Focus on Retirement Plans: The Future

Peg Hoyt-Hoch 0205Our members have been increasingly focused on retirement plan administration and compliance concerns. MSEC has been asked to assist members with some basic information and education to help them become more responsible and knowledgeable retirement plan sponsors.

Why the increasing interest? There are arguably three key reasons.

  1. Legislation in the late ‘90s authorized non-profit organizations to sponsor 401(k) plans, where before, they were limited to 403(b) plans. A few years later, legislation created new compliance and reporting requirements on 403(b) plans, bringing their management into alignment with 401(k) plans. In 2009, most 403(b) plans were required to be in writing, to publish Summary Plan Descriptions for participants, and to report financial information annually. These changes caused an increase in non-profit entities moving into the 401(k) arena.
  2. With increased enforcement by the U.S. Department of Labor (DOL) there has been a corresponding effort to encourage companies to sponsor 401(k) or 403(b) plans. It is simply good policy to do so and companies are responding to DOL support. Not only are there more resources available, but the DOL and the Internal Revenue Service have also extended several amnesty-type programs. The programs offer companies sponsoring retirement plans the chance to voluntarily come forward, and by following the steps of one of the programs, to report and correct plan problems while receiving future protection against fines, penalties, and potential plan disqualification. MSEC will outline the programs in a future retirement plan compliance articles in our Bulletin.
  3. A recent survey by Judy Diamond Associates, Inc.(1)  showed the top four states that have experienced the strongest relative growth in new 401(k) plans are also the strongest states with MSEC members!
  • The 401(k) plan growth was led by Arizona, with a 7.22 percent increase in new 401(k) plans;
  • Second place was Colorado, showing a 7.12 percent growth;
  • Wyoming came in third, with a 6.93 percent increase; and
  • California took fourth place, with a 4.03 percent increase in new plans.

New 401(k) plan growth tends to correlate with an improving economy, and it is interesting to note that these four states also offer favorable small business environments. New plan growth indicates that either new businesses are springing up or that existing organizations are at a point in their growth where they realize the strong returns on investing in improved total compensation packages for employees. Either way, we expect a continued increase in retirement plans and are happy to offer more educational resources to assist members. Watch for the new MSEC Retirement Compliance series in our August Bulletin. For more information, contact me at

[1]Judy Diamond looked at the number of newly initiated 401(k) plans in 2012, the most recent year for which a complete set of data was available. The 24,127 new plans included in the study covered 443,969 participants.