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News & Views | Q2 2020 Page 2 of 4

CONCERNS
The provision of greatest concern to NFP is the last one, allowing in-service distributions at age 59-1/2. Our concern comes
from our experience with previous similar changes, specifically those that first allowed roll-outs from defined benefit plans, and
portability to other types of retirement savings plans. While these provisions may be advantageous for some by allowing them
to consolidate assets and plan more holistically, there can be disadvantages when investment advisors, financial planners and
brokers convince participants to make changes that may not be in their best interest. NFP recommends to all plan sponsors
that you put tools in place to equip your participants with current, pertinent information needed to make informed decisions
– including all current fees; investments and their quality, performance and other characteristics; plan services and benefits;
and any other information a participant should have when considering rolling out their assets. Tools can be participant group
education, written and/or online summaries of plan information, vendor-provided materials, individual education, or other forms
that your participants find most useful. Your NFP advisor can help you look at information currently offered and where it may be
augmented for the benefit of your participants.
In our last edition of News & Views, we included an article on Plan Leakage, which contained ideas about how to equip
participants with information for when making withdrawal considerations. The article can be found here.

TIMING FOR CHANGES
When the SECURE Act passed in late December, the Department of Treasury was tasked with writing the regulations to implement
the changes and is required to issue preliminary regulations within six months of passage. The law allows an extended period to
formally adopt changes which are necessary to maintain compliance, and most governmental plans are required to be amended
by the end of the year 2024. Because changes can occur between the time the laws change and the regulations are published and
finalized, NFP recommends waiting for the final guidance to amend plan documents. We will continue to monitor developments
as they occur and advise our clients on changes pertinent to your plans.

NEW PROPOSAL WOULD ALLOW COLLECTIVE INVESTMENT TRUSTS IN 403(B) PLANS
NFP has long supported the addition of Collective Investment Trusts (CITs) to public sector plans, but the law does not currently
allow CITs in all 403(b) plans – only those sponsored by churches. A bipartisan bill was introduced in mid-March that would
enable all 403(b) plan sponsors to offer collective investment trusts to their participants. The bill was introduced by Rep. Jimmy
Panetta, D-Calif., as part of the Public Service Retirement Fairness Act, and is seen as a companion to the Retirement Security and
Savings Act sponsored by Senators Rob Portman (R-Ohio) and Ben Cardin (D-Maryland).

WHAT ARE CITS?
CITs are similar to mutual funds and are often run by mutual fund companies, yet there are significant differences. Both types of
investments are pooled and follow specific investment strategies. Mutual funds may be offered to the general public or within a
plan; CITs are designed to be part of a retirement plan and can be custom designed. CIT assets are typically collectively managed
and are made up of stocks, bonds, and other types of investments. CITs generally will have lower costs than other retirement
investment options, and may have more flexibility. Finally, neither CIT nor mutual fund assets are insured by the FDIC.

WHY IS THIS CHANGE BEING PROPOSED NOW?
Adding CITs to public sector 403(b) plans would allow teachers and public sector health care workers the same flexibility and cost
savings offered to other public sector plans. The Vanguard Group recently estimated that the cost savings to 403(b) participants in
plans that offer CITs could amount to as much as $250 million per year. NAGDCA placed the addition of CITs to 403(b) plans high
on their priorities for working with Capitol Hill to make improvements to public sector retirement plans.

HOW CAN CITS BE ACCESSED?
NFP has been on the leading edge of CIT integration for our clients as their utilization has increased in recent years. By leveraging
our size and scale, NFP is able to offer our clients exclusive access to top-performing asset managers in most asset classes at
significantly lower fees. This exclusive value-add offering has saved millions of dollars for plan participants over time. We use our
fund scoring process to identify funds within a plan’s selected investment categories that score well and have competitive net
investment costs. Additionally, every fund recommendation we bring forth to our clients is thoroughly vetted by NFP’s internal
Investment Committee. The vetting process includes an initial quantitative screen of the entire asset class, further quantitative
due diligence (e.g., longer time periods), and a formal review with the investment manager. Once a fund is approved by the
committee, NFP can negotiate directly with the investment manager for a lower investment management fee.
NFP will closely monitor this legislation as it develops and continue to keep you informed as your options and requirements
change. Please consult your NFP advisor if you would like to learn more about Collective Investment Trusts and whether they are
appropriate for your plan.