Adviser Opportunities

In 2024, advisers are facing both challenges and opportunities stemming from recent retirement legislation and a workplace push toward financial wellness for employees.

Kevin Gaston, director of plan design consulting at Vestwell, discussed these and other focus areas on April 25 during a webinar entitled “What’s Trending in 2024?” In the talk, Gaston focused on the role Congress has played in shaping retirement plans through legislative actions with the goal of enhancing savings options for Americans and encouraging businesses to offer retirement plans. 

One area of particualr note for plan advisers and sponsors, he said, was the the push toward more post-tax Roth savings for participants.

“One of the ways they did that is by adding a lot more Roth provisions,” Gaston explained. “Highly compensated employees can no longer catch up in pretax [savings], they have to go to Roth. However, they didn’t tell us how to do that … so now it is delayed until 2026.”

Gaston was referring to the Internal Revenue Service in August 2023 providing a two-year extension for the mandate that catch-ups from participants in 401(k), 403(b), or governmental 457(b) plans earning $145,000 or more be made as Roth contributions. That allowed for plan sponsors and recordkeepers to prepare for the mandate that will be a major shift toward Roth account use.

State Engagement

Gaston also noted state mandates that are aimed at bolstering retirement savings among small businesses outside of federal actions. He explained how, even though there are state auto-IRA options, the mandates are creating conversations around retirement planning and increased participation rates across providers.

He noted that employers don’t have to join the state plan, but they must provide some kind of plan—giving a chance for plan advisers to step in.

“What we’re hearing is real feedback from advisers who are coming to us and saying, ‘I’m getting calls from my small business owners I work with asking what do I do?’” he says. “This is your opportunity to tell them, ‘Did you know there’s credits to start a retirement plan? Did you know you can get credit for giving the matching, get a safe harbor?’”

Student Loan Matching

Transitioning to the issue of student loans, Gaston addressed the growing concern and impact of student loan debt on retirement planning. He highlighted the various solutions, including student loan repayment programs and employer matching contributions, as ways to alleviate the burden of student debt for participants so they can save for retirement.

Gaston concluded that a holistic approach to retirement planning is like a “pyramid of savings.” He stated the importance of stabilizing emergency funds, maximizing retirement contributions and addressing liabilities such as student loans.

Rather than just focusing on retirement, the recent legislation provides an opportunity for advisers to work with them on a larger range of employee benefit options.

“I think if you think about [financial wellness] holistically as an adviser, that is how you can talk to folks. You can really help them move upstream and understand where the next best dollar goes,” said Gaston.