Lost in the tumult of the last few weeks is a rather significant piece of pension legislation that was buried in the Consolidated Appropriations Act, 2021 that was signed into law on December 27, 2020. You know it more for its granting an extra $600 to Americans that were qualified to receive...
Choosing which is worse, the COVID-19 pandemic or the Great Recession of 2008 is like being asked to choose between having a root canal or a colonoscopy. They are both awful but they are awful in different ways. In terms of retirement plans though, it is certainly worth asking the question:...
Most of the deadlines for various forms of relief provided by the Coronavirus, Aid, Relief and Economic Security (CARES) Act have passed. But not all. However, as we wait for this awful year to finally be over, there are deadlines looming wuth regards to utilizing these special provisions for...
In the timeless children’s book Are You My Mother?, a baby bird goes in search of his mother. When a mother bird’s egg starts to jump, she hurries off to make sure she has something for her little one to eat. But as soon as she’s gone, out pops the baby bird. He immediately sets off to find his...
Congress often gets chided (and justifiably so) for moving at the speed of a glacier, but there are times when they do act with deliberate speed. The CARES Act was one of those times.
They acted quickly to pass legislation that increased the size of loans that participants can take from...
Tens of millions of Americans are out of work while the stock market’s wild swings are making you dizzy, and you wonder… what are the rules of retirement in this new world we now live in? Has there really been a shift in the tried and true rules to a secure retirement? The answers are yes and...
Every day, 10,000 Americans turn 65. Life spans are lengthening and the contingent medical bills that inevitably accompany old age rise as well. Half of American families in the 56 – 61 age bracket had less than $21,000 in retirement savings (based on a study by the Economic Policy Institute)....
We know that the CARES Act doubled retirement plan loan limits for qualified individuals eligible for a Corona-Virus Related Distribution (CRD) to be the lesser of $100,000 or 100 percent of the participant's vested account balance. To qualify, the loan must be made within 180 days after the...
I thought that the most important thing that I could do with this month’s newsletter is to provide you with an update of any retirement related legislation as it moves through Congress.
Though negotiations are not over, on March 22nd Senate Majority Leader Mitch McConnell
(R-KY) released...
We’ve seen these images and advertisements so many times that we don’t pay much attention to them anymore. They are on the booklets that the recordkeeping providers give out at enrollment meetings. They flash across the TV screen as part of the retirement based commercials for insurance...
Changes The Required Minimum Distribution (RMD) Rules
Increases The Age That Living Participants Must Begin Taking RMDs: SECURE changes the RMD rules. It extends the initial required beginning date for living participants from the April 1st following the year in which the participant attains...
Amidst all the strum and drang going on in Washington, little noticed by anyone other than pension geeks (like me), Congress passed the most sweeping retirement plan legislation in 13 years. It was signed into law by the President on December 20th.
Interest rates charged by credit card lenders are at an all-time high which I know seems counterintuitive because the Federal Reserve has recently lowered the prime rate (several times!). The competition for credit card customers has never been fiercer. As a result, banks have been forced to...
This lawsuit has something for everyone: a respected and revered institution (MIT), one of the leading providers of services to the retirement plan industry (Fidelity) and a prominent law firm in the field of fiduciary litigation (the firm of Schlichter Bogard & Denton LLP). Even Jeffrey...
Consumer-debt that is years or even decades old is known as “zombie” debt in the debt buying industry and represents a growing cause of concern for consumers. Just like real life zombies (that is probably an oxymoron) these “almost dead” consumer debts can see new life many years after they...
Well OK. Chicken Little notwithstanding, the sky is not actually falling. But for millennials, it might as well be. The barrage of depressing news coupled with the fact that the impact of climate change seems to be accelerating leaves many of them to be pessimistic about the future. 88% of...
Everyone would save more for retirement if they only had more disposable income. The Wall Street Journal recently sat down with a group of financial experts, one of whom is a Nobel prize-winning economist. Want to hear their take on why Americans have so little savings and struggle to save...
“Social Security is going broke.” So said John Stossel in a piece that he did for Fox News in August of 2018. Other financial gurus and economists have weighed in with similar opinions. But is it really going broke? Is Social Security going bankrupt or merely headed for insolvency? And is...
Last month I talked about the importance of factoring inflation into your retirement planning expenses, without specifically targeting any one area. This month’s article focuses on one specific post-retirement expense: inflation’s impact on health care costs. Fidelity has something called the...
For those at or near retirement, the topic of inflation is certainly a cause for concern. A study several years ago by the Society of Actuaries revealed that 71% of folks approaching retirement were “very or somewhat concerned about inflation risk.” Many baby boomers are now or will shortly...
Seniors with student debt? Surely that is some sort of a mistake. No, it’s not. A recent article in the Wall Street Journal (WSJ) shined a light on a little known and growing problem. Seniors that have taken on student debt. Some took out loans to help pay for their children’s college tuition...
Environmental, social and governance investing – better known as ESG to those in the know (by the way, I was one of those not in the know) is a hotly debated topic in the 401(k) world.
Research from Cerulli Associates, which specializes in worldwide asset management and distribution analytics,...
Findings from MassMutual’s 2018 “State of the American Family” illustrates that on average, respondents expect to retire at age 62, as opposed to age 64 when the study was last conducted five years ago in 2013. Surprisingly, 40% of the respondents from the study intend to retire before age 60,...
For many Millennials saving for retirement has become a binary choice. Either they choose to pay down their student debt or they choose to save for retirement. Either one or the other. As many Millennials are in the earliest years of their working careers, difficult choices about how to allocate...
A recent article in the Wall Street Journal (WSJ) highlighted the fact that many middle-class boomers are financially unprepared for their “golden years” and how this led to social tensions within a specific retirement community.
Is It Too Late to Establish a 401(k) Safe Harbor Plan for 2018?
The answer of course is – it depends. If you currently sponsor a retirement plan that includes a 401(k) feature, to use either of the standard 401(k) safe harbor provisions, (the mandatory employer matching contributions or the...
When it comes to growing your retirement nest egg, conventional wisdom calls for us to start early and then to save 10% - 15% of your income. That’s great but for many of us, totally unrealistic. The day to day expenses of the child rearing years, coupled with the need to save for college can...
Pay Attention To Your 401(k) Statements
So here is the drill – You receive your quarterly 401(k) statement and you:
a) Review it carefully so that you are reasonably comfortable that all of your deferrals have been posted to your account
b) Review it carefully to see that the automatic...
Fortune Magazine recently ran an article touting the benefits of a Solo 401(k) over a SEP-IRA for sole proprietors or single member LLCs with no employees. And for those of you who are sole proprietors or single member LLCs who are looking to maximize your contribution (and thus your tax...
Madison Pension Services first opened its doors on July 1, 1978. Being an actuary, it is not hard to figure out that July 1, 2018 will represent our fortieth year in business. Forty years is a long time and it has gone by in the blink of an eye. For you millennials and Gen Xers, let’s take a...
When I looked at various top ten lists of what people fear the most, public speaking was invariably number one. Also making the top ten list was a fear of heights, flying, snakes, spiders, zombies and clowns. But I noticed that a new fear had emerged. And as baby boomers age out of the work...
CPAs are tasked with auditing plans that (generally) have more than 100 participants. So they get to see just about everything – the good, the bad and the ugly. Auditors test a sample of the Plan Sponsor’s employee population when auditing a plan. Once they discover an error, they must determine...
Auto-enrollment has resulted in millions of people who were not previously putting savings into their company’s 401(k) plan, now actively participating in it. That is a good thing. However according to a recent article in the Wall Street Journal, many of these workers seem to be offsetting those...
A scheme using what appears to be stolen identity information has resulted in a lawsuit by the U.S. Attorney’s office in Colorado. Their goal is to recover $2 million in losses from participants’ 401(k) accounts.
Governmental oversight and compliance of retirement plans has largely shifted away from the IRS over to the Department of Labor (the DOL). At the American Society Of Pension Professionals and Actuaries (ASPPA) national conference in Washington, two speakers, J.K. Nowiejski and Heather Agribo...
A recent tax court ruling, Louelia Salomon Frias v. Commissioner illustrates the importance of verifying that loan repayments are actually being made. Moreover, it is the participant’s responsibility to do so.
A lawsuit that began in 2011 is finally approaching its conclusion. The plaintiffs claimed that the 17 investment options selected by the plan back in March of 1999 were retail funds instead of lower cost institutional shares. The funds remained in the plan beyond August 16, 2001. That date is...
Which Qualities Plan Sponsors Do Value…
A recent poll of plan sponsors wanted to know which services plan sponsors most value from their advisors. Asked to name their top three, two stood out:
• Monitoring investments (81%)
• Acting as a co-fiduciary (81%)
Coming in a distant third...
401(k) plans are so ubiquitous that we assume that every employer offers a retirement plan to their employees. But that perception is just that; a perception. There are a fair number of small to mid-size firms that do not sponsor a 401(k) retirement program for their employees. The question is...
When I was younger (much, much younger) Bud Lite ran a series of commercials where quasi- celebrities (most of them were retired athletes) argued back and forth about whether they drank Bud Lite because it “tasted great” or because it had less calories and thus was “less filling” (they had not...
The catch-up contribution got its name because it was designed to help older workers “catch up” on contributions they may not have made when they were younger. Simply stated, it is an opportunity to make up for lost time.
Anyone who turns age 50 at any point during a calendar year can make an...
Tibble v Edison broke new ground in terms of clarifying that plan stewards have “an ongoing duty to monitor plan investments.” In the Tibble case, the Supreme Court rejected the argument that an initial fund review was sufficient when facts and circumstances may have changed to preclude the need...
The plan sponsor is responsible for the proper administration of hardship withdrawals. Under IRS regulations, hardship withdrawals must satisfy two criteria:
(1) The participant must be experiencing (and be able to demonstrate) an immediate and heavy financial need, and;
(2) The distribution...
In a recent airing of Last Week Tonight, John Oliver devoted an entire episode to money in general and 401(k) retirement plans in particular. The piece can be seen in its entirety at https://www.youtube.com/watch?v=gvZSpET11ZY. It runs for 20 minutes but the actual discussion regarding...
An advisor who I have known for many years called me for help. His client has a problem with their retirement plans and the IRS. The company that sponsors the plans consists of four employees: a father (the business owner), his spouse, his son and his daughter in law. They maintain two plans: a...
Businesses rarely adopt a strategy of moving down market. They either stay or move up market. That certainly has been true in the world of 401(k) litigation. Almost universally, the plans being sued have had participants in the tens of thousands and assets in the billions of dollars. And why...
No one would argue that an annual physical is a good idea (we may not actually do it, but no one would argue that it is a good idea). Just like an annual physical can detect a small problem and keep it from morphing into a more serious problem, so too can an annual compliance review identify...
I thought that this week’s blog would focus on a couple of different topics. They are related to prior blogs that I have written.
Colorado State-Run Retirement Plan Is Postponed Indefinitely
In my last posting, I wrote how the state of Connecticut recently approved a bill to offer workplace...
By the slimmest of margins, the state of Connecticut recently approved a bill establishing a state-run retirement plan for private sector workers.
Here is how it would work. Employers with at least five employees that do not currently offer a workplace retirement plan would be required to set...
The golden years. Travel, more time with the grandkids, volunteering, finally having the time to pursue an old passion (gardening, teaching, writing, etc.). All of those things sound great. And all of those things assume something that none of us can really count on. As we age, our continued...
10,000 baby boomers turn 65 every day. This is expected to continue for the next 17 years. Their retirement years will not resemble that of the generation that preceded them, the greatest generation. Most of the information disseminated by the media about retirement has focused on saving for...
We all know that crime does not pay. But I always thought that no matter what crime you committed, that an individual’s retirement plan accounts were pretty much bullet proof. That the assets would be judgement proof as long as they remained within the retirement plan or had been rolled over...
If your client sponsors a qualified defined contribution retirement plan (a 401(k) plan, a profit-sharing plan, anESOP, etc.) they are required to restate the plan in its entirety to comply with the Pension Protection Act of 2006(PPA). For defined contribution plans, the restatement must be...
Which do you think your clients would fear more: an
IRS audit of their retirement plan, or a letter from the
Department of Labor (DOL) requesting a laundry list
of documents, pending a DOL investigation? I would
guess that almost universally, our clients would rather
deal with the DOL vs....
There are still many companies that may be implementing a 401(k) plan for the first time. Still other companies have maintained a profit-sharing plan, where the plan’s assets were invested on a pooled basis that is adding a 401(k) feature for the first time. There are still other companies that...
