Don't Lose Your Marbles Over Roth: PSCA National

To Roth or not to Roth—that is the question many sponsors had on the first day of the PSCA National. 

Titled SECURE ACT 2.0: Don't Lose Your Marbles Over Roth, the Day One session focused on how SECURE 2.0 affects Roths and included the history of Roth's creation by Sen. Roth as part of the Taxpayer Relief Act of 1997.

Moderated by Pete Walsh from Millennium Trust Company, it featured panelists Adam Tremper, Domenique DiSilvio, Sarah Engle, and Lauren Leneis.  

Panelists began by listing challenges plan sponsors had before SECURE 2.0 passed. They included retirement plans that were too complex for employees to understand (often due to a lack of financial education) and the emotional hurdle of near-term pain (taxed earnings) for long-term gain. Panelists said countless reasons led to low employee participation rates but that provisions in SECURE 2.0 may help. 

Sponsors also found Roths administratively burdensome for employers and that Roths only get selected by "wealthier" participants and have no mass market appeal. 

Panelists provided insight on the specifics of catch-up contributions and how Roths factor in now that SECURE 2.0 has passed, noting that plans currently offering catch-up contributions but not a Roth option must either add a Roth option or eliminate the plan's catch-up contribution for all employees.

There are three Roth contribution source options:

• If a Roth source is desired, then add a Roth source to the plan(s).
• If Roth source and catch-up provisions coordinate implementation with recordkeeper and service providers. 
• If there is no Roth source desired, eliminate catch-up provisions. 

One of the more interesting parts of the session was the live polling. Five poll questions were asked—each looking to get a feel for where the most significant knowledge gaps are for plan sponsors. 

Roughly 60% of audience members had a "somewhat" general knowledge of Roths. Plan sponsors also felt their plans could do more for Roth-related education. 

The last poll question asked the audience how they felt about ignoring the $145,000 income rule and directing all catch-up contributions to a Roth source; 68% of plan sponsors favored it. 

A deeper dive into the specifics of SECURE 2.0, which occurred on Day Two of the PSCA National, was mentioned by audience members as one of the conference's most "want-to-know" parts.