Hilton Worldwide Holdings Inc. is among the sponsors looking to encourage employees to keep their assets in its 401(k) plan after they retire or leave. "It's something we'll be talking about this year," said Mary Nell Billings, senior director of Hilton's global retirement programs in Memphis.
Ms. Billings said the company will discuss a potential employee communications campaign about the benefits of leaving assets in the plan at its oversight committee meeting this quarter. The company, she said, is well positioned to initiate such a campaign given the pro-retiree features of the $1.7 billion 401(k) plan. "We have as flexible a system as you can have," she said, referring to the withdrawal options the plan offers retirees. They can elect to withdraw their funds in several ways, including distributions whenever they need money or regular monthly, quarterly or annual payments, which can be adjusted over time as needed. These options, she said, allow "the plan to flex as you need it to," unlike annuities that "don't always flex with your life as you need it."
The plan also facilitates the roll-in of assets from IRAs and other qualified retirement plans, a benefit for participants looking to consolidate their savings.
The anticipated communications campaign will "hit all the points of why it might be a really good idea for them to do that," she said.
Many companies, like Hilton, have simplified the process of rolling in funds to both build plan assets and better serve participants. Almost half of sponsors (46.3%) encourage roll-ins from qualified plans, with another 17.9% planning to take steps this year to encourage them, according to Callan.
The Ohio Public Employees Deferred Compensation Program, a $14 billion 457(b) plan for some 210,000 Ohio state public employees, has gone the extra mile to facilitate the roll-in process. Unlike most plan sponsors, which allow only active participants to roll in funds from outside sources, Ohio Deferred Compensation gives even retired and non-active participants that ability, something it's allowed since 2001.
The plan sponsor talks to people about rolling in money from other accounts when they first start in the plan, a practice that has helped to grow its asset base, said Keith Overly, the Columbus-based executive director of the plan.
Ohio Deferred Compensation has nearly 15,000 accounts that were rolled into the program, up from 1,200 in 2002, he said. The ability to consolidate and manage retirement accounts in one place is appealing to participants as many have multiple plans, Mr. Overly added.
In addition to talking up the benefits of the plan when participants first enroll, the plan does targeted email communications to pre-retirees reminding them of the retirement planning and other available services. Also, if a participant calls about wanting to roll over the balance to an outside provider, plan representatives make it a point to review the advantages of staying, such as lower fees.
Partially as a result of that, the plan's assets have nearly tripled to $13.8 billion at the end of January from $5.5 billion in December 2004, Mr. Overly said.
The increase, in turn, has led to significant savings. "In the last three years, we've had six opportunities to move to lower-cost share classes with our existing investment managers because of our asset growth," he said. "We estimate that's about $4.6 million in savings annually."