goes
Income Insight
Good Read
PLANSPONSOR - February/March 2020 - Cover1
PLANSPONSOR - February/March 2020 - Cover2
PLANSPONSOR - February/March 2020 - 1
PLANSPONSOR - February/March 2020 - 2
PLANSPONSOR - February/March 2020 - 3
PLANSPONSOR - February/March 2020 - 4
PLANSPONSOR - February/March 2020 - 5
PLANSPONSOR - February/March 2020 - 6
PLANSPONSOR - February/March 2020 - 7
PLANSPONSOR - February/March 2020 - 8
PLANSPONSOR - February/March 2020 - 9
PLANSPONSOR - February/March 2020 - 10
PLANSPONSOR - February/March 2020 - 11
PLANSPONSOR - February/March 2020 - 12
PLANSPONSOR - February/March 2020 - 13
PLANSPONSOR - February/March 2020 - The Case for a Process
PLANSPONSOR - February/March 2020 - 15
PLANSPONSOR - February/March 2020 - 16
PLANSPONSOR - February/March 2020 - 17
PLANSPONSOR - February/March 2020 - 18
PLANSPONSOR - February/March 2020 - 19
PLANSPONSOR - February/March 2020 - 2020 PLANSPONSOR Best in Class 401(k) Plans
PLANSPONSOR - February/March 2020 - 21
PLANSPONSOR - February/March 2020 - 22
PLANSPONSOR - February/March 2020 - 23
PLANSPONSOR - February/March 2020 - 24
PLANSPONSOR - February/March 2020 - 25
PLANSPONSOR - February/March 2020 - 26
PLANSPONSOR - February/March 2020 - 27
PLANSPONSOR - February/March 2020 - 28
PLANSPONSOR - February/March 2020 - 29
PLANSPONSOR - February/March 2020 - A Changed Perspective
PLANSPONSOR - February/March 2020 - 31
PLANSPONSOR - February/March 2020 - 32
PLANSPONSOR - February/March 2020 - 33
PLANSPONSOR - February/March 2020 - Seize the Opportunity
PLANSPONSOR - February/March 2020 - 35
PLANSPONSOR - February/March 2020 - Ready As It Goes
PLANSPONSOR - February/March 2020 - 37
PLANSPONSOR - February/March 2020 - Income Insight
PLANSPONSOR - February/March 2020 - 39
PLANSPONSOR - February/March 2020 - Good Read
PLANSPONSOR - February/March 2020 - 41
PLANSPONSOR - February/March 2020 - 42
PLANSPONSOR - February/March 2020 - 43
PLANSPONSOR - February/March 2020 - 44
PLANSPONSOR - February/March 2020 - 45
PLANSPONSOR - February/March 2020 - 46
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PLANSPONSOR - February/March 2020 - 48
PLANSPONSOR - February/March 2020 - Cover3
PLANSPONSOR - February/March 2020 - Cover4
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