Administration June 29, 2015

Introducing Automatic Enrollment to K-12 403(b)s

“In 22 states, plan sponsors can use automatic enrollment right away,” said Matt Spina, executive vice president and chief operating officer at AdminPartners.

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Federal and state lawmakers have responded to the retirement crisis with the idea of automatic individual retirement account (IRA) plans.

President Obama introduced the myRA program in his 2014 State of the Union address. Senator Marco Rubio (R-Florida) suggested private-sector workers be allowed to participate in the Federal Thrift Savings Plan (TSP), and several states have established their own state-run plans for private workers that do not access to employer-sponsored retirement plans.

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Jessica Kovachick, registered principal and retirement plans specialist at The Legend Group, told attendees at the National Tax-Deferred Savings Association (NTSA) 403(b) Summit in Nashville, among 403(b) plans for public school systems, only about 30% of eligible participants are participating. “That is a part of this nationwide retirement crisis too,” she said.

Now is the time for K-12 403(b) plan sponsors to consider using automatic enrollment, Kovachick told summit attendees, noting that research shows plans with automatic enrollment average about 21% higher participation rates than plans that do not.

Automatic enrollment is not only good for participants, the Internal Revenue Service (IRS) is specifically looking at K-12 plans with low participation rates and questioning why.   

Ray Harmon, Esq., government affairs counsel at the American Retirement Association in Washington, D.C., said employers should consider whether they want to provide something “bare bones” to participants—i.e., the myRA program—or develop a more beneficial and attractive benefit for employees.

NEXT: Best practices for implementing automatic enrollment.

Matt Spina, executive vice president and chief operating officer at AdminPartners, said the NTSA formed a committee to research the use of automatic plan features for K-12 and governmental plans. It has developed a guide of suggested best practices for introducing automatic enrollment.

One issue preventing school systems in many states from implementing the feature is state law that doesn’t allow employers to divert pay from employee paychecks. But, Spina noted, there are three states in which automatic enrollment for non-Employee Retirement Income Security Act (ERISA) plans has been made legal—Colorado, Kansas and Arkansas—and there are 19 states in which automatic enrollment is legal because the federal government allows it. These include Washington, California, Idaho, Arizona, New Mexico, Texas, Nebraska, Iowa, Michigan, Kentucky, South Carolina, North Carolina, Virginia, Maryland, Delaware, New Jersey, Connecticut, New York and New Hampshire.   

“So, in 22 states, plan sponsors can use automatic enrollment right away,” Spina said. He added that plan sponsors and advisers should keep checking because more states could make it legal in the future. However, he noted, there may also be restrictions in collective bargaining agreements that plan sponsors may have to negotiate.

For school systems that do implement automatic enrollment, the NTSA guide suggests they use best practices used by ERISA plans; the default investment should be a qualified default investment alternative (QDIA) as defined by ERISA. In addition, plan sponsors should designate which person or entity is going to handle automatic enrollment so as not to run afoul of universal availability rules. The NTSA guide includes an instructional checklist, model participant notice and frequently asked questions (FAQs) that Spina said the association recommends plan sponsors include in plan documents.

Spina also suggested that advisers working with plans that use automatic enrollment should offer participants plan-level, product-neutral financial literacy education.

“Automatic enrollment will help participants by keeping participation rates increasing and participant assets growing,” Spina concluded.

Reader Responses June 29, 2015

SURVEY SAYS: The New $10 Bill

Recently, Treasury Secretary Jacob J. Lew announced that a newly redesigned $10 note will feature a woman.
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The announcement said Lew will select a notable woman—with a focus on celebrating a champion for our inclusive democracy. The Treasury is asking for public input about who to select and the design of the bill by using any social media with the hashtag #TheNew10, or by using the website www.thenew10.treasury.gov.        

Last week, I asked NewsDash readers which woman they think should be chosen for the new $10 bill. The clear winner was Eleanor Roosevelt, selected by 28.1% of responding readers. The Statue of Liberty took second place, with 14% of respondent votes.

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Others in the list provided were selected as follows:

  • Clara Barton – 8.8%
  • Rosa Parks – 4.4%
  • Frances Perkins – 1.7%
  • Betsy Ross – 4.4%
  • Deborah Sampson – 0%
  • Elizabeth Cady Stanton – 4.4%
  • Sojourner Truth – 1%
  • Harriet Tubman – 6.1%

 

However, 19.3% of responding readers submitted their own suggestions for which woman should be on the $10 bill—some serious, and some, I’m hoping, intended to be funny. Those answers included:

  • Kim Kardashian
  • Susan B Anthony
  • Whomever the first woman president ends up being (and I realize this means we may have to wait awhile)
  • Rosie the Riveter
  • Jeannette Rankin
  • Phyllis Diller
  • Caitlyn Jenner
  • Condoleezza Rice
  • My daughter
  • Lucille Ball
  • Queen Isabella
  • Barbara Jordan
  • Mary Jo Kopechne
  • Hattie Caraway
  • Wilma Mankiller
  • Molly Pitcher
  • Harriet Beecher Stowe
  • Julia Ward Howe
  • Elizabeth Blackwell
  • Sandra Day O’Connor (so wait until she passes)
  • Susan Sarandon

 

In verbatim comments, a large number of readers felt Andrew Jackson should be replaced on the $20 and Alexander Hamilton should not be replaced. Some didn’t like the idea of putting a woman on a bill at all, though there were more who said things like “It’s about time!” Editor’s Choice goes to the reader who said: “Really does it matter women, men, just so it is someone who had a positive connection and leadership in United States.”

Thanks to everyone who participated in the survey!

Verbatim 

Why not?

I don't feel any female from US history really deserves to be on the $10 bill especially one who merits knocking off Alexander Hamilton. Maybe in a few more decades there could be a more obvious choice like Hillary Clinton.

Actually I think a woman should be on the $20 not the $10. I mean come on, really? Andrew Jackson?

Change the $20 and dump Jackson instead. In that case, Eleanor Roosevelt

Should not remove a pillar of our country already on the $10 bill or any other bill. Those men were chosen for a reason and for their contributions to our country and do not deserve to be insulted at this point purely for the purposes of gratuitous inclusiveness. If this happens it will eventually result in every bill being changed so some so-called "misunderstood" group gets a representative on currency. We cannot and should not pander to every single person's self-interest at the expense of everyone else.

Most presidents have been reflected. Don't remove a president from the bill. Remove Ben Franklin and replace him

It's about time!!!

Replace that bum Andrew Jackson with a woman on the $20 and keep Alexander Hamilton who helped set up monetary policies - duh!

Although all of these women are worthy, I like the idea of the Statue of Liberty. She most represents everyone in the U.S.A.

glad to be rid of Hamilton; never did like his policies 😉

Why not?

Verbatim (cont.)

It seems the first Secretary of Treasury is a good person to feature on a bill. If any of the current people were to be replaced on a bill, I would think it would be Jackson on the $20.

Not sure why we need a change, but making it all about a woman? Geez...pick a notable American, male or female, for goodness sake!

It's about time!

Really does it matter women, men, just so it is someone who had a positive connection and leadership in United States

How politically correct this is. Guess this appeals to anyone who can't recognize the significance of anyone who died before they were born.

Andrew Jackson should be replaced by a woman on the 20, not Hamilton on the 10.

The current image should remain on the $10 bill.

Based on his accomplishments as the Secretary of the Treasury, I think they should leave Hamilton on the $10 and put a woman on a different denomination bill.

Hillary Clinton..... NOT!

Should be the $20 bill instead...

Verbatim (cont.)

I'm just joking about my answer :o)

Let's go a bit more contemporary with a selection.

Keep Hamilton on the $10. Replace Jackson on the $20.

Money's money. As long as it's legal tender, I do not care whose picture is on it.

Let's add her quote 'All I was doing was trying to get home from work.' to the $10

They say money can't make you happy, but it would make me smile to see her face on the $10 bill!

why not honor Columbus' sponsor to discover America

Wow! A woman on U.S. currency before one occupies the White House?! Hope to see both in my lifetime (and we will!) so I'm pleased.

Long overdue!

might want to wait to see if Hillary becomes the first female president.

Verbatim (cont.)

A stupid idea … if an individual should be honored (simply by virtue of their gender), then why not have them put on the LARGEST denomination, replacing Woodrow Wilson, on the $100,000 bill?

It is long overdue

Saved us from having Ted Kennedy as President.

It's about time!

1st female US Senator

It should be the $20 bill instead. Hamilton deserves his place on our currency, while Jackson does not.

My understanding of the decision to put a woman on the $10 bill is to honor our contributions to the inclusiveness of our democracy. In that case, a leader of the women's suffrage movement is an appropriate choice.

Wrong bill to change. Hamilton laid the foundation for managing a Treasury. Take Jackson off the $20 instead.

These are serious choices?

How about a collage of "all the above"?

Verbatim (cont.)

About darn time!

Great Idea!

Perhaps we should remove people from the bills and substitute national park icons. Get rid of the notion of who is worthy to grace our currency and honor our natural resources instead.

I'm getting on my soapbox - putting a woman on a bill and claiming it shows inclusion and equity is the worst sort of pandering. How about for every $10 you pay a man for the same job you stop paying me $7.50? Then I'd feel equal and included. This is just for show and accomplishes nothing real.

It should have been Wilma Mankiller replacing Andrew Jackson on the $20 bill; there's something so right about replacing a murderer with a modern leader of the people he slaughtered.

Can't help myself, ala Henny Youngman, it doesn't matter as I never knew one (woman) who could hold onto a $10 bill [ta-dump-tang].

It's about time!

I do not understand why Alexander Hamilton would be removed from the $10 bill. Most discussions about him center only on his role as one of the most influential of the country's Founding Fathers and in too many circles these days that makes him not "politically correct". However very little discussion about him involves looking at his strongly held abolitionist beliefs. That is regrettable given the recent tragic events in South Carolina.

This is the stupidest, most idiotic, most politically-(in)correct ridiculous move. Lay it off to rampant historical sexism, but the notion that ANY of these women warrants inclusion on our nation's currency is laughable on its face. Certainly in comparison to Alexander Hamilton, who in every way measureable, established this nation's financial system, set it on a sound foundation, and pulled together a loose confederation of disparate states with the only real tool the weak federal government had - money. This is a travesty - and blatant pandering to what is admittedly a large block of voters. Ladies, let's not fall for this charade. Do they really think we are that stupid? Are we?

Should be the $20, not the $10 bill. Andrew Jackson less notable than A. Hamilton. Secy Lew has heard this but doesn't care.

There are so many good choices on your list, but I chose the statue of liberty because America is all about freedom and she was our first lady about freedom.

Let's replace the faces on all bills with powerful women, except Madonna, any Kardashian and Gwyneth Paltrow,

 

NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Asset International or its affiliates.

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