Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. Print
August 23, 1999 01:00 AM

NEW BEGINNINGS: NORTH DAKOTA STARTS 401(A), ALTERS DEFINED BENEFIT PLAN

Arleen Jacobius
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    BISMARCK, N.D. -- North Dakota will start the new year with a new 401(a) plan and a more portable, hybrid defined benefit plan.

    The new defined contribution plan covers elected and appointed officials and non-classified state employees; about 600 current employees are eligible for the plan, whereas 16,000 are in the defined benefit plan.

    Those 600 employees may choose between staying in the $1.1 billion defined benefit plan or rolling over their assets into the new 401(a) plan, said Deb Knudsen, retirement programs manager for the North Dakota State Investment Board.

    Those hired after Jan. 1 will have six months to make the election, she said.

    Under the law authorizing the new plan, the Legislature also made some changes in the defined benefit plan, Ms. Knudsen said. Beginning Jan. 1, state employees who participate in North Dakota's $73 million 457 plan will receive a contribution from the state in the same amount -- up to 4% -- to the defined benefit plan.

    So, for example, if a person who has stayed in the defined benefit plan chooses to contribute 2% of pay to the 457 plan, the state will "reward" that person by contributing another 2% to the defined benefit plan.

    More portable plan

    And, the defined benefit plan will be more portable. Beginning Jan. 1, employees who leave will be able to take both their contribution and the employer's 4.12% annual contribution plus interest, Ms. Knudsen said.

    "This makes the plan more mobile," she said.

    Currently, departing employees may take only their own 4% annual contributions plus interest.

    Fidelity Investments, Boston, is the bundled provider for the new 401(a) plan. The plan will have eight investment options: stable value; balanced, with 65% equities and 35% bonds; value equity; indexed equity; growth equity; international equity; small-cap equity; and asset allocation, Ms. Knudsen said.

    The employer contribution to the new plan will be 4.12%; the employee contribution will be 4%, she said. However, the state will pay 2% of the employee contribution in lieu of a pay increase.

    The Legislature also made other changes to the retirement system, including reducing vesting to three years from five.

    North Dakota's move to add a 401(a) plan is at the forefront of an increasingly popular trend, said Eric Wietsma, assistant vice president of Hartford Life Insurance Cos., Simsbury, Conn.

    Although 401(a) plans have been around for a number of years, not many states used them until recently, Mr. Wietsma said.

    "The recent popularity of the last two years has been driven by the corporate side," he explained. While many states have 457 plans, like North Dakota's, they are not well used, Mr. Wietsma said. Participation rates in 457 plans averages about 30%, compared with 80% to 90% participation rates in 401(k) plans, he said.

    401(a) wave

    The low 457 plan participation is primarily because there is no employer match.

    Moreover, when employees leave for the private sector, they have to leave their 457 money behind, he said. Only workers whose new employer has a 457 plan can roll over their 457 money, Mr. Wietsma explained.

    However, employees can roll over 401(a) assets into an individual retirement account or a new employer's 401(k) plan, he said. And the 401(a) looks "virtually the same as a 401(k) plan," he said.

    Several governmental entities are setting up 401(a) plans as a way to match employee contributions in their 457 plans, Mr. Wietsma added.

    So far, a number of states are studying either adding or switching to a state defined contribution plan. Among them are:

    * Colorado, which is studying whether to expand the current defined contribution system. The existing plan only allows for the Legislature to have a defined contribution plan;

    * Florida, where a joint committee is looking at how to implement a defined contribution system;

    * Georgia, where three statutes that would create a defined contribution plan for public employees and increase the portability through the use of a 401(k)-type program have been carried over to the next session;

    * Idaho, which is conducting an interim study with a broad mandate that will include looking at the benefits of a defined contribution, defined benefit and hybrid plans;

    * Illinois, where the Legislature passed a resolution calling for lawmakers to consider expanding the portability options for state retirement funds; and

    * Kansas, where a joint committee is expected to evaluate several options for changing the current retirement system, including switching to a defined contribution plan.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    Alternatives: Investing Across the Spectrum
    Sponsored Content: Alternatives: Investing Across the Spectrum

    Reader Poll

    May 9, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Are Factors a Thing of the Past?
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    Out of the Shadows: The Revolution in Shadow Accounting
    The pivotal role of fixed income markets in the ESG revolution
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 9, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference