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<< Older News  |  September 25, 2020

News

All News > Retirement Plan Design

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No Silver Bullet to Eliminate Potential Snags When Offering Retirement Income Options
CAPTRUST Link to more items from this source
Sept. 24, 2020

"[W]hile early indications suggest that a handful of interesting new guaranteed income-oriented products are in the offing, ... adding a new and potentially complicated product or service to a plan investment lineup may not be the solution to participants' retirement income needs.... Without communication and education targeted at the right participant segments, adoption of new features can be destined for a lackluster future. Plan sponsors need to be prepared to communicate clearly and actively with participants about retirement income solutions if they want adoption."

Tags: Retirement Plan Design  •  Retirement Plan Investments

Employers' Sense of Responsibility for Employees' Financial Wellness Increased Significantly Over the Last Decade (PDF)
Bank of America Link to more items from this source
Sept. 24, 2020

28 pages. "62% of employers feel extreme responsibility for their employees' financial wellness, up from 13% in 2013. 83% of employers believe financial wellness tools lead to greater productivity.... 67% of eligible employees contribute to their Health Savings Account (HSA). 47% of employers are promoting workplace wellness with established diversity and inclusion programs."

Tags: Health Plan Design  •  Retirement Plan Design

Employee Benefits in the United States, March 2020
U.S. Bureau of Labor Statistics [BLS] Link to more items from this source
Sept. 24, 2020

"Private industry workers: ... Medical care was available to 27 percent of workers in the lowest 10th percent wage category and 94 percent of workers in the highest 10th percent wage category had access to this benefit. Sixty-seven percent of workers in an establishment with less than 100 employees had access to paid sick leave and 88 percent of workers at establishments with 500 or more employees had access to paid sick leave.... State and local government workers: Seventy-six percent of workers participated in defined benefit plans.... Eighteen percent of workers participated in defined contribution plans and employee contributions were required for 69 percent of these workers.... Medical care and retirement benefits were not available to 1 percent of primary, secondary, and special education school teachers and 99 percent of these workers had access to both benefits."

Tags: Health Plan Design  •  Retirement Plan Design  •  State and Local Government Plans

Editor's Pick GAO Report: Retirement Security -- Older Women Report Facing a Financially Uncertain Future
U.S. Government Accountability Office [GAO] Link to more items from this source
Sept. 24, 2020

"In all 14 focus groups GAO held with older women, women described some level of anxiety about financial security in retirement.... Women in all 14 focus groups said their lack of personal finance education negatively affected their ability to plan for retirement. Many shared ideas about personal finance education including the view that it should be incorporated into school curriculum starting in kindergarten and continuing through college, and should be available through all phases of life." [GAO-20-718T, Sep. 24, 2020]

Tags: Retirement Plan Design

DOL Publishes Proposed 'Independent Contractor' Rule
Ballard Spahr LLP Link to more items from this source
[Guidance Overview]
Sept. 24, 2020

"The rule would give businesses additional clarity in using economic reality factors when determining whether a worker is an employee or independent contractor. Many state laws follow different standards, and the tests used by other federal agencies, such as the [IRS], and under other federal laws are different as well. So businesses should be aware of the law in the jurisdictions where they operate and be sure to analyze these issues under all applicable laws."

Tags: Health Plan Design  •  Retirement Plan Design

DOL's Proposed Rule Provides Framework for Employers to Classify Workers as Independent Contractors
Duane Morris LLP Link to more items from this source
[Guidance Overview]
Sept. 24, 2020

"The DOL's newly proposed regulations are intended to provide clarity to employers by adopting a simplified model framework for determining independent contractor status under the 'economic realities' test. The economic realities test, which often has been used by courts deciding worker classification issues, generally considers whether a person performing services for a potential employer as an independent contractor truly operates his or her own independent business that is not economically dependent on the employer."

Tags: Health Plan Administration  •  Health Plan Design  •  Retirement Plan Administration  •  Retirement Plan Design

IRS Issues Guidance on SECURE and Bipartisan American Miners Acts
Mercer Link to more items from this source
[Guidance Overview]
Sept. 23, 2020

"The SECURE Act generally provides that amendments for its changes aren't due before the last day of the first plan year beginning on or after Jan. 1, 2022 (or a later date prescribed by IRS). For governmental and certain collectively bargained plans, amendments aren't due before the last day of the first plan year beginning on or after Jan. 1, 2024. [Notice 2020-68] clarifies that the same deadlines apply to both discretionary and required SECURE Act amendments and to amendments for the Miners Act."

Tags: 401(k) Plans  •  Retirement Plan Design  •  SECURE Act

Overpaying and Undersaving: Correlated Mistakes in Retirement Saving and Health Insurance Choices (PDF)
TIAA Institute Link to more items from this source
Sept. 22, 2020

10 pages. "A large majority picks one of two more expensive plans, even when, for all possible spending realizations, lower costs are more likely in the cheapest plan. Employees who do not choose the low-cost plan overpay for health insurance by nearly $1,700 in expectation.... About one-third of employees forgo matching contributions, and a large majority saves below reasonable benchmarks.... People who spend too much on health insurance are 23% more likely to forgo matching contributions than are people who choose the low-cost plan."

Tags: Health Plan Design  •  Retirement Plan Design

Adding a Safe Harbor Provision While Maintaining Flexibility in Contribution Costs
DWC Link to more items from this source
Sept. 22, 2020

"Because the safe harbor rules are meant to ensure a certain minimum level of contribution for the non-HCEs, you can design your plan so that contributions are required for the non-HCEs but optional for the HCEs. Presto! You have a safe harbor plan with the flexibility to reduce your contribution cost by more than 70% in any given year should you need to do so."

Tags: 401(k) Plans  •  Retirement Plan Design

What Can Plan Sponsors Do to Bring Employees Up to the Optimal Deferral Target?
Fiduciary News; free registration required Link to more items from this source
Sept. 22, 2020

"[T]he company match alone cannot represent the sole target for salary deferral. It might represent a minimum, but it is very clearly not a good measure for the maximum (unless the match is extremely generous).... Plan sponsors shouldn't make the mistake to think assisting employees to save the optimal deferral percentage is limited to a periodic meeting. It should be inculcated throughout the organization.... Plan sponsors need to be more proactive to get employees to reach their salary deferral target."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design

IRS SECURE Act Guidance Clarifies Key Issues for Retirement Plans
Groom Law Group Link to more items from this source
[Guidance Overview]
Sept. 22, 2020

"When considering the QBAD feature, plan sponsors should take into account the various changes necessary to implement the participant-friendly provision (and coordinate with their record-keeper), including: [1] account sources; [2] 1099-R reporting changes; [3] 402(f), rollover and withholding changes; [4] updated Summary Plan Description (or Summary of Material Modification); [5] certification process and coordination for all controlled group plans; [6] recontribution process/procedures; and [7] plan amendment terms."

Tags: 401(k) Plans  •  Retirement Plan Design  •  SECURE Act

The Value of Strategic Advisor Partnerships for Retirement Plans
Fiduciary Benchmarks Link to more items from this source
Sept. 22, 2020

"[B]oth generalist advisors, such as benefits brokers and wealth advisors, along with retirement plan specialists, are vital to supporting and sustaining the [401(k) plan] market.... [R]egardless of the size of the retirement plans you serve, opportunities for partnerships between generalist and specialist advisors are abound. This article will highlight these opportunities for collaboration and how financial professional partnerships can positively impact employers and their workforce."

Tags: Retirement Plan Administration  •  Retirement Plan Design

Employers Can't Provide Retirement Plans. Let's Stop Pretending They Can
Teresa Ghilarducci, via Forbes Link to more items from this source
[Opinion]
Sept. 21, 2020

"[At] the end of 2019, only 36% of workers age 25-64 had a retirement plan at work (a fall in coverage rates from 41% in 2015).... The voluntary system was never robust, but we keep pretending that relaxing regulations and giving more tax breaks will incentivize employers to sponsor a plan. Now we are left with self-interested advisors, tax breaks worth $250 billion ... and less than half the workforce with a retirement plan at work."

Tags: Retirement Plan Design  •  Retirement Plan Policy

Response to Prof. Ghilarducci: The Real 'Coverage' Gap Is Under-appreciated Plan Sponsors
American Retirement Association [ARA] Link to more items from this source
[Opinion]
Sept. 21, 2020

"There is a coverage gap -- though not as wide, nor as deep, as Ghilarducci assumes. In fact, the system she chooses to characterize as a 'failure' works remarkably well for those who have access to it -- thanks to the hundreds of thousands of employers that have… voluntarily, supported and encouraged by tax considerations, chosen to provide them."

Tags: Retirement Plan Design  •  Retirement Plan Policy

Pandemic Sharpens Focus on Employee Financial Wellness
Strategic Benefits Advisors Link to more items from this source
Sept. 21, 2020

"To gauge how well employees are utilizing their benefits, plan sponsors can ask their administrators to answer [specific] questions ... If the data shows employees aren't taking full advantage of the financial features of their benefits, additional employee education and communication may be in order."

Tags: 401(k) Plans  •  Health Plan Design  •  Retirement Plan Design  •  Stock Plans

Portable Benefit Solutions: Financial, Health & Retirement (PDF)
Women's Institute for a Secure Retirement [WISER] Link to more items from this source
Sept. 18, 2020

16 pages. "One of the challenges in building an entrepreneurial ecosystem is that the new jobs created rarely offer employee benefits.... [This] project aimed to assess the feasibility of an online platform to serve as a virtual human relations department for entrepreneurs, self-employed workers, independent contractors, freelancers and other workers without access to benefit resources.... The use of online, fintech platforms hold great promise for bridging this gap and connecting independent workers with information, services and opportunities to build a stronger financial future."

Tags: Health Plan Administration  •  Health Plan Design  •  Retirement Plan Administration  •  Retirement Plan Design

Evaluation Scorecard for Retirement Income Products
Newport Group Link to more items from this source
Sept. 18, 2020

"While ... a large body of knowledge ... has been developed regarding selecting and monitoring traditional investment options within participant directed retirement plans, the new lifetime income options don't easily fit within existing frameworks. The purpose of this paper is to propose a set of metrics that plan sponsors and their consultants can use in assessing the suitability of a retirement income strategy as an investment option within a participant directed retirement plan."

Tags: Retirement Plan Administration  •  Retirement Plan Design

COVID-19 Layoffs Can Cause Partial Retirement Plan Termination
Frost Brown Todd LLC Link to more items from this source
Sept. 17, 2020

"Employers may consider amending retirement plans to count a certain amount of furlough time due to COVID-19 as hours of service that count for plan vesting purposes. This likely will not cost much to the employer, can go a long way in fostering goodwill with employees, and will not result in lost vesting service for employees who return from furlough."

Tags: Coronavirus (COVID-19)  •  Retirement Plan Administration  •  Retirement Plan Design

IRS Provides Additional SECURE Act Guidance
Ascensus Link to more items from this source
[Guidance Overview]
Sept. 17, 2020

"Notice 2020-68 [1] clarifies that employers may receive a credit for each year during a single three-year period, starting in the first year that an employer adds an EACA.... [2] clarifies that each eligible employer that participates in a multiple employer plan (MEP) may receive the tax credit.... [3] states that employers with qualified retirement plans and 403(b) plans that are not maintained by a public school will have until the last day of the first plan year beginning on or after January 1, 2022, to amend their plans for the SECURE Act and the Bipartisan American Miners Act."

Tags: 401(k) Plans  •  MEP/PEP  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE Act

Why 'Six Is the New Three' When It Comes to Automatic Enrollment
Cammack Retirement Group Link to more items from this source
Sept. 17, 2020

"While this could backfire if more participants opt out of auto-enrollment because of the higher rate automatic deferral rate, according to John Hancock's State of the Participant 2020 report, the opposite is actually the case. 12% of employees opt out at 3%, but only 10.4% did so at 6%. Thus, it is possible that with an auto-deferral rate of 6%, more employees, rather than fewer, may contribute to the retirement plan, than they would at 3%."

Tags: 401(k) Plans  •  Retirement Plan Design

IRS Clarifies 'SECURity' Through 401(k) Plan Expansion to Long-Term, Part-Time Workers
Hall Benefits Law Link to more items from this source
[Guidance Overview]
Sept. 16, 2020

"As a result of the difference between service taken into consideration for elective deferral eligibility and service taken into consideration for vesting of other employer contributions, employers that elect to expand eligibility for employer contributions are required to track service ... over two different periods, posing potentially significant administrative burdens.... [S]maller employers with a substantial employee base of part-time workers may be newly subject to [the Form 5500 Independent Qualified Auditor's Report] requirement beginning in 2024. "

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE Act

Editor's Pick The Growing Burden of Retirement: Rising Costs and More Risk Increase Uncertainty (PDF)
National Institute on Retirement Security [NIRS] Link to more items from this source
Sept. 16, 2020

"Saving early and continuously during working years is difficult for many workers.... Workers face market timing, interest rate, and longevity risks when they approach retirement age.... While older Americans are the most likely to own a home, the number of Americans age 65 and older who are cost-burdened by housing costs has increased ... Healthcare costs continue to rise for all Americans, but these costs are higher for older Americans ... Long-term care costs represent an increasing challenge for many older Americans ... Creative solutions exist to address these challenges."

Tags: Retirement Plan Design

401(k) Savers Want Help Understanding How Much They'll Need for Retirement
Charles Schwab Link to more items from this source
Sept. 15, 2020

"The area where 401(k) participants say they could most use help is understanding how much they'll need to save for retirement ... Over two thirds (68%) of participants gave an estimate of how long their retirement savings will last, with the average being 24 years. The remaining 32% say they do not know how many years their retirement savings might last ... [P]articipants expect 44% of [their retirement income] to come from a 401(k). The remaining 56% is expected to come from a range of different sources." [Also available: Summary of survey results (14 presentation slides)]

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design

Text of Federal Thrift Investment Board Final Regs: New Automatic Enrollment Percentage Is 5%
Federal Retirement Thrift Investment Board [FRTIB)] Link to more items from this source
[Official Guidance]
Sept. 15, 2020

"[FRTIB] is amending its regulations to increase the automatic enrollment percentage from 3 percent to 5 percent of basic pay for all participants who are automatically enrolled in the Thrift Savings Plan (TSP) on or after October 1, 2020 and for Blended Retirement Service (BRS) participants who are automatically re-enrolled in the TSP on or after January 1, 2021. In addition, the FRTIB is making a non-substantive clarification regarding installment payments calculated based on life expectancy."

Tags: Federal Government Plans  •  Retirement Plan Design

Participant Savings Strategies That Are More Effective Than Projected Income Disclosure
Fiduciary News; free registration required Link to more items from this source
Sept. 15, 2020

"[1] Automatic enrollment is the one most commonly recognized 'go-to' strategy when it comes to encouraging savings, especially among younger workers.... [2] 401k plans were designed specifically to encourage retirement savings by offering financial incentives to save.... [3] Participants won't know what they're capable of if they aren't educated.... [4] The retirement savings account should be meant to motivate a savings mentality and project out where an individual can be, not where they currently are ... All these strategies can be employed today and have proven themselves effective. It's unclear that disclosing projected retirement income will provide the kind of incentive that will work."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design


<< Older News  |  September 25, 2020

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