A Letter from L&H: 2023 Year-End Reflections and Outlook
NATE MOODY, CPFA®, RETIREMENT ADVISOR, PARTNER
December 2023 – Retirement Plans Team highlights from 2023 and expectations for 2024
As 2023 comes to a close, we reflect on what has been a truly transformative year for Lebel & Harriman. This year brought us major regulatory changes, a volatile market environment, the final succession of one of our founding partners, new hires and promotions within our team, and many more notable events. Through all the changes, what’s remained steady and foundational to our firm is the importance of the work we do, the clients we do it for, and the many people, internal and external, we do it with. We thank you for your continued support and trust and want to share some of the highlights from our year with you.
SECURE 2.0
It’s hard to describe 2023 without first highlighting SECURE Act 2.0. The landmark retirement law that was passed just two days before the start of the year had Plan Sponsors, Service Providers, and Advisors scrambling. Once the dust settled, most of us agree that many of the changes, both mandatory and optional, will be a net positive for individuals. The biggest caveat to that being the new Roth Catch-Up requirement for higher-earning employees; but thankfully, the IRS issued a much-appreciated two-year delay.
Among the available ‘optional’ provisions, the ones of most interest to our Plan Sponsors include self-certification of hardship withdrawals, expansion of the IRS hardship reasons to include financial emergencies and victims of domestic abuse, and finally, crediting employees’ student loan repayments for purposes of earning the employer match.
Employee Recruitment and Retention Strategies
Beyond SECURE Act 2.0, we witnessed two major trends in 2023. First, we had a record number of clients exploring Non-Qualified Deferred Compensation and/or Cash Balance plans as a way to cost-effectively recruit & retain their key employees while also trying to align their incentives with their organization’s.
This trend was a result of (1) the continuation of this persistently tight labor market and (2) the upcoming Roth Catch-up Requirement.
The other trend we’ve seen is that more and more small employers are looking to start a retirement plan. This has been significantly accelerated by the upcoming Maine Retirement Plan Mandate taking effect in early 2024. Fortunately, SECURE Act 2.0 provides significant tax credits for these employers. Understanding the unique needs of this group, many of whom are administering a retirement plan for the first time, led us to develop an internal Small Business Team focused specifically on helping with start-up plans. This team is led by Owen Ramsay and Grace Bennett, both of whom have been exceptional additions to our growing Retirement Plans team.
Lebel & Harriman Team Updates
Building on these two great hires in 2022, we were able to attract two new talented professionals to our team in 2023. Connor Leonard, a Maine native, joined us as our new Retirement Plans Analyst. With his finance background and data analytics experience, Connor has been a tremendous resource for both our retirement plan and internal marketing teams. In addition, Amanda Hayes, also a Maine native, has joined us as our new Executive Coordinator and Office Ambassador. Amanda’s background in education has been a fantastic addition to our internal Learning & Development Committee.
Beyond those new hires, other changes to the team include Nate Chisholm’s promotion to Senior Retirement Counselor, Owen Ramsay’s transition from Analyst to Retirement Counselor, Grace Bennet attaining her MBA. Outside of the Retirement Plans team, Hillary Bouchard, another Maine native, joined us as a Relationship Manager with our Personal Financial Services team, and Amara Young was promoted to Marketing Manager.
Lastly, Lebel & Harriman completed its internal succession after Mike Lebel’s retirement when Nate Moody joined Jennifer, Laurie and Matt as Partner.
2024 Outlook – Retirement Income & Streamlined Plan Administration
Now as we look towards 2024, we see several developments in our industry, both here in Maine and nationally. We expect the conversation to return to the topic of retirement income (which was ironically introduced by SECURE Act 1.0 in 2019). Our Retirement Counselors, Nate C. and Owen, find themselves hearing the same two questions from our plan participants: (1) Am I on track for retirement and (2) How long will my money last in retirement? The increase in features like automatic enrollment, automatic escalation, and employer matching have made significant improvements in answering the first question. The rise of lifetime income solutions (in-plan annuities) will be instrumental in addressing the second.
The other major trend we see is a renewed interest in streamlining retirement plan operations. Our HR & Finance teams are as maxed as they’ve ever been and with new regulatory requirements being introduced, there has never been more demand to find efficiencies with the administration of their benefits.
Our Relationship Managers see two solutions gaining traction: payroll integration and 3(16) administrative services. Recordkeepers are increasingly building out integrations with payroll providers that allow them to automatically transfer necessary payroll data (e.g. contribution changes, eligibility dates, etc.) back-and-forth. Recordkeepers and Third-Party Administrators (TPAs) are also increasingly offering 3(16) administrative services where they not only take over many of the administrative functions, but also take on liability for any mistakes that may occur.
2023 was a banner year for our Retirement Plans Team and we are extremely excited for what 2024 has to bring. From all of us on L&H’s Retirement Plan Team, Happy Holidays. We thank you for our partnership, many of which now span decades. We stand at the ready to continue our great work together in 2024.
– Laurie, Jennifer, Matt, Vickie, Nate M., Nate C., Amara, Owen, Grace, Connor, Amanda
The information provided has been derived from sources believed to be reliable, but the accuracy is not guaranteed and does not purport to be a complete analysis of the material discussed. Nothing contained in this newsletter constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities. Diversification cannot assure a profit or guarantee against a loss.
