Fewer DC Plans Offering Hardship Withdrawals and Plan Loans

Fewer organizations are offering DC plan hardship withdrawals, plan loans and online retirement investment advice compared with five years ago. However, one-on-one and group/classroom-style investment retirement advice remains unchanged over the same period, according to new survey results from the Society for Human Resource Management.

SHRM’s “2017 Employee Benefit: Remaining Competitive in a Challenging Talent Marketplace” report also finds that more organizations were allowing Roth conversions from a traditional 401(k) plan over the five-year period, rising from 22% in 2013 to 31% in 2017.

Used by sponsors to benchmark their overall benefits strategy, the report tracks trends and examines changes in benefit offerings to develop a snapshot of the current benefits landscape in the marketplace. Among the general findings, nearly one-third of organizations increased their overall benefits offerings in the past year, with health (22%) and wellness (24%) benefits experiencing the most growth. Retirement savings and planning benefits were in the middle of the pack, increasing 13% in the past 12 months, according to the data.

Remaining competitive in the talent marketplace was the top reason for increasing benefits, SHRM noted. The study shows that few organizations (6%) decreased benefits overall, and for those that did, the most comment reason was to remain financially stable.

Defined contribution plans continue to dominate the marketplace, with 90% of responding organizations offering a traditional 401(k) or similar plan, while 55% offer a Roth 401(k). An employer match was provided by 76% of organizations for their 401(k) plans and 40% matched Roth 401(k) contributions. Interestingly, the report shows that 24% of organizations offered a traditional defined benefit plan that was open to all employees, up from 19% in 2013.

Informal phased retirement programs are also being offered by more employers, rising from 6% in 2013 to 13% in 2017. SHRM explains that organizations are recognizing the need to facilitate the transition and transfer of knowledge for both retiring employees and their remaining co-workers.

New for 2017, the survey now includes data on organizations offering in-plan annuity options and assistance for retirees to purchase an out-of-plan annuity with in-plan assets. While the take-up rate appears somewhat low (9% for in-plan annuity option and 2% for assistance for retirees to purchase an out-of-plan annuity with in-plan assets), the report indicates that not all respondents were asked these questions.

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