September 11, 2023

Q: We are working with our advisor to address the specific needs and unique circumstances of our women employees. Are there any recent trends to be aware of to help us frame our approach?

A: According to a December 2022 report from the U.S. Government Accountability Office, women still earn an estimated 82 cents for every dollar men make. Not only does that mean women likely earn less in their lifetimes, they also have less income to put toward retirement. In addition, a new study by 401(k) platform Guideline found women report feeling more overwhelmed and less in control toward their retirement savings than men (48% vs. 27%). They were also likelier to experience feelings of frustration (31% vs. 21%), intimidation (30% vs. 18%) and confusion (22% vs. 9%). As a result, fewer women are saving for retirement than men (69% vs. 80%). In addition, 55% of men save more than 10% of their income, whereas only 36% of women claim the same. The survey also found that women are nearly twice as likely as men to self-identify as novice investors.

The survey points to fundamental plan features for employers to have in place to begin closing the gender gap: automatic features with a robust employer match, along with tools and resources to help improve financial wellness. Targeted educational campaigns that focus on boosting retirement savings literacy and confidence with the overall retirement planning process should also be considered. In addition, a recent LIMRA survey indicates that women who work with a financial professional are much more likely to complete several retirement planning tasks that are recommended to bolster retirement readiness.

Q: Can you provide details on how SECURE Act 2.0 improved the employee self-certification process for hardship distributions?

A: Previously, the Internal Revenue Service permitted self-certification for hardship distributions, but it was the responsibility of the plan to obtain any records or evidence needed to prove compliance if the validity of the distribution was challenged. Therefore, some plan administrators and recordkeepers were hesitant to permit self-certification. Thanks to SECURE Act 2.0, for plan years beginning on or after December 29, 2022, plan administrators may rely on certification by a participant verifying that they have met the requirements for a 401(k) or 403(b) plan hardship distribution without this extra documentation. The employee’s written self-certification must state that circumstances for the hardship exist, the amount requested is not more than the amount required to satisfy the financial need, and the employee has no alternative means to satisfy such need. These changes are optional and are effective for calendar year plans now.

Q: We’ve spent significant time this year enhancing some features of our 401(k) plan to make it as attractive as possible to potential new hires. Are there any statistics regarding employers permitting immediate eligibility for plan participation?

A: Employers have reevaluated their retirement plan designs with an eye toward making it easier for employees to join plans and start saving, according to new Vanguard Group data. For Vanguard recordkeeper plans, 72% of employers permitted employees to participate in the plan immediately, compared to 58% in 2012; 86% allowed for entry within three months of employment. For insight on additional potential plan design enhancements, check out Vanguard’s “The Changing Workforce Environment: How Employer Plans Can Help Attract and Retain Employees” (March 2023).

For plan sponsor use only, not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.

Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045;

©2023 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance; nor as the sole authority on any regulation, law or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.