Deals and People May 2, 2023

Former Wilmington Trust CIT Division Rebranded as Great Gray Trust

After acquiring the Wilmington Trust CIT division from M&T Bank, new owners Madison Dearborn Partners opt for rebrand. 

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The Wilmington Trust NA collective investment trust business has been rebranded under a new name and structure after its acquisition by private equity firm Madison Dearborn Partners LLC, according to a letter sent to customers on Saturday.

The Great Gray Trust Co. will continue to offer CIT investments to plan sponsors and retirement plan advisers after Wilmington Trust parent M&T Bank Corp. announced the sale of the division in December 2022.

“Although your current Wilmington Trust relationship will transition to Great Gray, it will include the same talented people, customized solutions, and quality service you have come to know and expect,” Rob Barnett, the company’s president and CEO, wrote in an email to customers. “As this newly formed company, we are committed to continuing to expand and evolve the retirement space and deliver innovative solutions to meet your evolving needs.”

CITs have been growing in popularity in recent years due to offering a lower-fee investment option than most mutual funds for defined contribution retirement plans. The pooled investment vehicles, which are held by a bank or trust, have overtaken mutual funds as the most prevalent investment vehicle in defined contribution savings plans, according to consultancy Callan’s most recent DC Index.

After the deal was announced on Monday, Great Gray Trust released a video on LinkedIn with text:

“Today we ‘take flight’ on this new venture, and we’re eager to see what the future holds within CIT innovation and beyond,” it stated.

Barnett also wrote to customers that the Great Gray team will remain in place in the transition. Part of that team’s work with CITs has included educating plan sponsors, plan advisers and lawmakers on the benefits of using the investments for retirement plans. Currently, 403(b) retirement plan providers are not able to access CITs, though there is a proposed bill in Congress seeking to permit the investments.

“While our branding is changing, our focus will always remain on taking a modernized and fresh approach to developing innovative solutions that drive results for our clients,” the letter stated.

Ask the Experts May 2, 2023

Can A Church 403(b) Plan Require Employees to Use Roth Catch-Ups?

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

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Q: We are a large denominational church that sponsors a 403(b) plan for our member churches, but there is no centralized payroll system. Thus, it would be impossible for us to administer the new $145,000 rule for Roth catch-up deferrals under the SECURE 2.0 Act of 2022, since we have no idea what churches pay their individual employees. Instead, could we simply require that ALL employees utilize Roth for their catch-up elections?

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: Section 603 of the SECURE 2.0 Act amends Internal Revenue Code Section 414(v) to provide that any eligible participant earning more than $145,000 in prior-year wages from the employer sponsoring the plan who wishes to make catch-up contributions must elect Roth for such contributions, beginning in 2024. While there is no clear authority explicitly providing that a plan sponsor may require that all catch-up contributions be Roth, even for those making $145,000 or less in the prior year, plan sponsors generally have flexibility in plan design absent a prohibition. Therefore, pending additional guidance, it may be reasonable to add such a requirement to your plan.

Having said that, there is an exception that might limit the number of individuals you must identify as earning more than $145,000. Self-employed clergy do not need to be included at present, because individuals who do not have W-2 wages related to their employment will seemingly be able to continue to make traditional pre-tax catch-up contributions, even if their income from self-employment is greater than $145,000, due to the way the provision is currently written. However, it is possible this loophole could be closed via further Congressional action.

Finally, the future of catch-up contributions in general was questioned by some erroneous language in SECURE 2.0. Though we expect this potential error to be corrected or clarified by Congress (or through future guidance), you should check PLANSPONSOR periodically for future developments in this regard.

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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