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EGTRRA Permanency DB Plan Design
Portability DB Investment Consulting DC Plan
Design
As
we come to the close of our five-part series on the
implications of Pension Protection Act 2006 (PPA), we
turn our attention to the Defined Contribution (DC) plan
design opportunities the law has created. Key provisions
that address automatic enrollment and auto-deferral
increase features, as well as default investment
requirements create significant opportunities for you to
add value as your clients try to determine if these
components are appropriate for their plans.
PPA has cut through the gray area in which auto-features
and default investment requirements were previously
mired. The new laws have clarified not only that these
provisions will not be going away, but also how they are
to be defined going forward.
What’s more, if all of these features are implemented
properly, along with the required company matching
provisions, plan sponsors can be afforded safe harbor
(404(c)) protection, previously unavailable to them.
Additional benefits may also include simplified plan
operations for plan sponsors, simplified retirement
savings options for participants and the potential for
increased participation and average deferral rates.
While these provisions may all be good for plan
sponsors, the sponsors will be looking for assistance in
understanding the new regulations and their benefits.
They will also be looking to find out which providers
offer the best auto-features. And this is where you can
demonstrate your value.
Now is a great time to revisit sponsors who were
previously apprehensive about automatic enrollment,
consulting with them on program design and default
investment option types, explaining to them how easy
auto-features can be to implement. Ask sponsors what
tools they are currently using to simplify their plans
while increasing participation. If they can’t easily
answer this question, you can talk to them about how you
may help them do just that.
Click here to visit MassMutual.
©
2006 Massachusetts Mutual Life Insurance Company,
Springfield, MA 01111. All rights reserved.
www.massmutual.com MassMutual Financial Group is a
marketing designation (or fleet name) for Massachusetts
Mutual Life Insurance Company (MassMutual) and its
affiliates. RS: 10042-00
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