Domestic equity investors have been on a wild ride in recent years with the S&P 500 Index experiencing periods of 20% and 15% growth, followed by 10% and 20% declines, respectively, during the 18-month period prior to January 1, 2019. During the first quarter of 2019 domestic equity markets were once again on the move with the S&P 500 Index rallying 20% from its low on December 24, 2018,...
With the future of Social Security in question, it is becoming ever increasingly important for workers to self- prepare for post-retirement living. Studies show that approximately one out of every three eligible workers choose NOT to participate in their employer-sponsored 401(k) plan. Offering automatic enrollment in your 401(k) plan is a way for you, as Plan Sponsor, to help lend a hand to...
With the prevalence of data breaches in today’s news, now is as relevant a time as ever to remind employees about protecting their retirement accounts from potential fraud. What steps can employees take to help secure their accounts? Strong password management. Many times, the retirement plan account password is the same, or very similar, to another password in an account that may have been...
May 2019 15th: Deadline for participant-directed plans to supply participants with the quarterly benefit/disclosure statement including a statement of plan fees and expenses charged to individual plan accounts during the first quarter of this year. July 2019 1st: EACA ADP/ACP Corrective Testing - ADP/ACP refunds are due to highly compensated employees (HCEs) to avoid a 10% excise tax on the...
Qualified plans must perform annual testing to be sure that the plan doesn’t unfairly discriminate in favor of "highly compensated employees" (HCEs) or exceed the contribution limits set forth by the IRS. Depending on your plan provisions, it isn’t just one calculation, but a series of tests that show that your plan is not discriminatory. If your plan is audited, the auditor is looking for proof...
As the availability of Roth options in retirement plans and Roth contribution percentages continue to rise, it’s important to be able to distinguish the differences between pre-tax and Roth contributions. Employer-sponsored retirement plans offer many advantages to participants; the ability for accounts to grow on a tax-deferred basis, the chance of receiving employer contributions in the form...
In 2018, the 401(k) plan celebrated its 40th birthday! Though extremely popular today, 401(k) plans came about almost by accident. IRC Section 401(k) was passed into law as part of the Revenue Act of 1978 and was included to limit executive compensation. However, in 1980, Ted Benna of the Johnson Companies used the provision to create and get IRS approval of the first 401(k) plan for his...
February 2019 28th: Form 1099-R – The Form 1099-R is due for any distributions that occurred during the 2018 calendar year. Note: Participant Loans that are in default may be considered “deemed” distributions and are reportable on Form 1099-R. March 2019 15th: ADP/ACP Corrective Testing - This is the deadline for distributing contributions and earnings to participants as corrective measures to...
Domestic equity markets declined significantly during the fourth quarter of 2018, wiping out the gains from the first three quarters and ending the year with negative calendar year returns for the first time since 2008. The S&P 500 Index fell 13.5% during the quarter, its worst quarterly return since the third quarter of 2011. Large-cap stocks outperformed their small-cap counterparts during...
Domestic equity markets rallied during the third quarter of 2018, as positive economic data and strong corporate earnings once again helped to offset the impact of rising interest rates and continued trade tensions. The S&P 500 index increased 7.7% during the quarter, its best quarterly gain in nearly 5 years. Large-cap stocks outperformed their small-cap counterparts during the quarter,...
Earlier this year, the Bipartisan Budget Act of 2018 was passed by Congress and signed into law. While this law made several changes that impact retirement plans, one provision changing the rules around hardship distributions is particularly notable. As a result of the act, changes to the hardship distribution rules for 401(k) plans will take effect for the 2019 plan year (e.g., as of January...
One of the most prevalent and difficult challenges for many twenty somethings these days is the repayment of their, often substantial, student loan debt. Statistics show that the average college graduate with a bachelor’s degree left school in 2016 with $28,446 in student loan debt. While paying off this mountain of debt is certainly a difficult task on its own, doing so and contributing toward...
Every Fall, the coming year’s Cost-of-Living Adjustments (COLAs) are released by the Internal Revenue Service. The benefit increases counteract the effects of inflation and keep up with the “cost of living”. Below are the limits for 2019. 2019 2018 Maximum compensation limit $280,000 $275,000 Defined contribution plan maximum contribution $56,000 $55,000 Defined benefit plan maximum benefit...
It’s the time of year when Plan Sponsors scramble to deliver the myriad notices required to be given to their participants. Even with the help of service providers, the sheer number of notices can be overwhelming. Below is a summary of the notices that may apply to a calendar year 401k plan. Safe Harbor Notice – December 1st marks the deadline to distribute a notice of intent to use a safe...
Natural disasters can cause upheaval in many aspects of victims’ lives and this destruction often extends to financial matters. What should otherwise be routine compliance for plan deadlines can prove difficult in these extreme events and the government tends to grant temporary relief in such cases. The Department of Labor announced Oct. 26th that it has published employee benefit plan...
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