PLANSPONSOR - September/October 2024 - 27

RESEARCH | 2024 RECORDKEEPING SURVEY
The of
S
ignificant levels of
change in federal law
regarding employer
retirement plans-including
a variety of optional
and mandatory provisions
enacted since 2019-have
put
tremendous pressure
on plan recordkeepers after
years of fee compression.
" Recordkeepers are
Recordkeepers are juggling competing
priorities of new mandatory and
optional plan features alongside
demands for their platforms to support
retirement income, personalization,
financial wellness programs and more.
the hub of everything retirement, financial and [related to] health, "
says Pam Hess, executive director of the Defined Contribution
Institutional Investment Association Retirement Research Center,
in Washington. " We are asking them to do so much right now. "
The 2024 PLANSPONSOR Recordkeeping Survey found that
recordkeepers are overseeing $10.9 trillion in defined contribution
plan assets for 129.6 million participants across more than 14 plan
types. Recordkeeper firms also increasingly track several relatively
new plan types such as pooled employer and multiple employer
401(k) and 403(b) plans, which are tallied in the survey, by number
of plans, participants and assets, for the first time this year.
The survey also found that a majority (61%) of plan sponsors
maintain relationships of more than eight years with their
recordkeepers. Those relationships are increasingly important
as plan sponsors and their recordkeepers are butting up against
logistical and technical issues that make it hard to bring the new
plan provisions online.
The survey was fielded in April and May. Thirty-three recordkeepers
of defined contribution plans participated and reported on
their U.S. DC recordkeeping business as of December 31, 2023.
Recordkeepers do not want their clients to miss out on
their chance to add several
optional hardship withdrawal
features-all
enacted
as part of the
SECURE [after the Setting
Every Community Up for
Retirement
Enhancement
Act of 2019] 2.0 Act of
2022-but
providers
also
need insight regarding what
client plans want to add.
A review of certain early June communications that a recordkeeper
had sent to its plan sponsor clients, and shared with
PLANSPONSOR, shows the firm trying hard to ensure that its
clients are paying attention to upcoming changes. One of the
communications makes it clear that if client plans failed to opt
in during the campaign that kicked off in late June, the recordkeeper
would not be able to set up participation in four SECURE
2.0 optional hardship withdrawal programs until next year. The
recordkeeper asked to not be named.
The hardship withdrawal provisions plan sponsors may
adopt include a domestic abuse distribution, a distribution for
people living in places declared federal disaster areas, and emergency
withdrawals and distributions to pay certain qualified
birth or adoption costs.
Besides the optional withdrawal provisions, recordkeepers
and payroll providers are increasingly integral to making some
aspects of retirement plans possible, including different ways of
generating income in retirement. That means adding systems
to support the complex array of in-plan and out-of-plan options,
including a range of annuities, systematic withdrawals and
other offerings. While each firm is likely to address these areas
Art by Alex Eben Meyer
PLANSPONSOR.COM September - October 2024 27
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PLANSPONSOR - September/October 2024

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