A Look at the Participant RMD Journey: ASPPA Annual

Required minimum distributions (RMDs) are among the many plan features affected by laws enacted and regulations issued in the last few years. An Oct. 24 session of the ASPPA Annual conference held at National Harbor addressed some of the consequences of those changes. 

In “Participant Journey: Let’s Talk About Retirement: RMDs, Beneficiaries, and Total Outcome,” Theresa Conti, QKA®, APR, ERPA, CPFA, Senior Consultant, July Business Services and Amy Garman, QKA®, TPA Internal Retirement Plan Counselor, Capital Group, offered their insights. 

Following are highlights of that discussion. 

Decumulation

Much guidance addresses accumulation of assets; however, decumulation generates attention too—and not only regarding regulation and guidance. 

For instance, some participants who retire choose to keep their money in their erstwhile employer’s plan. Conti and Garman suggest that such a participant may choose to do so because: 

• it allows them access to flexible, low-cost investments;
• it gives them access to education and planning tools; and
• it simplifies their retirement paychecks. 

However, a retiring employee keeping their money in the employer’s plan can create some complications for employers, they observed, such as: 

• tracking;
• the possibility that the risk of an audit may be higher; and 
• fiduciary concerns. 

It can help to address these concerns, Conti and Garman suggest, if:

• participants are educated about retirement income options;
• there is discussion with plan sponsors about potential costs, such as audit charges and the cost of searching for missing participants; and 
• there is assessment of recordkeepers’ ability to handle distribution options. 

Communication Is Key 

Conti and Garman stressed the importance of communication. “It’s hard to understand what it’s going to look like,” said Garman, but she offered some concrete ideas. 

Conti and Garman argued that it is important to work with recordkeepers to confirm how they will communicate with clients. 

Educators Too

Education is another priority Garman stressed. 

In the next couple of years, it will be important for recordkeepers to pay attention not only to developments, but also participant education said Garman, adding that “the onus is on us to make sure that participant education is ongoing.” She further suggested leveraging literature and websites from recordkeepers in order to educate clients and participants.

Garman added that “it comes down to education” regarding planning retirement income options as well.