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Should an Employees’ Retirement Plan be Managed by the State?

Should an Employees’ Retirement Plan be Managed by the State? Many of American workers are just not covered by a company-sponsored Retirement Plan.  Mike DiCenso of DiCenso Consulting comments on how this current gap in company-sponsored retirement plan coverage leaves from 65 to 85 million US workers without retirement plan coverage.  Mr. DiCenso discusses with Fred Barstein Founder and CEO of 401kTV, the actions taken place by the States of Washington and Oregon, where the states have begun to implement state-run solutions.

Full Transcript Here

Fred Barstein:               Fred Barstein with 401K TV, and we’re here with esteemed thought leader Mike DiCenso. Welcome Mike.

Mike DiCenso:              Good to be here.

Fred Barstein:               Mike is a partner at DiCenso Consulting, which works with TPAs, RAs, record keepers, and private equity firms. Been in the industry for 30 years. Most recently President of Gallagher Retirement Services working in the technology, investing, record keeping, so he’s been around a long time, has a lot of thoughts and opinions, so today we wanted to talk to him a little bit about these state auto-IRA plans.

Fred Barstein:               So, before we begin, okay if we ask you a few questions?

Mike DiCenso:              Absolutely.

Fred Barstein:               Okay. So, tell our audience a little bit about what are these state IRA plans and how do they work?

Mike DiCenso:              What you have is you have a savings issue for retirement in the United States to where only 40% of Americans have $10,000 of net worth. 65% of Americans have saved $0 for retirement. And so what has happened is there’s 55 million Americans to 80 million Americans that are employed in the workforce but yet do not have a retirement plan offered to them in the workplace.

Mike DiCenso:              So, the states have taken amongst themselves to try to fix this issue and create a situation to which the states are going to offer retirement programs to these individuals through their employer.

Fred Barstein:               Right. So, tell us a little bit about the danger because our audience, if they’re watching, probably already has a retirement plan, 401K or 403B. What are the dangers and what are the upsides?

Mike DiCenso:              Well, what you look at is you look at these programs. There’s nine states that the governors have signed off, and they are in an enactment stage. We already have Oregon that has gone live, and we have Washington that has gone live.

Mike DiCenso:              Now, with these programs, every state is different by the requirements for the number of employees that an employer has and also from the standpoint of whether this is a payroll IRA, whether it’s a MEP, whether it is a 401K. There are a number of different programs for each state. There’s no consistencies. That’s one of the dangers.

Mike DiCenso:              So, as you go state to state and as you have employees who may be in different states, you may be falling under different rules. In fact, they’re not only state programs, but any city or municipality that has 600,000 people can have its own program, as well.

Mike DiCenso:              So, what we’ve seen is you take the state of Washington for example. There’s a state program and there is a Seattle city program, so there is confusion there as to where the employees would go under which program.

Fred Barstein:               Do you think employers should consider looking at the state programs even if they have a plan and moving to those programs?

Mike DiCenso:              You know, I think employers should do is actually meet with an advisor and decipher which program would be best for their employees and for their situation.

Fred Barstein:               So no matter what plan, whether it’s the state plan or theirs, you recommend them having an advisor.

Mike DiCenso:              Absolutely.

Fred Barstein:               Yeah, so great. Well, great. Great insights, Mike. Thanks for joining us today.

Mike DiCenso:              I hope this was helpful.

Fred Barstein:               This was. We’ll find out. And thank you for watching 401K TV. Stay tuned.



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