Deals and People January 30, 2024

Empower Names Former Fidelity Exec to New Enterprise Role

Dave Gray has been named executive vice president of enterprise solutions to expand customer offerings.

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Dave Gray

Empower has named Dave Gray to a new role of executive vice president for enterprise solutions, overseeing the expansion of platform and partnership solutions for the recordkeeper and wealth manager. 

Gray joins the company from Fidelity Investments, where he was head of workplace products and platforms, including employer-sponsored retirement benefits and brokerage solutions through the workplace.  

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His role at Empower, which started on Monday, includes working on its platform and partnership solutions in support of “the next phase of enterprise growth” and leading the company’s “enterprise data strategy with the goal of expanding and enhancing Empower’s portfolio of offerings to customers.” 

Empower, the country’s second-largest recordkeeper after Fidelity, is making a push into consumer wealth management with its Empower Personal Wealth division, the result of a rebranding last year to build off the firm’s 2020 acquisition of Personal Capital.  

Gray reports to Empower President and Chief Operating Officer Rich Linton.  

“With Dave’s experience in the financial services industry and proven track record driving results, this role uniquely positions him to help Empower provide holistic solutions for our customers to help them achieve higher levels of success,” Linton said in a statement. “As our clients’ needs change, we need to change along with them, and I am confident Dave will be an integral part of that.” 

Gray has more than 20 years of experience in retirement services, including platform modernization and product development. Prior to his role at Fidelity, he was head of product, client experience and business strategy at Charles Schwab. He was also head of client service at The Standard.  

Empower, owned by Great-West Lifeco U.S. LLC, has noted in earnings calls the importance of its proprietary dashboard used by workplace participants in connecting them with broader financial offerings. The firm’s workplace solutions business accounts for 85% of its revenue, and personal wealth makes up the other 15%, according to a June 2023 earnings presentation. 

“Empower has seen tremendous success and continues to innovate,” Gray said in a statement. “I am looking forward to being part of their team and helping contribute to their customers’ needs. There is so much potential in this market, and I’m proud to join an organization that is truly making a difference.” 

Gray has taken a leadership role within multiple influential industry organizations, including the U.S. Department of Labor ERISA Advisory Council, an appointment that ended last year, and the boards of the Employee Benefits Research Institute, which ended in 2021, and the board of Portability Services Network LLC through this month, according to LinkedIn.  

Empower currently administers about $1.4 trillion in assets for more than 18 million people through retirement plans, advice, wealth management and investments. 

Ask the Experts January 30, 2024

How Does the New Distribution Provision for Terminal Illness Work?

Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations.

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Q: We know that, thanks to the SECURE 2.0 Act of 2022, the hardship distribution rules for our 403(b) plan will now be the same as the rules for 401(k) plans. But will these rules include the new distribution provision for terminal illness as a category of hardship? Or will a terminally ill participant have to terminate employment or prove a different category of hardship to receive a distribution from the plan?

Kimberly Boberg, Taylor Costanzo, Kelly Geloneck and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

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A: You are correct: SECURE 2.0 did generally sync up 401(k) and 403(b) hardship distributions. However, those rules are separate from the new terminal illness distribution.

Section 326 of the SECURE 2.0 Act merely provides a new exception to the 10% additional tax under Section 72(t) of the Internal Revenue Code, which is applicable to both 401(k) and 403(b) plans, for distributions made to a terminally ill individual. However, Section 326 does not create a category of deemed hardship or another distribution right under a plan.

Therefore, a participant must be otherwise eligible to take a distribution under the plan to receive the benefit of a penalty-free withdrawal on account of terminal illness. For example, if a terminally ill participant qualifies for another hardship category under the plan (e.g., on account of medical care expenses), the participant may avoid the 10% tax on such early withdrawal, if otherwise applicable.

While plans may choose whether to specifically support the exception from the tax for distributions on account of terminal illness under their plan, an eligible participant may claim an exception to the 10% tax when filing their taxes, whether or not offered by the plan. If this exception to the early withdrawal penalty is offered by the plan (which would require a plan amendment), it is important to note that the plan cannot rely solely on a self-certification that the participant is terminally ill. The IRS recently issued Notice 2024-2 to provide additional information on these distributions, including the required supporting documentation.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Amy.Resnick@issgovernance.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future column.

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