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NFL Players Lose a Major Retirement Plan Benefit

Players will not receive valuable club contributions to their retirement plans through 2023.

There were many questions heading into this NFL season, but one is flying way under the radar. Players just agreed to a new Collective Bargaining Agreement in March amidst the coronavirus pandemic.

In August, the NFL gave players the option to voluntarily opt out of all or part of the 2020 season if they qualified as a “Higher Risk Player.” Additionally, they made several modifications to the 2020 CBA. The NFL and NFLPA resolved ongoing issues related to COVID-19 and the CBA – and after a review by the union, the deal was reported as “done.”

As a result, some key modifications relating to NFL player benefits are being overlooked by many. The changes eliminated certain benefits for which the consequences should be scrutinized carefully by players, their agents, managers and financial advisors to determine the long-term impact on the players’ financial futures.

Players will not receive club contributions of any kind for seasons 2020 through 2023 into their NFL Player Second Career Savings Plan (“401(k) Savings Plan”) or the NFL Player Capital Accumulation Plan.

Typically, players receive a 2:1 matching contribution, up to $30,000 if they have two-plus credited seasons. Generally, a player earns a credited season by having three or more games on a game day roster. In a player’s first credited season earned, the team contribution is normally $1,500.

“Although there definitely had to be some concessions because we are dealing with a global pandemic, I am not sure if all the players truly understand the full financial impact of the missed club contributions,” Shawn Wooden, who spent nine seasons in the NFL before becoming a financial advisor. Wooden works with Associated Investor Services in Ft. Lauderdale, Fla. 

The following illustration shows the hypothetical lost value for a 25-year old veteran player who maximizes his 401(k) contributions and receives a team match of $30,000 for the 2020-2022 NFL seasons. Based on assumptions, the lost value at age 65 with the three missed team contributions is $908,248 (if the investment earned 6% as an annual rate of return, compounded annually) and a whopping $1,906,930 (if the investment earned 8% as an annual rate of return, compounded annually).



“Players really need to take on the responsibility of saving for themselves, without regard for the benefits that are usually part of the CBA,” Wooden said. “This is probably the perfect time for them to sit with their financial advisor to assess the impact of these lost benefits on their personal situation.”

Players will still be able to defer eligible compensation into the 401(k) Savings Plan, up to the limits set by law ($19,500 for 2020). They are also able to defer eligible compensation paid to them as early as October 15 and will automatically be enrolled if they do not have a deferral election on file.

In addition to the 401(k) Savings Plan, players will not see team contributions of any kind into their NFL Player Capital Accumulation Plan. They also will not receive any qualified additions or nonqualified allocations from any club into their accounts for the NFL Player Tax-Qualified Annuity Plan or the NFL Player Annuity Program. For seasons 2021 through 2023, they will not receive any Health Credits into their health account in the Gene Upshaw NFL Player Health Reimbursement Account Plan. They may earn $35,000 in health credits for the 2020 credited season, but only if they earn a credited season or otherwise meet the eligibility requirements.

There are some modifications, though, that may benefit players. Players earn a credited season if they opted out as a higher risk player or if, for the first game of the regular season, they are on a team’s active, inactive, reserve/injured, reserve/COVID-19 or Reserve/Physically Unable to Perform list. A practice squad player can earn a credited season if they were on a club’s active/inactive list for at least one game in the 2020 season.

Players and former players will also still receive their pension benefits.

Evan Vladem is a financial advisor in Associated Investor Services' Sports & Entertainment Division in Ft. Lauderdale, Fla.

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