KeyBank Institutional Advisor’s National Call - 401(k) Plans – How to Optimize for Today’s Workforce
Craig Greenwald [00:00]
Okay, great. We'd certainly like to get started on time to make sure we, you know, value everybody's time appropriately throughout the call. So, thanks everyone for joining today's call. I'm really looking forward to the retirement-focused discussion that we have planned today.
I'd like to introduce today's speakers. To start off, first, I'm Craig Greenwald with KeyBank. I lead our retirement service offering and solutions nationally for Key within our institutional advisors team.
I have over 25 years of experience in the retirement industry, and also I'm an actuary by background.
Next, Ken Sinvisky.
Ken is also with KeyBank and leads our investment team nationally with an institutional Advisors Group as well. Ken also has over 25 years of experience in the investment space and specializes serving institutional clients in many areas, including retirement programs, foundations, and endowments.
Next, I'd like to introduce two of our guest speakers as well. First, Brian Lynch. Brian is with Pentegra. Pentegra is a firm that we work jointly with with our retirement offering that we will speak to later in the discussion.
Pentegra is a well-known firm in the retirement space, and largely focused on providing administrative fiduciary services to help plans meet their complex fiduciary requirements and responsibilities. Brian currently serves as a regional director for Pentegra, and has over 20 years of experience in the retirement industry.
Lastly, Jeff Zions with Transamerica. Transamerica is also a partner of ours within our retirement offering. Transamerica is certainly a well-known and award-winning record keeper in the retirement space.
Jeff also has over 25 years of experience in the retirement industry, and is a Divisional vice president at Transamerica.
Next, would like to just briefly touch on our agenda. As you can see here, we have three broad topics. First, the impact of the changing landscape on retirement benefits. Next, critical priorities for managing a 401 plan from a plan governance perspective.
And last, we will introduce Key's 401 solution, with a focus on how it can lower fiduciary risk and improve retirement outcomes.
Note that these slides and a recording of today's presentation will be made available for reference after the call.
Just before we move forward, do want to share that there is an opportunity to ask a question during this discussion if you'd like.
We will try to take, certainly, questions as much as possible during the call. To submit a question, please use the Q&A button in the bottom right of your screen.
Only the speakers will see the questions that you submit, and please be sure to submit them to all panelists, and then select and hit the send button. If we're not able to get to all of your questions, please connect with your relationship manager so that we can follow up.
Okay, great. So now we're going to start with the impact of the changing landscape on retirement benefits. I'm sure the chart on the right-hand side of the page is probably not a surprise to most, as most participants are covered by 401K plans, as the trend has certainly increased significantly with a decrease in the defined benefit or traditional pension plan space. I thought it was important to start our discussion here, because
Because this topic has several implications to both employees and employers as, again, as employees are mainly covered by defined contribution or 401K plans going forward. The prevalence of these plans and retirement benefits being delivered through defined contribution plans has profound… has profoundly altered how many people save for retirement, manage risk, and plan for their future.
Traditional defined benefit programs had provided guaranteed lifetime income benefits. In defined benefit plans, employers maintained the investment risk, giving retirees financial predictability.
401K plans and other defined contribution programs, however, that responsibility for saving, investing, and risk management is directly on the employees and participants.
Retirement income from 401K plans depends on an employee's own contributions and investment performance, making planning for retirement far less predictable.
Retirement outcomes now vary widely, and financial literacy is more important than ever. In addition to these challenges, employees are not truly sure that they can count ongoing on their overall full Social Security benefits.
Next, the shift to defined contribution plans has significant implications for employers.
As such, we are now going to focus on how the evolving landscape of this change in retirement… the continued change in this retirement benefit offering is impacting workforce planning for employers. We will also touch on the importance of offering competitive retirement benefits from a recruiting and retention perspective. As an example, according to a recent study by Transamerica.
83% of employees believe that retirement benefits offered by a prospective employer may be a major factor in their decision when looking for a job.
Given the responsibilities on employees, including contribution rates and investment selection, many employees may not be able to financially retire when they had planned or hoped to do so. All of this, of course, can have a ripple effect on workforce planning for employers.
As delayed retirements can impact succession planning and career progression for junior staff.
Importantly, this can also have more broad cost implications to an employer on their overall benefit offering. As an example, delayed retirements would translate to an aging workforce, which would have generally a higher medical plan cost for employers.
In addition, longer-tenured employees may have other elevated costs, such as overall salary levels and PTO or vacation allotment.
Given the changing retirement landscape, most employee surveys tell us that employees are looking for more support and guidance. As such, a robust communication and financial education program is critical for employees to really value and understand their benefit offerings.
On this slide, you'll certainly see some of the survey results, just two that I'd like to mention. First, 92% of employees are stressed about their finances, is what the survey tells us. Probably not a surprise to most of us. In fact, some of the surveys even suggest that the financial stress would have a
very significant impact on workplace productivity, as over 8 hours of productivity may be lost per week, on average, per employee as a result of this. Next.
Jeff is going to focus a bit more on strategies to encourage employees to increase 401 savings, as well as participation.
Jeff Z - Transamerica [06:59]
Thank you, Craig. And, good afternoon, everybody. Thanks for joining today. Yeah, kind of going off of that lowering stress idea that Craig talked about.
you know, if we can get participants saving more, that's definitely one of the ways to get there. We've found in our industry that we really need to promote savings and almost do it for the participants some of the time with automatic enrollment and automatic escalation. Simply put, what this means is
we determine, at a predetermined rate, we would automatically enroll your participants into the plan when they join the organization, after a waiting period, and then after every year, escalate them up 1% in contribution. There's different caps, there's different
Minimums that we like to talk about, but that's something that we would work with our clients to talk about those different percentages.
Communication and education, we'll talk more about. This is a critical, critical part of the retirement program, and we've got a lot of different ideas that we're going to discuss in today's meeting.
Matching is something that we'd… I'd say 9 out of 10 plants today are offering a matching solution.
We try to design that match to meet the needs of each employer, whether it's a safe harbor match that eliminates some of the testing, or whether it's a tiered match. Again, that's something that all the parties on today's call would work with the clients to determine.
And then we wrap this offering with a lot of financial wellness support, whether that's
maybe offering HSA integration, whether that's offering emergency savings. There's a lot of different tools and resources that the record keepers, such as Transamerica, can offer to the different, our plan sponsors.
So let's… let's discuss,
briefly, what… you know, really one of the topics today, what we're talking about are what's called a pooled employer plan, or you'll hear it commonly referred to a PEP.
Pooled employer plans have been around for decades, but in the past, you had to be a related company to offer a PEP. And think about a PEP, or a pooled plan, as, like, a hub and a spoke
The theory. So, you've got one central plan sponsor.
Which in this case is gonna… we're gonna talk about, that'll be Pentegra. But you've got one… one common plan sponsor, and then each…
adopting employee, or each company, like yourself, would adopt onto the main plan.
So, what you're gaining in that is, number one, economies of scale. Instead of
sitting alone as a single employer plan, now you're part of a very large, offering, which leads to a lot of the benefits on the right-hand side that I'll talk about here a little bit further shortly. But at PEP, again, they've been around for quite a while.
but have really gained traction the last few years because the elimination of that commonality. You don't have to be a related employer, part of an association, or…
PEO, for example, that doesn't need to exist anymore. So any, you know, if we put together a PEP, which we're going to talk about, anybody can join it if you meet certain minimums.
And then that leads me to the next point about the Department of Labor, because obviously.
In order to offer these…
unique… these unique products. The Department of Labor, we need their blessing, and they've given that. So, the DOL has really come in and offered some significant guidance the last couple of years.
So they're really encouraging smaller employers, and even some mid-sized and large employers we've seen go into our PEPs, but really, you know, they've really given the guidance that these can be very beneficial for employers and participants. And a couple of things
that the Department of Labor touches on that really impact you directly. Number one is you're transferring risk.
you're no longer considered the plan sponsor. So think about that risk that comes along with being a plan sponsor. You're… you're transferring much of that risk
the administrative tasks, the day-to-day administrative tasks are greatly reduced. And then, obviously, we'd love to, you know, the cost is a big part of retirement programs, so we've seen our PEP, our pool plan adopters.
dramatically lower their cost. You know, even think about the audit cost if you're a large plan filing an audit, and audits can be, you know, $15,000 to $20,000 in annual fees.
Those are shared amongst the various adopters, so it brings that cost down significantly as well.
So there's a number of key factors that, that go into why you would want to join a PEP, and I want to turn it over to Brian with Pentegra to talk a little bit more about that.
Brian Lynch [12:05]
Thanks, Jeff, and good afternoon, everyone. Appreciate your taking some time to learn about the retirement solution that we're going to discuss a little bit.
A lot has been said about…
the importance of retirement planning so far, and one of the things that is going on in our country is the leaders have a huge focus on the retirement plan landscape. They understand how critical it is, and it's one of the few areas where we have bipartisan support.
Over the last 8 years, there's been quite a few laws passed that have impacted retirement plans.
So, it's got the eyes and ears of not just the regulators, but other leaders as well.
And it's a critically important component of an overall benefit structure. In fact, it is the number one tool for Americans to gain financial independence by investing and saving
thoroughly in a workplace retirement plan, it is the number one way that Americans get financial independence.
The law that…
manages retirement plans, or that people are forced to follow, is known as ERISA. What does that stand for? It's the Employee Retirement Income Security Act.
It was passed in 1974, so it just hit its 50th anniversary a year ago, and it is a very, very high standard that one who offers retirement plans have to be held to.
Why is that?
well, I kind of say this half-jokingly, but it's serious. There was a movie on Netflix, came out a few years ago, great cast, called The Irishman.
And there's a scene there where Al Pacino plays Jimmy Hoffa, and they literally steal money from the union pension fund that Jimmy Hoffa runs.
To build casinos for the mafia.
There's other stories, very sad. Studebaker went bankrupt.
before ERISA, and all the participants lost their retirement savings or the pension they were promised, because they were not forced
to remove the assets of the pension plan from the assets of the company, and they were able to use that for their creditors. So this is why ERISA was passed, and why it is so stringent. We do not want to see things like this occur with people's future retirement savings.
And one of the things that ERISA's concerned with,
We want to have you all understand today is these bullet points are critical to help you realize these are many, or a few of the many requirements that you as a fiduciary
Have to make sure you have formal processes around in order to manage your retirement plan effectively.
And ERISA holds, sponsors to the highest standard ever, or not ever, the highest standard, and that's fiduciary. And what does that simply mean? It means that every decision you make
As a plan sponsor, Has to be as a prudent expert would.
Again, I'm going to use an example. I'm a geek over 20 years in the business. When I'm on the road quite a bit, I like to listen to podcasts to get other perspectives. And one thing I've learned, when you listen to podcasts on ERISA, every single guest so far that has been on it.
They have all been asked how they got into the retirement plan industry.
Not one ever said, when I was in middle school or high school, I dreamed that I would be spending my life knee-deep in ERISA plans and helping people retire.
So I say that because here are people who literally dedicated their lives
And plan sponsors who are trying to offer an important benefit are held to a standard that they may or may not even understand all the complexities of this law that manages retirement plans.
Real simply, the reason you have to have these bullet points we have on the screen here.
ERISA is really a process and documentation law.
It's… there's not a lot of black and white in what you can do, or what is considered, you know, check the box for regulators when they're looking at your retirement plan.
But as long as you have documentation and a prudent process.
you're covering. Now, the standard they use quite a bit in the law is reasonable.
I go back to an old psychology class. There was a picture shown
And it had the same lines, everyone saw it, 100 people would see it, 50 people saw one image, 50 people saw a completely different image. If you're familiar with it, one image looks like a young woman to the audience, and the other image, same page, looks like an old woman to the audience.
And you'd literally have people arguing what they're seeing. It's literally the same exact lines on that piece of paper, but people have a totally different perspective.
So that reasonable standard is really difficult, and requires
Tremendous amount of knowledge about how to implement those prudent processes in order to cover the important roles you have as a plan sponsor.
So I've used this F word quite a bit, fiduciary.
And what does that mean? Well, a fiduciary is just simply every decision has to be made as a prudent expert.
would. Meaning, one who is well-versed in what you're going through. And Craig, if we can advance the slide.
So, who is a fiduciary? Well, if you offer a plan, That means you're a fiduciary.
And there's 4 key things that you should make sure you cover when you're a fiduciary that you have to cover.
One is duty of loyalty. I've kind of hit this pretty hard. That's making sure that every decision you make is in the best interest, or the sole interest, of the participants and their beneficiaries.
Duty of care, just referenced that as well. That just means every decision has to be made with the care, skill, and prudence of someone who is an expert in the matters that you're trying to make that decision for.
The duty to diversify?
We're gonna hit on that a lot more in a few minutes here with Ken.
And one of the most critical, the duty to follow plan documents. Every day, every week, we work with plans, and one of the first things that we ask, and by the way, a regulator would ask, is where are your plan documents? And the amount of plans we work with that
Can't find them quickly, don't have access to them.
Pretty scary, because everything that you do has to follow that legal document.
And if you don't have them, the regulators will literally set camp up in your conference room, and they're very good at what they do.
In fact, if we move to the next slide, if you ever find yourself on the wrong end of a DOL or IRS investigation.
They want to make sure that that plan is set up
or the benefit to help people retire. IRS is more concerned with the tax qualification, that you're following their rules, so you're not trying to hide some money that's not allowed.
DOL is really concerned about that fiduciary standard, and you can see some of the bullet points. They're very good at,
Finding issues with plans. I had the…
I don't know if it's the benefit, but I once saw a former DOL investigator speak.
And he had given some behind-the-scenes
knowledge of what happened there. 75% of the plans that the DOL goes in to investigate, they will find an issue, and they will collect money, as you can see, in 2024, over $1.4 billion.
was, restored back to retirement plans. And most of that has to be covered by the organization if they were found to have a fiduciary breach.
So… A lot has to be done in order to follow the real stringent rules of ERISA.
it's the…
very difficult law to understand. I would argue that many in our industry sometimes struggle with all the provisions.
Not to say that help isn't there for you. And one of the key ways and key things that you have to think about when you're running a retirement plan, I mentioned was that duty to diversify.
and really understand your fund menu as a prudent expert would, well, there is help, and I'm going to turn it over to Ken, who can give you a little background on what that means and some resources that are available to you as an investment committee.
Ken Senvisky [20:24]
Thanks, Brian, I really appreciate it. So, we talked about being a fiduciary, we talked about proper oversight, proper governance. So, right now, we're going to focus on what we believe are best practices for structuring a 401 investment committee.
Investment Committee is critical for ensuring strong governance of the plan and fiduciary oversight.
For all employees that are registered in the plan.
A well-structured investment committee helps organizations, employers, best manage their retirement plan responsibilities by meeting requirements
acting in the best interest of plan sponsors, or plan participants. We're going to touch upon
What we believe are a few bullet points as to how to structure, a well
Crafted Investment Committee. First.
Define clear roles and responsibilities of committee members. These roles and responsibilities should be laid out with committee members.
Clear delineation of duties and responsibilities to help prevent gaps or overlaps in the oversight and ensures accountability of
The members on the committee.
Next.
Include broad experience. Committee members should bring together a diverse set of skills, including finance.
And investments, compliance, and a deep understanding of participant needs.
This diversity on the committee ensures that decisions are well-informed.
And consider all aspects of plan management.
Third, establish regular meetings. Have a regular meeting schedule.
And maintain documentation.
Whether those meetings are quarterly or more frequently, it's essential for that ongoing oversight. By keeping detailed minutes and documentations of all decisions and discussions in committee.
It helps to support transparency, and also provides a record for regulatory and audit purposes.
And then lastly, which I think is most important, is implement ongoing training and education.
Committee members should receive ongoing education on fiduciary duties, and
information on regulatory updates. The retirement plan landscape is constantly evolving, so staying current helps committees fulfill their responsibilities and avoid compliance pitfalls.
So next, I thought I'd focus on the importance of offering a diverse and high-quality lineup of investment options within a retirement plan.
The goal is to ensure that all participants have access to choices that help meet a range of needs, risk tolerances, and investment goals and objectives.
The first thing to do in structuring an investment program for a 401 is to develop
An investment policy statement.
The investment policy statement is a document that provides a framework for fund selection and ongoing monitoring.
It also helps plan fiduciaries and the investment committee make consistent, well-informed decisions, and serves as a reference point for evaluating fund performance.
and compliance.
Next!
Make sure you offer a qualified default investment alternative.
This is essential to offer for automatic enrollment. QDIAs, as they're referred to, are designed
To be appropriate for participants, Who do not want to make active investment decisions on their own.
It's common to select target date funds as a QDIA. These options help to ensure participants are invested in a diversified portfolio aligned with their retirement timeline.
As it relates to target date fund options, your plan should include these target date fund options, because they're a popular choice for participants who want a simple, hands-off approach.
These funds automatically adjust asset allocations based upon each participant's expected retirement date, gradually reducing risk as retirement approaches.
Offering target date funds can help participants to avoid common investment mistakes and stay on track for long-term goals.
Next, you want to make sure that you include low-cost index funds as an option for participants. These funds help to minimize fees.
which can significantly improve long-term performance for participants. Index funds also provide broad market exposures and are easy for participants to understand.
And then lastly, regularly review and update the fund lineup. It's not enough to just set a fund lineup and forget about it.
Regular reviews are necessary to ensure that all options remain competitive, cost-effective, and aligned with participants' needs.
Performance, fees, and changes in the investment landscape should be considered during these regular reviews. Updating the lineup as needed demonstrates a commitment to your fiduciary responsibility
and participant outcomes.
So I'll turn it over to Jeff.
Jeff Z - Transamerica [25:41]
Thanks, Ken. And one other… another part of the… of the maintenance of a retirement plan is
fee benchmarking. So.
going back to the Department of Labor, they recommend that plans benchmark their fees every few years. So every 3 years or so.
it's critical
again, going back to what Ryan said about documentation, your role as a fiduciary, it's really… you're creating this… think of, like, a vault of backup information, and it's just good practice as well, so benchmarking your fees will ensure that you're getting a fair price.
for the services that you're receiving from the record keeper and the advisor.
Again, why benchmark your fees? It's just plain and simple. You need to do it to document that you are receiving good value for the offering.
So, if you're a fast-growing organization, if you're going through acquisitions, mergers, etc, you may even want to do it every couple of years. And that's also, you know, as you've benchmarked throughout the years, a lot of the times you're able to
Potentially lower your costs on the record-keeping side as you grow as an organization.
So let's… let's spend a little bit of time talking about communication and education. That's something that, at Transamerica, we feel very, very passionately about, and I would just want to run through some different ways that we deliver communication and education to our plan participants.
First of all, most of our plans have what's called a relationship manager or an account manager. They work with you to put together an annual education plan that outlines and sets a strategy for the entire year worth of education for your participants.
We find it's critical to use clear and concise language, keep it simple. If you have multilingual needs.
A lot of the time we see Spanish integrated into the offering as well, and we can do this in a number of different formats. The most common are going to be webinars, whether that's live or recorded, just like we're doing today.
we still love to do in-person communications. We really… we do love to send folks out in person, especially when we kick off a new offering, just to be able to communicate that face-to-face, and then maybe spin off into some one-on-ones afterwards.
We're gonna be able to offer guidance, we're gonna be able to offer even advice if participants have questions on
How much should I put into the 401K plan? Where should I be investing my money? Those are all things that we can address during these online and in-person sessions.
And then we just encourage regular communication. We find that engagement really is the key. If we can keep your participants engaged.
it's gonna lead to better outcomes, and again, going back to that lower stress, financial stress goes down if we have a better engaged participant base. So Craig, let me turn it back over to you.
Craig Greenwald [28:41]
All right, great. Thanks, Jeff. Appreciate that, and I know we've certainly talked a lot about fiduciary responsibilities and the importance of plan governance, so I'm real excited now to share with each of you a bit more details with regards to Key's 401 solution.
As Jeff touched on earlier in the call, pooled employer plans, or PEPs,
have an expected significant growth over the next few years as more and more employers are choosing this type of program, given the many benefits offered relative to, say, a single employer 401 plan.
As such, we will now spend some time focusing specifically on Key's 401K Pooled Employer Plan, and provide some details and further background. Just a note…
Keys 401K PEP is for employers that have at least $2 million in their 401 plan with regards to asset values to be able to join the PEP.
The key PEP is designed to reduce employer risk and simplify retirement plan management, as well as provide improved retirement outcomes for participants, which certainly is a critical factor in any type of retirement.
retirement program.
Again, as Jeff mentioned earlier, a PEP is simply a defined contribution retirement plan that allows unrelated employers to participate through a pooled arrangement.
A PEP can be particularly helpful, as most employers don't have internal expertise in managing 401K plans. Note that PEPs are not just for small employers, as, you know, many employers, whether you have $2 million or $200 million in plan assets, so we're seeing many employers join these types of programs.
And the reason is simple. Whether you have a $2 million or $200 million plan, you have the same type of compliance issues and same type of fiduciary standards that you have to meet, regardless of size. The key 401 PEP is managed by professional fiduciaries with the expertise and resources to effectively oversee the program.
As such, our PEP can significantly reduce your risk in providing a retirement program to your participants.
When you consider all of the various risks and administrative complexities in managing a 401 plan that we discussed earlier in the presentation, our PEP can provide substantial benefits due to the nature of the bundled and integrated offering.
As Jeff mentioned earlier, even the Department of Labor, or DOL, recently has signaled significant support for PEPs, given the many benefits they can offer both employers and the participants. In particular, with regards to our PEP,
Our PEP provides plan sponsors with a significant reduction in plan administrative tasks, as most of these tasks are handled directly by,
by the PEP itself, in this case, Pentegra.
Our PEP provides plan sponsors with significant reduction in fiduciary risk and responsibilities, as professional fiduciaries within our PEP program take on most of the legal and regulatory burden. When you consider the reduction in administrative tasks.
as well as fiduciary responsibilities, joining our PEP could save your organization an estimated 100 to 200 hours annually, depending on the size of your 401K program.
Our PEP also provides access to economies of scale pricing by pooling assets from multiple employers. RPEP can typically provide better pricing and lower fees, which benefits both the employer and, importantly, the participants.
Our PEP also provides access to industry-leading providers, which also provides benefits, of course, to participants, both from high-quality investment options and menu, as well as award-winning record-keeping services that can provide significant support to participants for both initial enrollment and ongoing education.
When we built the Key 401 , we wanted to ensure a great experience for both employers and their participants. This slide provides a high-level summary of the roles and responsibilities within the Key 401 PEP.
KeyBank, Pentegra, and Transamerica.
All three of these organizations have tremendous experience in the retirement space in these types of services, and have been providing these types of services for several decades, and are well-established and industry leaders in this space.
In particular, KeyBank serves as the investment manager, Pentegra as the plan administrator and plan sponsor of the PEP, and Transamerica as the record keeper. Going a bit deeper into each of the roles, KeyBank, again, serves as the investment manager, which includes fund selection and ongoing monitoring of those funds. As Ken will touch on in a few minutes, this also includes establishing a strong investment policy statement
to support decisions made by KE in this process. In fact, we have created a formal investment committee just to manage and oversee the PEP. Participants certainly still have full control with regards to how they allocate their individual 401 assets.
Pentegra, again, is the plan administrator and plan sponsor for the PEP. Pentegra will provide full compliance testing and even draft and sign the 5500 on behalf of the PEP.
Which, obviously, is welcome news to employers that join the program, because this means individual employers no longer need to sign a Form 5500. In addition, when annual plan audit or DOL investigation questions come up, it's typically Pentegra that will be collaborating directly with the auditor rather than individual employers.
Other administrative duties that employers typically would get involved with are also transferred, in this case, to Pentegra, such as authorizing loans and distributions.
No surprise, this process can save employers a significant amount of time and energy. Lastly, Transamerica is the record keeper, providing participants with online access to their accounts. Transamerica provides a full call center and ongoing support to participants as well. As part of the PEP,
Transamerica provides enrollment and education services, as well as ongoing communications that can significantly enhance the value of the overall retirement offering. Next, Jeff will go into more detail with regards to Transamerica's role in the PEP.
Jeff Z - Transamerica [35:22]
Thanks, Craig. Yeah, we've talked a little bit about, education and guidance, so let's really here just focus on
some of the numbers that really pop out to me. So.
When our retirement plan consultants, we call them RPCs, are meeting with your participants and employees, we see a couple of key drivers happening here. 32% higher average participation rate.
and almost a 30% higher, average deferral rate. So, more… just think of it as simply as this. More people are participating, and they're participating at a higher level of deferral, which is really, really impactful. So, again, we can have the best program
in the world, but if we're not communicating effectively, it's gonna fall flat, I feel like. And then we know that the RPCs and the retirement plan advice teams really get a lot of feedback based on, 98% of the participants we're meeting with
said that the meetings were beneficial or very beneficial, so we know it works, it's documented, we see the results, and that's a big, big part of the plan.
So, how do your participants then access, once they're enrolled, they're deferring, everything's going well, how do they get access to their, to their 401K? And that's a couple of different ways, mainly through the desktop or,
Or, like, even through your iPad, or through the mobile app. These are both available in English and Spanish, which…
as a pretty unique offering. And then the transaction capabilities are very robust. Most of the activities that you can do
online if you're on your desktop or laptop computer. You can also do via the Transamerica mobile app, so if you need to make changes, even down to naming beneficiaries.
you can do all that either on the desktop version or via the mobile app that are both award-winning interfaces with your participants. So, education mixed with technology, we know, is the key to those participant outcomes.
So, Brian, back to you to talk a little bit more about Pentegra's role.
Brian Lynch [37:38]
Yeah, thanks, Jeff. So we talked about how this solution, can help the participant, clearly. Jeff's firm and Transamerica's partnership has led to such significantly better outcomes for those who engage.
What Pentegra will do is offload that administrative work. So, it's a fiduciary role. If you're the person at your organization signing and filing that 5500, you would be the named plan administrator.
And all the things in that gray box you see there, not only do you have to make sure they're being done according to ERISA, but you're…
Responsible and potentially liable, that they are done correctly.
When you join the PEP, however.
You can see the red arrow to the right, you're left with those three tasks.
As far as the responsibility goes. So, within the PEP, everything in that box is not only being taken care of in a way that it's supposed to be done, but the responsibility, that fiduciary responsibility, is being done for you as well.
And what does that mean? Well, because Pentagra is the pooled plant provider, we are actually sponsoring the, PAP.
So, if you think of that 5500, if you're familiar with it, on the front page, it would have your organization's name, it would have your address, and again, the signature of someone.
Well, if we move to the next slide, you'll see that Pintegra is actually the sponsor of the PEP. So that first page, it would be Pentegra's name, Pintegra's address.
And we would be the ones who are signing and filing that with the DOL and IRS. So if something ever did go wrong, it would not be your organization that's getting the call, because your name is not on that. It would be Pentagra.
So, we are making sure that
Everything that you want your retirement plan to do for your participants, we're responsible for making sure that the administration of that is done correctly, and we're really doing a big service by removing your name from that government form, as well as in the document, as that named fiduciary plan administrator.
So… You know, obviously Transamerica has proven to help participants.
Create better outcomes. Integra's there to help the plan administrator and the plan sponsor take those legs of the stool off your plate. And Ken's going to talk a little bit more about exactly what KeyBank does from that investment manager fiduciary, and how that can help offload even more of that ERISA responsibility.
Ken Senvisky [40:08]
Yeah, thanks, Brian. You know, we've talked an awful lot about
transfer of fiduciary risk and responsibility as relates to the administrative function, and I think a lot of plan sponsors can appreciate the additional work that is necessary to maintain a 401 plan. In my experience, not enough employers consider the investment management risk, or the investment risk.
That they assume in maintaining oversight a 401K,
program. What you can see here from this slide is a differentiation between a 321 advisor and a 338 advisor. You can also see all of the responsibilities,
of maintaining an investment program for a 401 in order to accommodate the rules and requirements of ERISA.
So, from an investment perspective, you can see that a significant portion of fiduciary risk is transferred to a 338 advisor when joining a PEP program. This slide, again, provides details on all of those various responsibilities.
As shown, our role, KeyBank, in the 401 PEP program is to serve as a 338 advisor.
all of that fiduciary risk of an investment program, with the exception of monitoring the service provider, is transferred to KeyBank, serving as a 338.
So, as Craig earlier mentioned, in addition to maintaining an investment lineup, we also maintain an investment committee that consists of experienced investment professionals that are responsible for reviewing the underlying plan fund lineup to ensure
compliance, not only with ERISA, but also with the investment policy statement that has been created for the investment program, or for the key 401 PEP.
So, Craig, if you want to turn to the next page, we can talk a little bit about the key 401 PEP fund lineup.
And as we…
You know, as we went into this endeavor, we wanted to make sure, as a good fiduciary, that we created a fund lineup that was broad enough to provide adequate diversification for participants, including not only active funds, but passive funds, as well as target date funds, which
Are in 5-year increments for participants to invest in in a passive manner that is simple, that automatically adjusts the allocation over time based upon their retirement date.
In addition to having A well-thought-out, diverse fund lineup.
We have a couple additional options that we've included to provide additional opportunities for participants to influence their own opinions as it relates to their individual portfolio construction. We have a managed advice option.
That is… that is managed through Transamerica, as well as a self-directed brokerage account option for participants to access.
So, Craig, I'll turn it back over to you.
Craig Greenwald [43:20]
Sure, thanks, Ken.
So, before we wrap up, I know we have a few minutes, I am seeing just a couple questions that came in, so why don't we start there, and then we can wrap up.
The first question that I'm seeing is, as an employer that does decide to join the KPEP, would we have flexibility in plan design, or is there only a single standard design that we would have to adopt?
And certainly a great question, maybe I'll quick off an initial thought, and then see if others on the panel have any additional thoughts as well. You know.
With regards to plan design flexibility, the key PEP does offer significant plan design flexibility when joining our PEP. For example, things that impact employers' benefit costs, the vesting schedule, for example, the employer match or employer contribution schedule, all of those can be customized by adopting employers, so this is not a, you know, a fixed plan design approach.
Anyone else have anything to add on that?
Brian Lynch [44:22]
Yeah, Craig, I think you summed it up nicely. I would just say that, when you onboard, each adopter would have a plan design call with the team onboarding from Integra, KeyBank, and Transamerica.
And there's very few limits. I think one of them is, like, you have to have a calendar year plan, and that's pretty much it. You can't go as a fiscal year off calendar.
Craig Greenwald [44:48]
All right, great, thank you. Next, the only other question I'm seeing is, with regards to transition, how much time does it take an adopting employer to transition and join the PEP?
Jeff, you want to kick off that response?
Jeff Z - Transamerica [45:05]
Yeah, absolutely. The typical transition is about 60 to 90 days in total to bring everything over, and a lot of that is actual legal requirements that
we need to notify your participants within a certain amount of days of the change. So, the actual, you know, call it transition of monies coming over and records, that's a few days, but the timeline in general is about 60 to 90 days.
Craig Greenwald [45:31]
All right, great. Thank you for that. And certainly, I'd say important…
important to add on that with the transition process that we have in place for employers to join the key PEP, certainly the lion's share of the work is handled by Key Transamerica and Pentegra. There's just limited engagement and ongoing work, you know, workflow and time commitment needed from the adopting employer, so I certainly think that that would be welcome news as well.
Okay, so, just to wrap up here, you know, our discussion today, we started with a review of how retirement benefits have changed over the years to mostly 401K-defined contribution-type programs, and how this change has significantly impacted most of the financial security risk to employees and participants.
We then focused on several areas to consider when managing a 401 plan from a plan governance perspective, and certainly from a fiduciary perspective. We also discussed plan audits, DOL investigations, and the need for having a formal investment committee structure in place, with, certainly the need to document certain decisions as well.
And also, of course, an important part of education requirements with regard to participant communication, not only initially at time of enrollment, but certainly ongoing. Many of the areas we discussed in managing a 401 plan, of course, can be time-consuming and complex, and create additional risk for the employer, as well as any of the
and fiduciaries involved in that plan. We do believe the key 401 plan solves many of these challenges and can provide an appropriate support for both employer and its participants.
Just as a quick summary, joining the key PEP, we believe can be safer, simpler, and more cost-effective, all with improved participant outcomes. Safer as most of the fiduciary risk and responsibilities are transferred to the PEP,
simpler, as most of the day-to-day administrative tasks are handled by the PEP, and more cost-effective given the overall economies of scale provided in the PEP.
I'd like to thank all of our speakers today on the panel discussion, and everyone on the line for the time and listening to this important topic. If you do have any additional questions, don't hesitate to reach out to your relationship manager. As a reminder, these slides will be circulated along with a recording of today's call. Thanks again for your time, and I hope everyone has a great rest of the day.
As the retirement landscape continues to evolve, organizations must adapt their 401(k) strategies to meet the needs of a dynamic workforce. This webinar replay explores how to navigate the shifting environment, manage plan priorities effectively, and leverage KeyBank’s 401(k) solution to reduce risk and enhance participant outcomes.
Topics Addressed:
- Impact of the changing landscape on retirement benefits
- Critical priorities for managing a 401(k) plan • How Key’s 401(k) solution can lower your risk and improve participant outcomes
Featured Speakers:
- Craig Greenwald, FSA, EA, MAAA, National Director of Pension Solutions
- Brian Lynch, Regional Director, Pentegra
- Jeff Zyonse, Divisional Vice President, Retirement Transamerica
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