The RPAG Scoop | March 2024

Welcome back to our monthly RPAG Scoop where we give you the latest and upcoming information in the retirement industry. We're hopping on the March Madness train to bring you some great resources and strategies to up your game. Join us as we show you what's new with RPAG, teach you how to "rothify" employer contributions, let you in on Principals secrets to success, and Voya's strategies for their new Small-Cap Growth CIT.

What's New with RPAG! (1:07) 
Our two marketing specialists Ashley Passow and Melody Ravanipour have taken the mic to give you the best resources accessible to RPAG members. Starting off with events, we have the RPAG Regional Summits happening in four different cities across the United States! Registration is included with your membership to RPAG and we have hotel rooms available at a discounted rate. Register now if you haven't yet and enjoy spending 2 days learning and networking with your peers.

Moving on, we have more educational resources in the Resource Center such as the RPAG University videos. These are designed for new members, new employees of current members, or even as a refresher for tools you haven't used in a while. There are also multiple handouts such as the Retirement Times that we release throughout the year accessible for you to distribute to your clients and prospects. 

Speaking of clients and prospects, you also have the ability to join Venrollment through our advantageous partnership with them. They have a multitude of videos for your clients to learn how to enroll in their retirement plans to lessen your load of onboarding and teaching new employees how to maximize their retirement accounts.

"Rothification" of Employer Contributions (8:41)
Our very good friend Jenny Kiffmeyer was generous enough to lend her expertise in the ERISA world to give us a thorough update of what you need to know about this rule under SECURE Act 2.0.

1. Implementing Roth Employer contributions: if a plan permits, participants may elect to treat their vested employer contributions as a designated Roth matching or Roth nonelective contributions in the year the amounts are allocated to their accounts.
2. How it works: Participant election must occur prior to the amounts being allocated to their accounts, and only vested amounts may be treated as designated Roth contributions.
3. Why Consider Rothification? Qualifying Roth distributions are tax free, and you can control the liabilities going into retirement.
4. The Process: First, the participant makes the election, specifying which type of contribution, then that election remains until revoked for future contributions. Plan sponsor contributions are considered designated Roth matching contributions or designated Roth nonelective contributions. The election does not impact the W-2 form and is not subject to FICA/FUTA, but generates a Form 1099-R.
5. Plan amendment needs to occur by December 3, 2026 for 401(k) and non-public school 403(b) plans, while public school 403(b) plans and eligible governmental plans have a deadline of December 31, 2029.

How Principal Can Help You Be Different (16:48)
Sean Jordan plays a pivotal role in the core and middle-market sector at Principal, where significant shifts are taking place in the retirement industry. An inflection point has emerged as individuals increasingly seek employer assistance in navigating complex retirement decisions, prompting a reconsideration of the services offered and bundled. Principal, known for its advisor-centric approach, acknowledges the industry's commoditization and emphasizes the need for differentiation to attract sponsors and advisors.

In the current landscape, the focus for 2024 at Principal revolves around critical elements such as service, emphasizing trust and anticipating needs; technology, aimed at simplifying business processes to enable advisor scalability; product solutions, facilitating seamless integration and customization; and enhancing the advisor experience, allowing real-time feedback for increased agility. Recognizing the disruptive impact of over 12,000 Americans retiring daily, Principal emphasizes the importance of leveraging solutions to align with evolving employer and employee needs in order to stay attractive in the marketplace.

Important Information
In 2024 more than 12,000 Americans expected to start turning 65 each day. The Peak 65 Generation: Creating a New Retirement Security Framework – Alliance for Lifetime Income White Paper (March 2021).     
RPAG is not an affiliate of any company of the Principal Financial Group^®.
Insurance products and plan administrative services provided through Principal Life Insurance Company^®, a member of the Principal Financial Group^®, Des Moines, IA 50392.
3410010-022024

Voya's New Small-Cap Growth CIT (23:12)
Scott Herrick and Mike Coyne play pivotal roles as the client portfolio manager and lead portfolio manager, respectively, for the Voya Small-Cap Growth CIT. This strategy, available to members at a 58-basis point fee, offers a significant 32 percent discount compared to their mutual fund fee. Supporting them is a team of three portfolio managers, including one analyst, who collectively bring around 25 years of small-cap growth investing experience. Their approach involves rigorous bottom-up analysis for each company in the portfolio.

What sets this team apart is their emphasis on cash flow earnings and revenue growth, targeting a substantial 15% growth over the next few years. They strategically enter the market at a historical valuation range in the lower two-thirds of the trading spectrum, with specific attention to operating cash flow relative to free cash flow for growth companies. Additionally, a top-down risk control overlay ensures they do not deviate over 10% in any industry or sector.

Recognizing the value in small caps from a valuation perspective, the team acknowledges the nuances tied to the Federal Reserve's rate policies. They advocate for early allocation, asserting that now is the opportune time to start. The team's performance, reflected in a perfect 10 on the RPAG scale as of year-end, underscores the effectiveness of their approach and strategy.

As we look forward to the year ahead, we are grateful for Principal and Voya's partnerships and the valuable contributions they bring to the retirement industry. Stay tuned for our next edition of the Scoop, coming April 1, where we will continue to bring you the latest updates and insights from the retirement industry.

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