UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________
FORM 11-K
_________________________________________________________
(Mark One)
ý ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
or
o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
___________________________________________________________________
Commission file number: 001-10898
___________________________________________________________________
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
___________________________________________________________________
Horace Mann 401(k) Plan
___________________________________________________________________
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
___________________________________________________________________
Horace Mann Educators Corporation
1 Horace Mann Plaza
Springfield, IL 62715
___________________________________________________________________
REQUIRED INFORMATION
Financial Statements | Item 4
In lieu of the requirements of Items 1-3, audited financial statements and supplemental schedule are prepared in accordance with the requirements of ERISA for the Plan’s fiscal year ended December 31, 2019 and 2018, and for the year ended December 31, 2019, and are presented on pages 2 through 13.
Horace Mann Service Corporation
Horace Mann 401(k) Plan
Financial Statements and Supplemental Schedule
As of December 31, 2019 and 2018, and for the year ended December 31, 2019 with
Report of Independent Registered Public Accounting Firm
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Financial Statements and Supplemental Schedule
As of December 31, 2019 and 2018, and for the year ended December 31, 2019
Table of Contents
Report of Independent Registered Public Accounting Firm | 1 | ||||
Financial Statements | |||||
Statements of Net Assets Available for Benefits | 2 | ||||
Statement of Changes in Net Assets Available for Benefits | 3 | ||||
Notes to Financial Statements | 4 | ||||
Supplemental Schedule | |||||
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) | 13 | ||||
Signatures | 14 | ||||
Exhibit, Consent of Independent Registered Public Accounting Firm | 15 | ||||
KPMG LLP
Aon Center
Suite 5500
200 E. Randolph Street
Chicago, IL 60601-6436
Report of Independent Registered Public Accounting Firm
To the Plan Participants and Plan Administrator
Horace Mann 401(k) Plan:
Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of Horace Mann 401(k) Plan (the Plan) as of December 31, 2019 and 2018, the related statement of changes in net assets available for benefits for the year ended December 31, 2019, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2019 and 2018, and the changes in net assets available for benefits for the year ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Accompanying Supplemental Information
The supplemental information in the accompanying Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2019 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.
/s/ KPMG LLP
KPMG LLP
We have served as the Plan’s auditor since 2005.
Chicago, Illinois
June 26, 2020
1 | ||
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Statements of Net Assets Available for Benefits
December 31, 2019 and 2018
2019 | 2018 | ||||||
Assets: | |||||||
Investments at fair value | $ | 202,982,928 | $ | 164,120,722 | |||
Notes receivable from participants | 3,184,060 | 3,577,895 | |||||
Accrued interest | 80,371 | 68,568 | |||||
Total assets | 206,247,359 | 167,767,185 | |||||
Liabilities: | |||||||
Accrued administrative expenses | 172,001 | 267,559 | |||||
Net assets available for benefits | $ | 206,075,358 | $ | 167,499,626 | |||
See accompanying notes to financial statements.
2 | ||
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2019
Additions: | |||
Investment income: | |||
Net appreciation in fair value of investments | $ | 29,649,669 | |
Interest | 3,929 | ||
Dividends | 5,494,202 | ||
35,147,800 | |||
Interest income on notes receivable from participants | 170,541 | ||
Contributions: | |||
Employer | 7,883,203 | ||
Participants | 8,655,116 | ||
Rollover | 7,350,251 | ||
Total contributions | 23,888,570 | ||
Total additions | 59,206,911 | ||
Deductions: | |||
Benefits paid to participants | (20,376,572 | ) | |
Administrative expenses | (254,607 | ) | |
Total deductions | (20,631,179 | ) | |
Net increase during year | 38,575,732 | ||
Net assets available for benefits: | |||
Beginning of year | 167,499,626 | ||
End of year | $ | 206,075,358 | |
See accompanying notes to financial statements.
3 | ||
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Notes to Financial Statements
December 31, 2019 and 2018
(1) General Plan Information
(a) Description of the Plan
The Horace Mann 401(k) Plan (the Plan) is sponsored by Horace Mann Service Corporation (HMSC) which is a wholly owned subsidiary of Horace Mann Educators Corporation (HMEC). HMSC is also the Plan Administrator. HMSC and HMEC are collectively referred to herein as the Company. The following brief description of the Plan is provided for general information purposes. Participants should refer to the actual Plan document or the employee summary plan description for additional information.
The Plan is a defined-contribution 401(k) plan covering all employees of the Company. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
The Plan document was amended and restated effective January 1, 2019 to reflect the Company’s acquisitions of Benefit Consultants Group, Inc. (BCG) and NTA Life Enterprises, LLC (NTA). BCG was acquired on January 2, 2019 and NTA was acquired on July 1, 2019. As a result of these acquisitions, BCG’s and NTA’s 401(k) plans were terminated and their participants became fully eligible to participate in the Plan and were provided the option to roll their account balances into the Plan which would preserve their prior participation and vesting. The Plan also assumed the former BCG and NTA 401(k) plan’s outstanding participant loans. Approximately $5,061,967 of rollovers were made into the Plan in 2019 and approximately $303,870 of participant loans were assumed by the Plan in 2019 as a result of the BCG and NTA acquisitions.
The Company’s employees become eligible to participate in the Plan upon their date of hire.
(b) Contributions and Vesting
The Company provides an employer non-elective (safe harbor) contribution on behalf of all eligible participants. The contribution is equal to 3% of participants’ eligible compensation for the plan year. The Plan may be amended to reduce or suspend the non-elective safe harbor contribution, with at least a 30 day notice of the reduction or suspension to all eligible participants. The Company matches, on a dollar-for-dollar basis, the first 5% of eligible compensation that participants contribute as employee pre-tax contributions, in addition to the automatic 3% safe harbor contribution.
During 2019, all new employees were subject to the Plan’s “auto-enrollment” rate provision which provided for an automatic employee deferral of 3% their eligible compensation. The auto-enrollment rate was 3% in 2019 and 2018, respectively. However, new hires or other participants could elect to decrease or stop their contributions at any time by filing an election with the Plan.
Participants can voluntarily elect to defer up to 20% of their eligible earnings (subject to statutory limits). The Company may also make employer regular profit sharing contributions to the Plan. The amount of the employer regular profit sharing contributions, if any, is determined by the Company each year and allocated to all participants who satisfy the eligibility and allocation requirements of the Plan. There were no employer regular profit sharing contributions during 2019.
4 | ||
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Notes to Financial Statements
December 31, 2019 and 2018
Employee contributions and employer non-elective (safe harbor) contributions are 100% vested immediately. Employer matching contributions and employer regular profit sharing contributions vest in accordance with the following schedule:
Vesting | ||
Years of Vesting Service | Percentage | |
Less than 1 year | 0 | % |
1 year but less than 2 years | 20 | % |
2 years but less than 3 years | 40 | % |
3 years but less than 4 years | 60 | % |
4 years but less than 5 years | 80 | % |
5 years or more | 100 | % |
Contributions are self-directed by the participant to any or all of the Plan’s investment options. If a participant does not designate an investment option, their contributions default to an appropriate Target Retirement Fund (as listed in the accompanying Supplemental Schedule) based on the participant’s attained age at the time of the deferral.
Effective March 15, 2019, Roth contributions were made available to Plan participants. Participants can make Roth after-tax contributions to the Plan in addition to (or in place of) pre-tax contributions. Roth contributions are not subject to tax at the time of withdrawal provided certain conditions are met. Roth contributions also receive a 3% safe harbor contribution and Company match of up to 5% of eligible compensation that participants contribute as employee after-tax contributions. During 2019, $322,283 of Roth contributions were made to the Plan.
The total pre‑tax participant contributions were limited to $19,000 in 2019. The limit will be subject to adjustments to reflect increases in the cost of living pursuant to Section 402(g) of the Internal Revenue Code (Code). Participating employees who reached age 50 or older during the Plan year have the opportunity to make pretax, catch-up contributions subject to federal limits, which were $6,000 in 2019.
(c) Participant Accounts and Benefits
Each participant’s account is credited with the participant’s contribution, the Company’s contribution, an allocation of Plan investment earnings and charged with an allocation of administrative expenses. Allocations are based on account balances or specific participant transactions as defined. The benefit to which a given participant is entitled is the benefit that can be provided from that participant’s vested account.
(d) Trust Agreement
Except for participant loans, 100% of the Plan’s assets are in a Master Trust held by The Northern Trust Quantitative Advisors, Inc. (Northern Trust) as of December 31, 2019 and 2018, respectively. The assets of the Plan are participant-directed investments in mutual funds, collective investment trusts, and HMEC Common Stock at December 31, 2019.
5 | ||
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Notes to Financial Statements
December 31, 2019 and 2018
(e) Transfers, Withdrawals, and Final Distributions
Participants may transfer all or a portion of their account balance between the various investment funds on a daily basis. Participant withdrawals and final distributions (as allowed under the Plan) are permitted on a weekly basis. An administration fee is deducted from the participant’s withdrawal proceeds.
Participants are eligible for a distribution of after-tax and rollover contributions at any time. Participants are eligible for a distribution of Plan benefits upon termination of service, whether by disability, retirement, death, or leaving the Company. In the event of financial hardship, as defined in the Plan document, participants may withdraw money from their accounts while they are still employed. Account assets available for hardship withdrawals include vested elective and non-elective contributions, along with the associated earnings on all sources. Participants will still be allowed to contribute to the Plan after taking a hardship withdrawal. Participants who have attained age 59 ½ may request a distribution of all or a portion of the value of the account. Withdrawals by the participant before attaining age 59 ½ are subject to Internal Revenue Service (IRS) penalties.
Participants that die during a period of qualified military service (as defined in Code Section 414(u)), become fully vested and the participant’s survivors are entitled to any additional benefits (other than contributions relating to the period of qualified military service, but including vested service credit for such period and ancillary life insurance or other survivor benefits) that would have been provided under the Plan had the participant resumed employment on the day preceding the participant’s death and then terminated employment on account of death.
(f) Forfeitures
Participants’ forfeited unvested accounts are used to pay Plan administrative expenses, reinstate accrued benefits, and to reduce Company contributions. At December 31, 2019 and 2018, forfeited unvested accounts available to reduce future Company contributions were $33,538 and $3,776, respectively. In 2019 and 2018, the Company applied $363,456 and $409,201 of forfeitures, respectively, against Company contributions and administrative expenses.
(g) Notes Receivable from Participants
Participants may borrow a minimum of $1,000 up to a maximum of 50% of their vested account balance but no more than $50,000. The minimum term for a loan is 12 months and the maximum is 60 months (180 months for primary residence loans). Effective January 1, 2019 the Plan began allowing only one outstanding loan at any time. Participants that currently had two loans outstanding prior to January 1, 2019 can continue to make loan payments through payroll deductions on both loans until they are paid off. Both loans will need to be paid off before taking a new loan. A loan administrative fee is deducted from the participant’s loan proceeds. Interest rates charged on loans ranged from 3.67% to 9.25% and 4.25% to 9.25% in 2019 and 2018, respectively. The loans are secured by the balance in the participant’s account and are carried at amortized cost. Principal and interest is paid ratably through monthly payroll deductions. Participants may also make additional payments throughout the month directly to the recordkeeper. No allowance for credit losses has been recorded as of December 31, 2019 or 2018.
(h) Termination
Although it has not expressed any intent to do so, the Company has the right to terminate the Plan at any time, subject to the provisions of ERISA. In the event of a Plan termination, participants become fully vested in their accounts.
6 | ||
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Notes to Financial Statements
December 31, 2019 and 2018
(2) Summary of Significant Accounting Policies
(a) Basis of Accounting
The accompanying financial statements have been prepared using the accrual basis of accounting.
Investments held by a defined contribution plan are required to be reported at fair value.
(b) Investment Valuation and Income Recognition
The Plan’s investment balances are carried on the Statements of Net Assets Available for Benefits as follows: Quoted market prices are used to value investments in common stock; shares of mutual funds held are valued at the accumulated unit value based on the net asset value of the funds, which in turn value their investment securities at fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded as earned on an accrual basis. Dividend income is recognized when dividends are declared and paid.
(c) Short-term Investments
Short-term investments are comprised of money market funds. The money market funds are valued at the daily closing price as reported by the fund. These funds are required to publish their daily net asset value (NAV) and to transact at that price.
(d) Net Appreciation (Depreciation) of Investments
In the Statement of Changes in Net Assets Available for Benefits, the Plan presents the net appreciation (depreciation) in the carrying amount of its investments which consists of realized gains or losses and unrealized appreciation (depreciation) on those investments.
(e) Plan Expenses
The Plan pays administrative expenses, consisting primarily of recordkeeping, trustee, audit, and legal fees. All investment fees have been included in the quarterly performance gains or losses reported for individual Plan funds.
Quarterly general administrative fees are charged to participant accounts with balances over $1,000. Individual service fees associated with specific features or services offered under the Plan are charged separately to participants’ accounts.
(f) Benefits Paid to Participants
Benefits paid to participants are recorded when paid.
(g) Use of Estimates
The preparation of the Plan’s financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires the Plan Administrator to make estimates and assumptions that affect (1) the reported amounts of net assets available for benefits at the date of the financial statements and (2) the reported amounts of changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates.
(h) Risks and Uncertainties
The Plan provides for investments in collective trust funds, mutual funds, and HMEC common stock. Investment securities are exposed to various risks including, but not limited to, interest rate, market and credit risks. Due to
7 | ||
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Notes to Financial Statements
December 31, 2019 and 2018
the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participant account balances and the amounts reported in the Statements of Net Assets Available for Benefits.
(i) Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits per the financial statements at December 31, 2019 and 2018 to Form 5500:
2019 | 2018 | |||||
Net assets available for benefits per the financial statements | $ | 206,075,358 | $ | 167,499,626 | ||
Amounts allocated to deemed distributed loans | (27,278 | ) | (35,250 | ) | ||
Net assets available for benefits per the Form 5500 | $ | 206,048,080 | $ | 167,464,376 | ||
The following is a reconciliation of benefits paid to participants per the financial statements for the year ended December 31, 2019 to Form 5500:
Benefits paid to participants per the financial statements | $ | 20,376,572 | |
Add: amounts allocated to deemed distributed loans at December 31, 2019 | 27,278 | ||
Less: amounts allocated to deemed distributed loans at December 31, 2018 | (35,250 | ) | |
Benefits paid to participants per the Form 5500 | $ | 20,368,600 | |
8 | ||
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Notes to Financial Statements
December 31, 2019 and 2018
(j) Subsequent Events
The global pandemic caused by the novel coronavirus (COVID-19) was initially reported in December 2019 by China. By early 2020, COVID-19 spread across the world and efforts to contain the spread intensified. The outbreak and any preventive or protective actions that the Company, the Plan’s third party service providers and suppliers, or governments may take to mitigate the impact of COVID-19 could have an adverse effect on the Plan’s net assets available for benefits.
Several enhancements have been made to the Plan in 2020.
The Plan document was amended and restated effective January 1, 2020 to add annual Company match true-up contributions to the Plan. Participants will receive a “true-up” contribution following the end of each plan year as necessary to ensure that each participant’s employer contribution account has been allocated matching contributions for the plan year in the amount provided for in Section 4.1(e) of the Plan document, regardless of whether the participant is still employed with the Company on the last day of the plan year. The true-up is based on a participant’s annual compensation and total employee contributions and will be credited by the end of the first calendar quarter following the end of the plan year.
Effective March 30, 2020, the State Street Target Retirement Fund merged into State Street Target Retirement Income Fund, and the State Street Target Retirement 2065 Fund was added as an investment option.
Effective April 1, 2020 several changes have been made to the Plan’s investment options to provide participants with lower cost share classes. The iShares US Aggregate Bond Index Fund, iShares S&P 500 Index Fund, iShares Russell Small/Mid Cap Index Fund, and State Street Target Retirement Funds will be moved to State Street’s collective Investment Trusts (CITs). Participant’s invested account balances and future contributions will automatically be allocated to the new CIT options, unless participants elect to change their investment elections prior to the effective date of the fund change.
Effective April 1, 2020, the HMEC Common Stock fund was frozen for future contributions and inter-fund transfers into the fund. Existing investments may remain in the HMEC Common Stock fund. Future contributions are automatically transferred \ directed to the Plan’s qualified default investment alternative unless participants elected to change future contributions to a different investment option prior to April 1, 2020.
(3) Investments
(a) Common Collective Trust Funds
The Plan’s investments in common collective trust fund units of ownership are based on the Plan’s dollar amount invested as a multiple of the collective trusts’ net asset value (NAV). Investments are carried at fair value. The fair value of investments is based upon the NAVs of the underlying securities and allocated on a pro rata basis based on units in the collective trust. Management’s estimate of the fair value of these investments is based on estimates provided by the Trustee. The investments of the underlying collective trust funds, which were valued at fair value, included stable value investment contracts, fixed income instruments, money market instruments, common stock, and depositary receipts. There are no restrictions on redemptions.
9 | ||
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Notes to Financial Statements
December 31, 2019 and 2018
(b) Mutual Funds
The Plan’s investments in mutual funds are valued at the daily closing prices as reported by the fund. Mutual funds held by the Plan are open-end mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily NAV and to transact at that price. The mutual funds of the Plan are deemed to be actively traded. There are no restrictions on redemptions.
(c) HMEC Common Stock
The Plan’s HMEC Common Stock fund at December 31, 2019 and 2018 consisted of 100,258 units and 104,803 units, respectively, of HMEC common stock, which is traded on the New York Stock Exchange under the symbol HMN.
(4) Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In determining fair value, the Plan utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs that may be used to measure fair value are:
Level 1
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2
Unadjusted observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for the assets or liabilities. Level 2 assets and liabilities include fixed maturity securities with quoted prices that are traded less frequently than exchange-traded instruments.
Level 3
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. As a result, a Level 3 fair value measurement may include inputs that are observable (Level 1 or Level 2) and unobservable (Level 3). Transfers into or out of Level 3 are reported as having occurred at the end of the reporting period in which the transfers were determined. There were no transfers into or out of Level 3 in either 2019 or 2018, respectively.
Common stocks are valued as Level 1 assets and are valued at the last reported sales price or closing price by the national securities exchange on which it trades.
The following table sets forth by level, within the fair value hierarchy, the Plan’s investments carried at fair value in the accompanying Statements of Net Assets Available for Benefits as of December 31, 2019 and 2018:
10 | ||
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Notes to Financial Statements
December 31, 2019 and 2018
Investments at Fair Value as of December 31, 2019 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
HMEC Common Stock | $ | 4,377,285 | $ | — | $ | — | $ | 4,377,285 | |||||||
Collective investment trust funds | — | 48,917,491 | — | 48,917,491 | |||||||||||
Mutual funds | 149,511,521 | — | — | 149,511,521 | |||||||||||
COLTV Short Term Investment Fund | 176,631 | — | — | 176,631 | |||||||||||
Total investments, at fair value | $ | 154,065,437 | $ | 48,917,491 | $ | — | $ | 202,982,928 | |||||||
Investments at Fair Value as of December 31, 2018 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
HMEC Common Stock | $ | 3,924,860 | $ | — | $ | — | $ | 3,924,860 | |||||||
Collective investment trust funds | — | 45,260,759 | — | 45,260,759 | |||||||||||
Mutual funds | 114,724,757 | — | — | 114,724,757 | |||||||||||
COLTV Short Term Investment Fund | 210,346 | — | — | 210,346 | |||||||||||
Total investments, at fair value | $ | 118,859,963 | $ | 45,260,759 | $ | — | $ | 164,120,722 | |||||||
11 | ||
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Notes to Financial Statements
December 31, 2019 and 2018
(5) Income Tax Status
The Plan has received a determination letter from the IRS dated December 13, 2017, stating that the Plan is qualified under Section 401(a) of the Code, and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt. The Plan Administrator believes the Plan is no longer subject to income tax examination for years prior to 2016.
GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
(6) Related Party Transactions
Investment options available to Plan participants include investments in the common stock of the Plan sponsor’s parent in 2019 and 2018, HMEC.
The Parent provides staffing, building space, and supplies at no cost to the Plan.
12 | ||
Supplemental Schedule
Horace Mann Service Corporation | Horace Mann 401(k) Plan
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2019
EIN: 37-0972590
Plan: 004
Number of Shares or Units | Description of Asset | Current Value | |||
Collective investment trust funds: | |||||
31,556,907 | Goldman Sachs Stable Value Fund Collective Trust II | $ | 31,556,907 | ||
19,950 | Prudential Core Plus Bond Fund Class 5 | 3,588,427 | |||
806,805 | Wellington SMID Research Equity Trust | 13,772,157 | |||
Total collective investment trust funds | 48,917,491 | ||||
Mutual funds: | |||||
75,115 | iShares S & P 500 Index Fund K | 28,747,954 | |||
1,137,272 | JP Morgan US Equity R6 | 18,401,055 | |||
1,347,543 | State Street Target Retirement 2025 Fund K | 16,089,663 | |||
1,123,722 | State Street Target Retirement 2030 Fund K | 13,799,311 | |||
1,065,559 | State Street Target Retirement 2035 Fund K | 13,394,074 | |||
763,170 | State Street Target Retirement 2045 Fund K | 9,707,526 | |||
648,380 | iShares Russell Small\Mid Cap Index K | 8,558,616 | |||
680,165 | State Street Target Retirement 2020 Fund K | 7,747,074 | |||
595,919 | State Street Target Retirement 2040 Fund K | 7,538,371 | |||
389,317 | State Street Target Retirement 2050 Fund K | 4,905,395 | |||
431,102 | iShares U.S. Aggregate Bond Index K | 4,483,459 | |||
432,089 | iShares MSCI Total International Index K | 4,165,339 | |||
262,208 | State Street Target Retirement 2055 Fund K | 3,319,557 | |||
173,407 | Transamerica International Equity Class R6 | 3,213,224 | |||
178,127 | State Street Target Retirement 2015 Fund K | 1,939,803 | |||
157,266 | State Street Target Retirement Income Fund K | 1,734,642 | |||
107,198 | State Street Target Retirement 2060 Fund K | 1,343,194 | |||
51,871 | Pimco Inflation Responsive Multi Asset Fund Institutional | 423,264 | |||
Total mutual funds | 149,511,521 | ||||
176,630 | COLTV Short Term Investment Fund | 176,631 | |||
100,258 | Horace Mann Educators Corporation Common Stock* | 4,377,285 | |||
Total investments | $ | 202,982,928 | |||
Participants Loans (562 loans, interest rates ranging from 3.67% to 9.25%, maturing January 16, 2020 to October 11, 2047) | $ | 3,184,060 | |||
*Represents a party-in-interest.
All investments are participant-directed; therefore, historical cost information is not required.
See accompanying report of independent registered accounting firm.
13 | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Pension Plan Committee of the Horace Mann 401(k) Plan has duly caused this annual report on Form 11-K to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 26, 2020 | HORACE MANN 401(k) PLAN | |
By: | /s/ Kimberly A. Johnson | |
Name: Kimberly A. Johnson | ||
Title: Senior Vice President and Controller | ||
(Principal Accounting Officer) | ||
14 | ||
KPMG LLP
Aon Center
Suite 5500
200 East Randolph Drive
Chicago, IL 60601-6436
Consent of Independent Registered Public Accounting Firm
Horace Mann Service Corporation Pension Committee and Horace Mann 401(k) Plan:
We consent to the incorporation by reference in the registration statement (No. 333-98917) on Form S-8 of Horace Mann Educators Corporation of our report dated June 26, 2020, with respect to the statements of net assets available for benefits of the Horace Mann 401(k) Plan as of December 31, 2019 and 2018, the related statement of changes in net assets available for benefits for the year ended December 31, 2019, and the supplemental schedule of Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2019, which report appears in the December 31, 2019 annual report on Form 11-K of the Horace Mann 401(k) Plan.
/s/ KPMG LLP
KPMG LLP
Chicago, Illinois
June 26, 2020
15 | ||