By Thomas Hawkins | September 2, 2016
Why should plans care about roll-in contributions?
Establishing a program that encourages participant rollover contributions (or “roll-ins”) is one of the most beneficial programs that a plan can implement.
For participants, roll-ins:
- Consolidate retirement savings
- Reduce fees from holding multiple retirement accounts
- Simplify retirement planning
- Are proven to decrease the incidence of cashouts
For plans, roll-ins:
- Increase average balances
- Enhance financial wellness metrics
- Reduce the number of small accounts
- Improve the effectiveness of in-plan retirement income solutions
What steps can a plan take to support roll-ins?
- Make sure that the plan accepts roll-ins. This should be clearly-identified in the plan document, in the section addressing plan contributions.
- Clearly communicate the plan’s roll-in feature to participants, particularly at initial eligibility and during annual enrollment.
Example forms of communication include
- Printed materials
- Participant E-Mails
- Internal benefits website
Be sure to emphasize:- Saving the participant time & money- Un-complicating participants’ lives
- Improving the participant’s retirement readiness
- Offer essential roll-in support, including instructions and easy access to the required contribution forms
Will my plan’s recordkeeper do a good job of supporting roll-ins?
- Roll-ins can be complex transactions, with many variations. Most recordkeepers are more-familiar with high-volume, repetitive transactions.
- The nature of the roll-in process requires a “workflow” orientation, vs. a simple transactional approach.
To effectively support your roll-in program, we suggest that plans consider a facilitated roll-in service provider that specializes in supporting roll-in programs.
What should plans look for in a facilitated roll-in service provider?
Look for a firm that’s unbiased and can effectively work with you, your recordkeeper and your participants.
The best roll-in service providers should:
- Operate on a fee-for-service basis. All participants -- regardless of balance -- can be encouraged to take advantage of the roll-in program.
- Offer fees that can be structured on either a “participant-pay” or a “plan-pay” basis.
- Qualify as a permissible plan expense, if paid for by the plan.
- Have a proven track record of success in performing plan-to-plan roll-ins.
What results should plans expect from an effective program of roll-ins?
Based on our five years of experience with a mega plan sponsor, we believe that you can expect that:
- Around 15%+ of new participants will decide to transfer qualified assets into the plan.
- Average balances can increase substantially. In our mega plan sponsor, they increased over 57%.
- Participant experiences and overall satisfaction with the roll-in process will improve dramatically.