Deals & People January 19, 2023

DCIIA Appoints New Head of Retirement Research Center

Pam Hess will take over as executive director of a research center that includes advisory councils staffed with some of the industry’s largest retirement plan advisories.

Reported by


The Defined Contribution Institutional Investment Association announced Thursday that Pam Hess has taken over as executive director of the organization’s Retirement Research Center, the association announced in a press release.

Hess ascends to the position after joining the RRC in 2021 as vice president of research. She succeeds Warren Cormier, the founding executive director of the center, who will remain involved as director emeritus with a focus on custom research done exclusively for one organization, according to the release.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

In November, DCIIA announced the formation of three new advisory councils to provide stakeholder input and guidance on the most important topics and needs of the industry. As executive director, Hess will identify and run key research initiatives with input from some of the biggest retirement plan advisories and institutional consultants in the space.

Hess played an “instrumental role in conceptualizing and developing the Advisory Councils” with the RRC leadership and staff, a spokesperson said by email. Hess has also led the organizing discussions and resulting meetings and events and will continue to do so in her new role, the spokesperson said.

The Councils advise the RRC on potential topics, review research papers, and facilitate collaboration between the RRC team and specialized segments of the industry, the spokesperson said. They also meet formally each quarter to review projects, priorities and collaboration opportunities with members.

In 2022, the center published reports with member input on industry topics ranging from low- and moderate-income worker views on financial wellness to an analysis of custom target date funds. In November, the association announced the three new advisory councils with industry organizations to add to its existing academic advisory council.

Hess played an “instrumental role in conceptualizing and developing the Advisory Councils” with the RRC leadership and staff, a spokesperson said by email. She has also led the organizing discussions and resulting meetings and events, and will continue to do so in her new role, the spokesperson said.

The Councils advise the RRC on potential topics, review research papers, and facilitate collaboration between the RRC team and specialized segments of the industry, the spokesperson said. They also meet formally each quarter to review projects, priorities and collaboration opportunities with members, she wrote.

DCIIA’s Advisor Institute Council includes representatives from Hub International, CAPTRUST, Gallagher Fiduciary Advisors, Marsh McLennan and the SageView Advisory Group, among others. The Institutional Consultant Advisory Council includes representatives from Aon, Callan, Mercer, and NEPC.

Cormier, now in an emeritus position, will be focused on expanding the RRC’s proprietary projects pipeline, in which custom research is conducted exclusively for one organization, and will serve as a general resource, according to DCIIA. The former executive director joined in 2018 after working as CEO and co-founder of Boston Research Technologies and president and founder of Boston Research Group. He is also the co-founder, with Dr. Shlomo Benartzi, of the Behavioral Finance Forum.

Before joining DCIIA, Hess worked at Aon Hewitt as director of retirement research. Earlier in her career, she worked on the investment side at Aon Hewitt and with other firms in the financial services industry, including Smith Barney. She is based in Charlotte, North Carolina.

Compliance January 19, 2023

Small Businesses and SECURE 2.0: Exemptions and Tax Credits

SECURE 2.0 offers tax credits to create plans, as well as to join existing PEPs and MEPs.

Reported by


The SECURE 2.0 Act of 2022, among many other things, offers increased tax credits to small businesses to encourage plan creation. These tax credits were expanded to such an extent that Joe DeBello, vice president of OneDigital Retirement and Wealth, remarked at a OneDigital webinar on Tuesday that it will be “next to impossible for small businesses to not be able to offer a retirement plan.”

The recently passed retirement reform law will increase the three-year startup tax credit to 100% of administrative costs, up from its current 50%, with an annual maximum of $5,000, for employers with up to 50 employees. This provision came into effect on January 1 of this year.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Chad Parks, founder and CEO of Ubiquity Retirement and Savings, a 401(k) provider specializing in small businesses, says that this should be a big deal for small business. He remarks that this provision “basically says to the small business owner that the federal government is so serious about getting you into the retirement system, that they are willing to pay the startup costs for the first three years.”

Parks explains that since small business plans rarely cost in excess of $5,000 a year to administer, this effectively makes the plan set up free for the first three years.

For small businesses sponsoring a new defined contribution plan, SECURE 2.0 makes available a tax credit for employer matching contributions. The credit covers 100% of employer matches for the first two years after plan creation, 75% in Year 3, 50% in Year 4, and 25% in Year 5, before falling to zero in Year 6. The annual maximum for this credit is $1,000 per participant. Employers with 50 or fewer employees receive the full benefit of this credit, and it is phased out gradually for those with 51 to 100 employees. This provision also took effect on January 1 of this year.

Section 111 of SECURE 2.0 also states that joining a pooled or multiple employer plan counts as creating a plan for purposes of applying the three-year administrative cost tax credit. This provision is retroactive for plans created after December 31, 2019.

SECURE 2.0 also exempts small businesses from certain mandates. Most notably, employers with 10 or fewer employees do not have to have the automatic enrollment and escalation features required for all new plans created in 2025 or later.

Parks notes, however, that the SECURE Act of 2019 provides a tax credit of $500 for the first three years after an automatic enrollment plan is adopted. This tax credit did not have an expiration clause and was not repealed by SECURE 2.0, which means that when automatic features become mandatory for all new plans, the $500 credit will still apply for the first three years for new plans using automatic features.

Small businesses did not, however, receive an exemption from what might be the most infamously complicated provision in SECURE 2.0: a mandatory Roth source for all catch-up contributions made by highly compensated employees. David Stinnett, head of strategic retirement consulting at Vanguard, warns sponsors to not “underestimate the complexity of this provision.”

Plans that do not offer a Roth source may even have to suspend catch-up provisions for their HCEs entirely if they are not prepared to comply with this requirement in 2025, when it is set to start, Stinnett says. This could be a particularly burdensome feature for small businesses, one to be prioritized in planning.

Section 310 changes the rules for top-heavy testing in 401(k) plans. 401(k) plans are regularly required to pass the top-heavy test, which assesses the contribution proportions that HCEs and non-HCEs can make to a plan. If they do not pass, the sponsor can make a 3% non-elective contribution instead. This can be particularly burdensome for small businesses, because they are more likely to fail the test, according to Parks, and the 3% contribution, in effect a penalty, would affect their budget more than a larger business.

As a consequence, small businesses have an incentive to remove excludable employees (i.e. lower paid and part-time employees) from the plan so the businesses can pass the test without paying the 3% contribution.

Section 310 allows sponsors to perform a top-heavy test on excludable and non-excludable employees separately, thereby making it easier to pass and reducing the incentive to remove excludable employees from the plan.

Though Section 310 does not apply only to small businesses, it does potentially impact them more. The phrase “small business” or “small businesses” was used three times in Section 310 in a summary of SECURE 2.0 provided by the Senate Committee on Finance.

«