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401(k) plans

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Don't Forget 401(k) Deadlines During the Holiday Bustle
"Here's a partial to-do list for participants and plan sponsors as 2017 comes to a close." (Bloomberg BNA)
[Guidance Overview] 2017 Year-End 'To Do' List for Qualified Retirement Plan Sponsors
Categories: [1] all qualified plans; [2] section 401(k) plans; [3] defined contribution plans other than section 401(k) plans; [4] defined benefit plans; and [5] section 403(b) plans. (Snell & Wilmer)
Roth IRAs: Favored for Annual Contributions, Neglected for Rollovers from Company Plans
"The tax on moving funds into a Roth IRA may be sharply reduced by making a series of partial rollovers ... [which] can prevent the taxable income on conversions from piling up into higher tax brackets. Converting just 5% or 10% of plan funds every year can convert them all over time with minimum income tax cost." (Slott Report)
[Guidance Overview] Puerto Rico Treasury Department Issues Post-Hurricane Rules for Qualified Retirement Plan and IRA Distributions and Loans
"As a result of [Administrative Determination No. 17-29], employers must decide whether to amend their plans to incorporate these special rules. Notably, in the event that the employer decides to amend the plan accordingly, AD 17-29 is silent as to which procedure a participant must followed to receive a favorable tax treatment, in the event he/she has already received Eligible Distributions within the Eligible Period prior to the effective date of AD 17-29." (Littler)
How the Senate Finance Committee's Tax Reform Bill Would Impact Retirement Plans
"Elimination of IRA 're-characterization' ... Extension of time to roll over plan loan offsets ... Elimination of special 403(b) and 457(b) catch-up rules ... Coordination of 403(b) and 457(b) contribution limits ... Elimination of 403(b) contributions for former employees." (J.P. Morgan Asset Management)
Tax Reform and Accumulated Leave ('Special Pay') Plans
"The proposed Senate tax reform bill ... eliminates the ability of 403(b) plans to accept contributions for former employees for up to five years following termination of employment.... The result will be greater employment taxation on the employer and former employee, and more immediate income taxation on the employee." (Carlton Fields)
Impact of Borrowing from Your Retirement Plan
"This calculator can help you make a more informed decision about whether a loan is the right approach for your financial situation." (Smart About Money)
Comparing Small Law Firm 401(k) Plans: Fees, Matching, and the Best States to Work In
"Here's key information, broken down by state, of small firm 401(k) plans ... D.C.'s $9K average employer contribution [far exceeds] even the nearest competition (Montana and Oregon). Coincidentally, Small Law employees in D.C., Montana, and Oregon also have the highest average contributions overall suggesting -- as one would expect -- that a good matching program encourages employees to contribute too." (Above the Law)
[Official Guidance] Cash or Deferred Arrangement LRM and Information Package, October 2017 (PDF)
43 pages. Oct. 2017, published online Nov. 2017. "This information package contains samples of plan provisions that satisfy certain specific requirements of the Internal Revenue Code... Note that these CODA LRMs assume the plan will permit catch-up contributions (defined in Code Section 414(v)) for participants age 50 and over and Roth Elective Deferrals (defined in Section 402A)." [Also online: 45-page red-lined version showing changes from the previous (October 2011) version.] (Internal Revenue Service [IRS])
[Guidance Overview] Puerto Rico Treasury Department Finally Grants Relief to Participants Affected by Hurricane Maria (PDF)
"After a long and tumultuous process, and 56 days after Hurricane Maria hit Puerto Rico, the Puerto Rico Treasury Department issued Administrative Determination No. 17-29 to grant relief on eligible distributions (including hardship withdrawals) and plan loans by participants in Puerto Rico tax qualified retirement plans who were affected by Hurricane Maria." (Groom Law Group)
Participants Say More Information About Plan Investment Fees Would Be Useful
"[N]early seven in 10 survey respondents in employer-sponsored retirement plans said they were at least somewhat familiar with their plan's fees, while 31% were not at all familiar with the fees. Roughly two-thirds had not read any investment fee disclosure in the previous year.... Of the one-third who had read a fee disclosure, nearly seven in 10 said they found the information understandable ... Roughly four in five participants said it would be at least somewhat useful to have additional information about investment fees." (PLANSPONSOR)
[Guidance Overview] IRS Guidance on Missing Plan Participants and Required Minimum Distributions
"Unlike the DOL, the IRS's [October 19] administrative enforcement guidance ... does not require the administrator to identify and contact the missing participant's designated beneficiary. Moreover, the IRS guidance requires the use of one of [three] search methods ... [T]he DOL does not require that these search methods be used in all cases ... It is not known whether the DOL will give any deference to the IRS's position on what constitutes 'reasonable efforts' to locate missing participants." (Baker Botts L.L.P.)
401(k) and 403(b) Contributions Still on the Chopping Block
"Here's what is now under consideration: [1] The maximum catch up contribution would be increased to $9000, but catch up contributions would have to be made on a ROTH basis.... [2] No catch up contributions would be permitted for employees earning more than $500,000. [3] Catch up contributions for pre-retirees and long service employees under 403(b) and 457 plans would be eliminated. [4] Special post-termination employer contributions for 403(b) plan participants would be eliminated. [5] The rules permitting contributions to a 457(b) plan in addition to maximum 401(k) and 403(b) contributions would be eliminated." (Cohen & Buckmann, P.C.)
Senate Tax Proposal Could End Feds' Catch-Up TSP Contributions
"The chairman's retirement savings amendment ... would increase the maximum catch-up contribution that all employees age 50 and older can make to their 401(k), 403(b) or 457(b) retirement savings plans in a given year from $6,000 to $9,000, but would require those contributions to be made to Roth plans only ... This would affect federal employees age 50 and older who make such extra payments to the TSP[.]" (Government Executive)
House and Senate Tax Bills Propose Changes to Qualified Plans
"[T]he House bill contains a number of smaller proposed changes that are intended to simplify plan administration, promote savings, and/or raise revenue, and the Senate bill proposes several targeted reductions to various tax-qualified retirement plan contribution limits." (Morgan Lewis)
Pension Plan Limitations for 2018
"These changes will take effect on January 1, 2018, and are based on the fact that the Consumer Price Index increased by 2.2% last year. Many of the limitations are being increased, while others remain unchanged." (Trucker Huss)
Senate Sneaks 401(k) Contribution Limits Into Tax Cuts Bill
"High earners would be prohibited from making $6,000 catch-up contributions to 401(k) workplace retirement plans. That lets the Senate say it isn't targeting 401(k) deferrals, but it's a huge grab out of the $24,000 high earners can put away today ($18,000 elective deferral and $6,000 catch-up). In addition, the Senate proposal targets government workers who have both a 457 retirement plan and a 401(k) plan. No matter how much they earn, they wouldn't be able to save to the max in both plans anymore at one employer. And special catch-ups for 403(b) and 457 plans would be restricted too." (Forbes)
Nordstrom Plan Participant Claims 401(k) Plan Fees No Bargain
"[The participant] argues, among other things, that Nordstrom failed to use the leverage it says the plan's $2.6 billion in assets should have enabled it to obtain reasonable fees for plan participants. In addition, she argues that the plan fiduciaries failed to adequately and prudently manage the plan by not using lower-cost investment vehicles and that they provided inadequate disclosures on fees." [McCorvey v. Nordstrom, Inc., No. 17-8108 (C.D. Cal., complaint filed Nov. 6, 2017)] (National Association of Plan Advisors [NAPA])
Senate Tax Reform Proposal Caps Catch-Ups
"The Chairman's Mark of the Senate tax reform proposal throws a few unexpected curves -- bringing back problems for deferred compensation plans, introducing some new problems for 403(b) and 457 plans and capping catch-up contributions. Under the proposal unveiled Nov. 9 by Sen. Orrin Hatch (R-UT), Chairman of the Senate Finance Committee, as of plan years and taxable years beginning after Dec. 31, 2017, individuals could not make any catch-up contributions -- even on an after-tax basis -- for a year if they received wages of $500,000 or more in the preceding year." (National Association of Plan Advisors [NAPA])
Participant's Missed Plan Loan Installment Payments Did Not Violate Level Amortization Requirement Because They Were Properly Cured
"The IRS assumed that the 401(k) plan permitted plan loans and allowed for a cure period ... in which a participant could make up a missed installment payment by the last day of the calendar quarter following the calendar quarter in which the required installment was due. The IRS explained that, in two situations, the participant properly cured missed loan repayments by either making payments within the cure periods or by refinancing the loan with a replacement loan within the cure period." [IRS Chief Counsel Advice Memorandum 201736022] (Wolters Kluwer Law & Business)
2018 Inflation-Adjusted Limits Affect Many Employee Benefit Plans
"[Rev. Proc. 2017-58] sets out the 2018 inflation adjustments for ... health flexible spending arrangements (FSAs), qualified transportation fringe benefits, qualified adoption assistance programs, penalties related to the [ACA] individual mandate and qualified long-term care (LTC) premiums. The limits also include ... the qualified retirement plan limits released in Notice 2017-64 and the recently announced Social Security taxable wage base. The 2018 tax limits may affect design, administration, communication and tax reporting for these benefits." (Willis Towers Watson)
[Opinion] Steps to Address America's Retirement Security Challenge: A Public Policy Point of View (PDF)
15 pages. "As the U.S. retirement system continues to evolve and individuals take on more responsibility for retirement planning, it's important to support those workers as much as possible in the transition.... [K]ey policy changes that will strengthen the current system.... [1] Encourage greater access to lifetime income products.... [2] Establish an alternative 401(k) safe harbor plan with higher deferral rates.... [3] Facilitate portability and consolidation of individuals' retirement assets.... [4] Permit some retirement savings to be used for short-term needs.... [5] End the Federal Budget practice of 'double counting' increases in the premiums that plan sponsors must pay to the PBGC.... [6] Revise nondiscrimination testing rules that currently encourage many plan sponsors to 'freeze' their DB pension plans." (Mercer)
Disciplined, Confident and a Little Stressed: Millennials Report Positive 401(k) Saving Behaviors
"86 percent of Millennials, 90 percent of Gen Xers and 84 percent of Boomers [consider a 401(k) plan] a 'must-have' benefit. Millennials are especially reliant on 401(k)s for the money they'll need in retirement, with 78 percent saying a 401(k) is their largest or only source of retirement income.... [F]inancial stress has affected the job performance of more than a third of Millennials (35%), compared to 18 percent of Gen Xers and 11 percent of Baby Boomers. Not surprisingly, student loan debt impacts many Millennials, with 24 percent citing it as a source of financial stress." (Charles Schwab)
New Tax Reform Bill: Major Changes to Executive Compensation Lead Impact on Benefits and Compensation Practices (PDF)
9 pages. "Employers that have used nonqualified deferred compensation plans to attract and retain highly compensated employees ... would need to consider alternatives to achieve their goals ... With the possible exception of incentive stock options, there would appear to be no reason for employers to grant stock options or stock appreciation rights.... [R]ule changes would ease the ability of employees to take hardship withdrawals and would reduce some of the complexity in administering hardship withdrawals.... As a taxable contribution, [Dependent Care FSAs] would be effectively eliminated as they would have no value to employees.... The Tax Bill does not eliminate Health Care Flexible Spending Accounts." (Mazursky Constantine LLC)
Financial Wellness Via Your 401(k)
"Those living paycheck to paycheck are probably your best customers when it comes to hardship withdrawals, loans and post-separation distributions. What can you do? ... Automatic enrollment, automatic escalation, etc ... Flexible account consolidation/aggregation provisions ... Eliminate hardship withdrawals ... Add 21st century loan provisions ... Consider adopting 'Deemed IRA' provisions." (Plan Sponsor Council of America [PSCA])
Tax Reform Surprise: Congress Slips in 401(k) MEP Broadside
"H.R.1 introduces a brand-new subsection to Section 401 -- subsection (o). Within this new subsection resides language that just may change the nature of the retirement plan industry. The proposed new 401(o) subsection is titled 'Special Rule for Applying Non-Discrimination Rules to Older, Longer Service and Grandfathered Participants.' Further down, specifically on Page 157, line 10 of H.R.1, sits paragraph 401(o)(1)(H). It reads as follow: '(H) TREATMENT AS SINGLE PLAN.--For purposes of subparagraphs (E) and (G), a plan described in section 413(c) shall be treated as a single plan rather than as separate plans maintained by each participating employer.' " (Fiduciary News)
Why Automating Retirement Savings May Not Be Enough
"There is no doubt that automatic retirement savings plans do considerable good. They prod us into getting started on a path of saving regularly for our futures. The problem arises when we see them as a complete solution, rather than one piece of a complex and difficult set of behaviors that we will need to perform and integrate into our lifestyles." (Psychology Today)
Reenrollment of Your Participants in Target Date Funds: The Price Is Right ... or Is It?
"[O]ne of the most common times for a plan sponsor to face the decision of re-enrolling the entire plan into target date funds is at a provider change.... Many vendors are offering lower administrative fees if plan sponsors choose to re-enroll the plan into their proprietary target date funds. So how do you make that decision? Is it a fee decision or an investment decision? And how do you run a request for proposal (RFP) taking this into account?" (Paul L. Powell)
Tax Cuts and Jobs Act: Good News for 401(k) Plans, Bad News for Nonqualified Deferred Compensation
"While there were no adjustments to contributions to 401(k) plans under the Act, that does not mean that the final version of the bill will not include some form of Rothification.... The Act liberalizes certain rules relating to hardship distributions.... This proposal would eliminate many standard forms of deferred compensation, such as 401(k) mirror plans. It also removes from the Code, with respect to services performed after December 31, 2017, Sections 409A, 457(b) (for tax exempt employers), 457(f), and 457A ... The exclusions for adoption assistance, dependent care, qualified moving expenses, and employee achievement awards are repealed." (The Wagner Law Group)
House Tax Reform Bill Unveiled (PDF)
"In addition to proposing reductions in individual and corporate tax rates, the House Bill proposes far-reaching changes to the taxation of executive and nonqualified deferred compensation and relatively minor changes to IRA and qualified retirement plan rules, clarifies that unrelated business income tax (UBIT) applies to state and local government plans, and changes the tax rules that apply to various types of fringe benefits provided to employees. Notably, the House Bill does not contain changes to the tax incentives for retirement savings." (Groom Law Group)
Employer Retirement Plans Comparison for Small Businesses, 2018 Plan Year
"This table provides a comparison of the features and benefits that apply to retirement plans that can be sponsored/adopted by small business owners. Focus on the areas that are important o the business owner, so as to help ensure that the plan that is chosen is the plan that is most suitable for the business." (Appleby's IRA Publications)
Has Your 401(k) Plan Had Its Annual Check-Up?
"While a number of variables contribute to how well a 401(k) works for its participants, four factors are critical to plan health -- but ... are not typically reviewed by the average 401(k) advisor. A positive report on all of them is required for a truly healthy 401(k). These four measures of health are widespread participation, high savings rates, adequate investment diversification and compliance with nondiscrimination rules." (ForUsAll)
Average 401(k) and IRA Balances Climb, Hitting Record Levels
"Retirement account balances reached all-time highs for the fourth consecutive quarter. Helped by strong stock market performance, the average 401(k) and IRA balances increased 10 percent over the last year and continued to hit record levels. The average 401(k) balance rose to $99,900, while the average IRA balance climbed to $103,500." (Fidelity)
Tax Reform Bill Contains Retirement Plan Changes
"Hardship distribution rule changes ... Plan loan rule change ... In-service distributions ... IRA contribution/conversion recharacterization rule.... [P]lan nondiscrimination testing [for closed plans]." (American Society of Pension Professionals & Actuaries [ASPPA])
[Guidance Overview] Relief Comes for Retirement Plans After Hurricane Maria and Wildfires
"Hardship distributions will still be taxable as an in-service distribution and potentially subject to early distribution penalties. [IRS Ann. 2017-15] simply temporarily removes certain administrative burdens of the plan so that funds can be released more quickly than normal procedures would typically allow. In addition, plans which do not currently have provisions for loans or hardship distributions can make them before the employer formally amends its plan to include such provisions. This guidance can be followed for distributions made by March 15, 2018." (RSM US)
Chapter 13 Debtor Can Put Earnings Into 401(k)
"Chapter 13 debtors can deduct 401(k) contributions in calculating their disposable income that must be contributed to a payment plan, even if they weren't contributing in the six months prior to the bankruptcy ... The court followed what it said was the majority of courts considering the question and found that absent a showing of bad faith, the retirement plan deductions could be included among the debtor's expenses. [In re Davis, No. 17-70784 (Bankr. C.D. Ill. Oct. 30, 2017] (Bloomberg BNA)
Chairman Brady Introduces the Tax Cuts and Jobs Act
"For individuals and families, the Tax Cuts and Jobs Act: ... Retains popular retirement savings options such as 401(k)s and Individual Retirement Accounts so Americans can continue to save for their future.... Lowers the corporate tax rate to 20% ... Reduces the tax rate on the hard-earned business income of Main Street job creators to no more than 25%[.]" Also released: [1] Full legislative text of the Tax Cuts and Jobs Act; [2] Section-by-section summary; [3] Policy highlights; and [4] Examples of how the Tax Cuts and Jobs Act will help Americans of all walks of life. (Committee on Ways and Means, U.S. House of Representatives)
A Three-Step Guide for Employers to Select and Monitor 401(k) Index Funds
"As an employer, you can't just randomly choose index funds for your 401(k) to meet prudent standards. You need a process for selecting and monitoring a basket of funds to meet investment-related fiduciary responsibilities for requiring diversification and ongoing monitoring.... [1] Establish a basic investment policy ... [2] Select funds that meet your policy ... [by considering] Diversification ... Market Returns ... Efficiency ... [and] [3] Ongoing monitoring." (Employee Fiduciary)
House Tax Chief Says No Plans to Reduce 401(k) Pretax Limits
"House Ways and Means Chairman Kevin Brady says he doesn't plan to reduce the pretax contributions American workers can make to 401(k) retirement plans -- 'unless there's broad agreement' among investment advisers that a different system would lead workers to save more. 'It will either be strengthened or enlarged or left pretty much as is,' Brady told reporters[.]" (Bloomberg)
Establishing and Maintaining a 401(k) Plan: A Guide for New Plan Sponsors
"[1] Exercise care when choosing the 401(k) plan vendor.... [2] Get well-considered advice when designing the plan's key features.... [3] Timely sign and date the plan document, and keep copies.... [4] Always keep in mind that the plan must be operated in strict accordance with its written terms.... [5] Filing Form 5500 annual reports.... [6] Conducting annual nondiscrimination testing and performing any required corrections.... [7] A special problem: is the plan top-heavy ... [8] Timely remittance of salary deferral contributions to the 401(k) plan's trust.... [9] When things go wrong: IRS and DOL correction programs.... [10] Terminating the Plan." (Fenwick & West LLP)
[Official Guidance] Text of IRS Announcement 2017-15: Relief for Victims of Hurricane Maria and the California Wildfires (PDF)
"This announcement provides relief to taxpayers who have been adversely affected by Hurricane Maria and recent wildfires in California ('California Wildfires') and who have retirement assets in qualified employer plans that they would like to use to alleviate hardships caused by these disasters. In addition, this announcement provides relief from certain verification procedures that may be required under retirement plans with respect to loans and hardship distributions. The relief provided under this announcement is in addition to the relief already provided by the Service pursuant to News Releases CA-2017-06, VI-2017-02 and PR-2017-02 ... The relief in this announcement is separate and in addition to the relief provided to victims of Hurricane Maria by the Disaster Tax Relief and Airport and Airway Extension Act of 2017 ...

"As described [in this announcement], a qualified employer plan will not be treated as failing to satisfy any requirement under the Code or regulations merely because the plan makes a loan, or a hardship distribution for a need arising from Hurricane Maria or the California Wildfires, to an employee or former employee whose principal residence on September 16, 2017, in the case of the U.S. Virgin Islands; September 17, 2017, in the case of Puerto Rico; or October 8, 2017, in the case of California was located in one of the areas identified for individual assistance by [FEMA] because of the devastation caused by these disasters or whose place of employment was located in one of these areas on that date or whose lineal ascendant or descendant, dependent, or spouse had a principal residence or place of employment in one of these areas on that date....

"[A] profit-sharing or stock bonus plan that currently does not provide for hardship or other in-service distributions may nevertheless make hardship distributions related to these disasters pursuant to this announcement, except from QNEC or QMAC accounts or from earnings on elective contributions (see below for plan amendment requirements)....

"[T]he relief provided by this announcement applies to any hardship of the employee, not just the types enumerated in the regulations, and no post-distribution contribution restrictions are required." (Internal Revenue Service [IRS])

If Retirement Pros Set Tax Policy Instead of Politicians, This Is What We'd Get
"These are the experts who live on the front lines of the retirement industry. They see, first hand, what works and what doesn't work. They have no political favors to pay back, but they do have to worry about getting 're-elected' (i.e., retaining their clients). As a result, they may be more accountable when it comes to acting in the best interests of retirement savers. That's because they have a direct fiduciary liability for their advice and actions that no elected official can ever have. Nearly every financial adviser we spoke with agreed only one policy change would get people to save more for retirement: Increasing the cap on retirement contributions." (Fiduciary News)
Missing Your 401(k) Check? The Federal Government Is Here to Help You
"The agency that insures America's private pension plans already has a database to help participants in traditional pension plans search for unclaimed money. The PBGC has a pending final rule ... that would extend its program to many more missing participants. Under the proposed rule, which was issued in September 2016, the PBGC would also offer a similar program to individual account defined contribution plans, such as 401(k) and profit-sharing plans. Such plans would have the option of transferring benefits to the PBGC." (Bloomberg BNA)
Key 401(k) Statistics: Retirement Plans by the Numbers
"In plans offering automatic enrollment, Vanguard finds that a whopping 90% of eligible employees join the plan. The figure plunges to 63% in plans without auto enrollment. This discrepancy is even wider for young employees. The participation rate is 85% for those below the age of 25 -- if they are auto enrolled into the company plan. The participation rate falls to 27% if they have to enroll themselves.... The average deferral rate was 6.2% ... [T]he average expense ratio was 0.39% for domestic equity funds in plans with more than $1 billion in assets.... BrightScope puts 2014 average total plan cost at 0.97% of assets." (ForUsAll)
[Opinion] Limit on 401(k) Savings? It's About Paying for Tax Cuts
"Nearly 40 years later, 401(k) accounts are the most common employer-sponsored retirement plans and a raft on which millions of Americans hope to float through retirement.... A proposal to slash the amount of money workers can put in tax-deferred retirement accounts set off alarms among savers and members of the financial services industry, who contend that limiting the tax break would discourage contributions to 401(k) plans." (The New York Times; subscription may be required)
Employee Perspectives on Barriers to Retirement Saving (PDF)
32 pages. "Overall, two-thirds of those working for small to midsize employers said they have access to a plan at their jobs, and 68 percent of that group participates.... When businesses contribute to retirement plans, full-time employees are more than twice as likely as those whose employers do not contribute to participate. Only 28 percent of full-time workers without access to employer-sponsored plans report having any other retirement savings through alternative approaches, such as an IRA or a 401(k) from a previous employer." (The Pew Charitable Trusts)
Helping 401(k) Participants Become Better Investors
"[1] Give all participants a risk assessment quiz every year ... [2] Offer basic investment advice to every participant. Free.... [3] Offer a target date series ... [4] Re-enroll everyone into the QDIA in your plan ... [5] Adopt an auto-enrollment provision." (Lawton Retirement Plan Consultants)
Few Workers React Negatively to 'Pushing the Envelope' on Default Savings Rates
"Erring on the high side when choosing a 401(k) savings default-contribution rate won't likely discourage employees from participating in the plan, new research suggests. Plan sponsors' experiences seem to back up this finding.... Suggesting rates between 7 percent and 10 percent did not result in lower enrollment when compared to a 6 percent control rate. The highest rate suggested -- 11 percent -- resulted in only a slight drop in enrollment." (Society for Human Resource Management [SHRM])
The 401(k) Millionaire Next Door
"The proof of the success of the 401(k) or TSP has been the ability of an increasing number of participants to reach a high milestone. The TSP had 16,475 millionaires as of August of this year. There were 2,675 millionaires in the same month in 2014. TSP millionaires are a small group relative to the 5.1 million participants, but it's clearly growing. As of year-end 2014, Fidelity Investments said that 72,000 of its 401(k) accounts held more than $1 million. This is up from 59,000 in 2013 and 21,000 in 2009." (The Washington Post; subscription may be required)
[Opinion] Congress Might Take Away the 401(k) for the Wrong Reason
"The 401(k) is hardly a perfect retirement savings vehicle. It was originally designed in the 1980s to be a supplement to pensions plans, not the main way Americans save for retirement.... About everyone agrees that Congress -- and corporations -- need to find ways to spur people to save more. But the current proposal being tossed around by the GOP would do the opposite[.]" (The Washington Post; subscription may be required)
[Opinion] How the Republican Tax Plan Would Hurt Retirement Savings
"[C]hanging the way 401(k) contributions are taxed today frees up a significant amount of money to use to lower the overall tax rate.... If Congress lowers the cap on 401(k) contributions, they get more money now, which helps them pass their massive tax cuts. It doesn't matter that the federal government will collect less money in the future; those losses will occur outside the ten year budget window." (National Public Pension Coalition)
Failure to Log In: The Dirty Little Secret of Many Retirement Plans
"[One] recordkeeper [recently] tested some of their retirement plan communication initiatives on their own employees.... [When the] recordkeeper began their project, they made a surprising discovery: not only had many of their employees not recently logged in to their retirement plan account, but a significant number had NEVER logged in!... How can plan sponsors find out the percentage of their population who have accessed the retirement plan website recently, or ever?" (Cammack Retirement Group)
Trump Says 401(k)s Off Limits for Tax Reform, But Top Tax Lawmakers Say They're Under Consideration
"Republicans seeking to reach an agreement on tax reform are considering changes to the popular 401(k) retirement plan, despite President Donald Trump's vow that they would not be touched. House Ways and Means Chairman Kevin Brady, R-Texas, said on Wednesday that certain state and local tax deductions were still under discussion, including a proposal to cap contributions to retirement plans, ahead of the planned rollout of new tax reform legislation next week." (U.S. News & World Report)
African-Americans Want More Financial Education from Their Employers
"African-Americans are more likely to say they are behind in saving for retirement, and 41% of survey respondents expressed concerns about making ends meet. Respondents also indicated a greater proclivity to making withdrawals or loans from their 401(k) or other employer-sponsored retirement plan compared with the general population -- 24% vs. 14%, respectively.... Meanwhile, African-Americans were nearly half as likely to worry about the cost of health care as others[.]" (PLANSPONSOR)
401(k) Enrollment: How to Get More Employees Saving
"While enrollment rates have improved in recent years, there are still plenty of employees who fail to enroll in the company 401(k). When asked about the reasons for not saving into the plan, 28% of plan sponsors reported that a 'lack of awareness or understanding' was the primary reason employees did not participate in their plans." (ForUsAll)
Decumulation in Defined Contribution: The Second Act
16 pages. "As a burgeoning number of older Americans shift from retirement saving to retirement spending, the central financial question of 'How can I create lasting income in retirement' is gaining urgency. There are few readily available answers for retirees.... So far, employer-based [DC] plans have not been seen as a serious response to this question. Yet, DC plans can deliver on the top reason that plan participants save for retirement -- maintaining consistent spending in retirement -- while providing a seamless transition from the savings phase." (BlackRock Retirement Institute)
[Opinion] Even If Trump Spares 401(k)s, Saving for Retirement Is Still Broken
"[T]he current strategy of encouraging retirement savings through tax incentives such as 401(k) plans is not one that 'works.' According to a recent estimate from researchers at the Census Bureau, fewer than one-third of American workers participate in 401(k) plans and other workplace retirement accounts, and the failure of 401(k) plans to cover broad swaths of the population is a major cause of the country's retirement-savings shortfall." (The Atlantic)
What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Plan Account Balances, 2010-2015 (PDF)
24 pages. "The average 401(k) plan account balance for consistent participants rose each year from 2010 through year-end 2015. Overall, the average account balance increased at a compound annual average growth rate of 13.9 percent from 2010 to 2015, to $143,436 at year-end 2015. The median 401(k) plan account balance for consistent participants increased at a compound annual average growth rate of 17.9 percent over the period, to $66,412 at year-end 2015. The growth in account balances for consistent participants greatly exceeded the growth rate for all participants in the EBRI/ICI 401(k) database." (Employee Benefit Research Institute [EBRI])
Xerox Nixes Challenge to Robo-Adviser Fees in Ford 401(k) Plans
"Xerox HR Solutions LLC escaped a lawsuit by participants in three Ford Motor Co. 401(k) plans challenging the allegedly excessive fees charged for investment advice provided by robo-adviser Financial Engines Advisors LLC. Xerox -- which provided administrative and record-keeping services to the Ford plans -- didn't act as an [ERISA] fiduciary with respect to the compensation it received from Financial Engines ... Xerox had no discretion over the amount of its own compensation as it relates to the participants and thus wasn't acting as a fiduciary in collecting fees from Financial Engines, Cleland held." [Chendes v. Xerox HR Solutions, No. 16-13980 (E.D. Mich. Oct. 19, 2017)] (Bloomberg BNA)
Retirement Pros Reveal Worst Fears Regarding Tax Reform
"[L]owering or removing tax-deductibility of a majority of contributions hurts the very people who can least afford it -- those who don't make enough to overcome the loss of the incentive yet who make too much to avail themselves of government assistance programs.... Any public policy change that discourages retirement savers will alter the current trend among some to attain the financial self-sufficiency needed to offset expected reductions in Social Security.... The most cynical fear Congress might make changes retroactive, effectively removing tax advantages from decisions made years ago." (Fiduciary News)

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