Institutional Services

Use it or Lose it!

Year-end is fast approaching, and it is important to make sure that you are maximizing your employer benefits. Typically, many benefits reset at the end of each year, so here are some benefits to review before year-end to make sure you get the benefits you deserve.

1. Review Health and Dental benefits

If you have not done so, make appointments for annual checkups by year-end. For medical, this is good for a review of your overall health, especially as you age. For dental benefits, you often get things like two free cleanings per year, so make an appointment to at least get preventative measures done to reduce future costs. If you have an upcoming expensive dental procedure, you can start it now and use up the max benefit for 2020 and have the rest done in 2021 using the new benefits. This strategy can keep more money in your pocket!

2. Review your vacation time

Depending on the state you live in and/or your employers’ policy, some vacation time is not eligible for rollover, so make sure to not lose that time before year-end. If your employer allows you to roll overtime or get paid out, review your options now. Also, now is a great time to put in vacation requests for next year since many people delay doing this, and typically those that ask first are granted the time off first.

3. Use up your Medical Savings Account (MSA) by year-end

Your employer may offer a Health Savings Account or a Medical Savings Account. The Health Savings Account (HSA) can be rolled over so no need to spend the money, but the Medical Savings Account (MSA) must be spent by year-end or you lose the money you contributed!

4. Max out contributions to employer-sponsored retirement plans

If you are saving a lot towards retirement, review your contribution elections to see is you can max out your plan contributions for 2020 and plan for how much you will contribute in 2021.

As the new year approaches review your benefits to make sure you do not lose benefits you are entitled to before year-end. Now is also the ideal time to begin some planning for your benefits for 2021.

Five Key Benefits for Military Families

The families of military members face challenges of their own during the member’s time of service and the federal government recognizes the hard work that goes into being part of a military family (and we do too). If you are saving for college or retirement, buying a home, or wondering how to help secure your family’s financial future, don’t overlook these five important benefits for military families.

1. Thrift Savings Plan

Retirement is something you need to plan for, whether it’s far away or just around the corner. Even if you can rely on a military pension because you’ve stayed in the service for 20 years or more, it’s probably not going to provide all the retirement income you’ll need, and neither is Social Security. That’s why it’s important to save for retirement on your own. One option you have is to contribute to the government’s Thrift Savings Plan (TSP).

The TSP is a retirement savings plan for federal employees, including servicemembers. When you make traditional contributions to the TSP, you get the same types of savings and tax benefits as you would if you contributed to a 401(k) plan offered by a private-sector employer. Contributing to the TSP is simple – your regular contributions are deducted from your paycheck before taxes (which can lower your taxable income for the year), and your contributions and any earnings accumulate tax deferred until withdrawn in retirement. You can also opt to make after-tax Roth contributions. They won’t reduce your current tax liability, but qualified withdrawals in retirement will be tax-free (assuming IRS requirements are met).

You can enroll, change, or cancel your contributions whenever you’d like. You can contribute as little as 1% or as much as 100% of your basic pay (or a designated dollar amount) each pay period, up to what’s called the elective deferral limit for the year. In 2020, you can contribute up to $19,500; if you’re age 50 or older and are making catch-up contributions, you can contribute up to $26,000.

If you’re contributing a percentage of your basic pay, you can also contribute a percentage of your incentive pay, special pay, or bonus pay (but you can’t make catch-up contributions from these types of pay). And if you’re deployed and receiving tax-exempt pay (i.e., pay that’s subject to the combat zone exclusion), you can also make contributions from that pay, and your contribution limit for the year is even higher; the limit for total contributions from all types of pay is $57,000 for 2020.

When you leave the military, you can’t continue to contribute to the TSP, but you have the option of keeping your money in the TSP or rolling it over to another retirement account, such as a traditional or Roth IRA or an eligible employer plan.

For more information on the TSP, visit

2. Savings Deposit Program

Are you trying to save money to buy a vehicle or make a down payment on a home? Do you need to set aside money for a rainy day? If you’re deployed to a designated combat zone for more than 30 consecutive days, you may have a unique chance to save for your goals at a guaranteed interest rate by participating in the Defense Department’s Savings Deposit Program (SDP).

The SDP pays you 10% interest on deposits up to $10,000 while you’re deployed, and you’ll earn this interest rate on your money for up to 90 days after your return. You may deposit all or part of your unallotted pay. Interest compounds quarterly and is taxable.

Generally, you can withdraw funds and close your account only after you leave the combat zone and are no longer eligible to participate in the SDP, although emergency withdrawals, while you’re deployed, are allowed in some cases.

Other rules and eligibility requirements apply. To find out more or begin participating in the SDP, contact your local military finance office.

3. Post-9/11 GI Bill

Education benefits are one of the most valuable benefits available to servicemembers. If you’re entitled to benefits, the Post-9/11 GI Bill will pay up to the full cost of in-state tuition and fees at public colleges for up to four years, or up to a certain maximum amount per academic year if you attend a private college or foreign school. The maximum is $25,162/year. Extra benefits may be available to those who are enrolled in Science, Technology, Engineering, and Math (STEM) programs.

But if you don’t need to use your entitlement, the Post-9/11 GI Bill can provide a great way to pay for your family’s education. Servicemembers who make a long-term service commitment have the opportunity to transfer unused education benefits (up to 36 months’ worth) to their spouses and children.

To transfer your unused benefit entitlement to your spouse, you must have served at least 6 years, and generally commit to serving 4 additional years from the date a benefit transfer is approved (some exceptions to this added service requirement exist). Once the transfer is approved, your spouse may begin using the benefits immediately and generally has an unlimited amount of time to use the benefits.

If you opt to transfer your unused entitlement to your dependent children, they can use the benefits only after you’ve completed at least 10 years of service. In addition, they must have attained a secondary school diploma or equivalency certificate or have reached age 18, and they can use the benefit entitlement only until reaching age 26.

If both your spouse and your children are attending school, you can opt to split your benefit entitlement among them.

To learn more about GI Bill benefits for you and your family members, visit

4. VA Home Loan

Saving for a down payment is one of the biggest obstacles to homeownership. Fortunately, military families can often benefit from the no-down-payment requirement of a VA loan. This type of loan, which can only be used to finance a primary residence, also features another money-saving benefit: borrowers aren’t required to pay mortgage insurance.

Despite its name, the VA loan isn’t handled by the government. Like other home loans, VA loans are offered by private lenders such as banks, credit unions, and mortgage companies. The VA guarantees a portion of the loan, which may make it easier for you to obtain a loan or qualify for more favorable terms, including lower closing costs and appraisal fees. Not all lenders offer VA loans, so you’ll need to ask potential lenders whether they are VA-approved lending institutions.

One lesser-known feature of the VA loan program is the opportunity to do a cash-out refinancing. If you have substantial home equity, this feature allows you to refinance an existing home loan (including a non-VA loan) while borrowing extra money, which you can use to pay off debt or make home improvements, for example.

A VA loan is often a good choice for military families, but it’s not the only game in town. You should compare the terms, interest rate, closing costs, and fees against other mortgage options. One drawback of a VA loan is the funding fee that’s generally required. This funding fee which you pay at closing (it can be financed into the loan) is a percentage of the amount you’re borrowing.

For more information on VA loans, including how to qualify and how to apply, visit

5. Servicemembers’ Group Life Insurance

Knowing that your family will be protected is extremely important, and affordable term life insurance coverage is available through the Servicemembers’ Group Life Insurance (SGLI) program. Eligible servicemembers are automatically enrolled in SGLI, and spouses and dependent children are generally automatically insured through a related program, Family Servicemembers’ Group Life Insurance (FSGLI).

When you leave the military, you can apply to convert your policy to Veterans’ Group Life Insurance (VGLI), which provides renewable term coverage. An SGLI policy may also be converted to an individual policy sold by a participating commercial company. (Deadlines apply to both types of conversions.) However, you should carefully evaluate your options to determine whether VGLI will meet your life insurance needs. Points to consider include premium costs, plan features, and whether term insurance is your best option.

For more information about these and other life insurance programs for servicemembers, visit

If you’re married, make sure that you and your spouse understand what financial challenges you face and what benefits you’re entitled to. Regularly discussing financial matters can help ensure that both of you are prepared to handle family finances whenever the need arises.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020

Cost of Living Adjustments for 2021

On October 26, 2020, the IRS announced the Cost of Living Adjustments affecting the dollar limitations for retirement plans. Contribution and benefit increases are intended to allow participant contributions and benefits to keep up with the “cost of living” from year to year. Here are the highlights from the 2021 limits:

  • The elective deferral limit remains unchanged at $19,500. This deferral limit applies to each participant on a calendar year basis. The limit applies to 401(k) plans, including Roth and pre-tax contributions, 403(b), and 457(b) plans.
  • Catch-up contributions remain unchanged at $6,500 and are available to all participants age 50 and older in 2021.
  • The maximum dollar amount that can be contributed to a participant’s retirement account in a defined contribution plan increased from $57,000 to $58,000. The limit includes both employee and employer contributions as well as any allocated forfeitures. For those over age 50, the annual addition limit increases by $6,500 to include catch-up contributions.
  • The annual benefit limit which applies to participants in a defined benefit plan remains unchanged at $230,000.
  • The maximum amount of compensation that can be considered in retirement plan compliance has been raised to $290,000. In addition, income subject to Social Security taxation has increased to $142,800.
  • Thresholds for determining highly compensated and key employees remain unchanged at $130,000 and $185,000, respectively.
Annual Plan Limits202120202019
Contribution and Benefit Limits
Elective Deferral Limit$19,500$19,500$19,000
Catch-Up Contributions$6,500$6,500$6,000
Annual Contribution Limit$58,000$57,000$56,000
Annual Contribution Limit including Catch-Up Contributions$64,500$63,500$62,000
Annual Benefit Limit$230,000$230,000$225,000
Compensation Limits
Maximum Plan Compensation$290,000$285,000$280,000
Income Subject to Social Security$142,800$137,700$132,900
Key EE Compensation Threshold$185,000$185,000$180,000
Highly Compensated EE Threshold$130,000$130,000$125,000
IRA Limits
SIMPLE Plan Elective Deferrals$13,500$13,500$13,000
SIMPLE Catch-Up Contributions$3,000$3,000$3,000
Individual Retirement Account (IRA)$6,000$6,000$6,000
IRA Catch-Up Contribution$1,000$1,000$1,000

Cycle 3 Plan Document Restatements

Approximately every six years, the IRS requires that pre-approved qualified retirement plans update (or restate) their plan document to reflect recent legislative and regulatory changes. Plan restatements are divided into staggered six-year cycles depending on the type of plan (e.g. defined benefit plans or defined contribution plans, such as 401(k) and 403(b) plans). In Announcement 2020-7, the IRS confirmed that the next restatement cycle for pre-approved defined contribution plans is a 24-month period that began August 1, 2020 and will close on July 31, 2022. This restatement cycle is known as the “Cycle 3” restatement, as it is the third required restatement under the pre-approved retirement plan program.

What is a plan restatement? A restatement is a complete re-writing of the plan document. Along with mandatory regulatory changes, the restated document incorporates all voluntary amendments adopted since the last time the document was updated.

What is a pre-approved document? A pre-approved document is one that has fixed provisions and pre-approved choices that can be selected by the plan sponsor. The fixed language and choices have been reviewed and approved by the IRS.

Why is a plan restatement needed? Plan documents are drafted based on laws and regulations imposed by Congress, the IRS, and the Department of Labor (DOL). Plan documents must be updated to remain in compliance with changing laws and regulations. Since the previous restatement cycle ended on April 30, 2016, there have been several regulatory and legislative changes that impact retirement plans. To assist with the restatement process, the IRS issues a “Cumulative List of Changes,” instructing what must be included in the restated document. For this current cycle, the Cumulative List of Changes was issued in 2017. As a result, the list does not include any recent changes due to the SECURE Act or CARES Act. These changes will be addressed in separate good-faith amendments rather than in the Cycle 3 restated plan documents.

What if a plan was just established? The restatement cycle is set by the IRS without regard to a plan’s initial effective date. Since the Cycle 3 document language was just recently approved, even newly-established plans may need to be restated.

What if a plan is terminating? The IRS requires that all documents be brought up to date with current laws and regulations before they can be terminated. As a result, your document must be amended and/or fully restated as part of the plan termination process.

What happens if a plan is not restated? Plans that do not adopt a restated plan document by the July 31, 2022 deadline will be subject to IRS-imposed penalties. Failure to timely restate the plan will also jeopardize the plan’s tax-qualified status.

Can restatement fees be paid from plan assets? Since the plan document restatement is required to maintain the plan’s tax-qualified status, the DOL allows the restatement fee to be paid from plan assets.

Required Year-End Participant Notices

As the end of the year approaches, our to-do lists become longer but our bandwidth becomes condensed. To compound matters, when you sponsor a retirement plan, you know you will be in close contact with your recordkeeper or TPA firm about the various year-end notices that must be distributed to plan participants. Below is a summary of some of the most common year-end notices that may apply to calendar year defined contribution plans:

Safe Harbor Notice – Safe harbor plans must provide an annual safe harbor notice to participants at least 30 days (but no more than 90 days) before the beginning of each plan year. The safe harbor notice informs participants of certain plan features, such as eligibility requirements, the plan’s safe harbor formula, and vesting and withdrawal provisions for plan contributions.

The SECURE Act eliminated the safe harbor notice requirement for plans that only include a nonelective safe harbor contribution. If the plan also provides for a discretionary matching contribution, a safe harbor notice is still required.

Qualified Default Investment Alternatives (QDIA) Notice – If a plan utilizes a QDIA on behalf of participants or beneficiaries who fail to direct the investment of assets in their individual accounts, the plan must provide an annual QDIA notice at least 30 days (but no more than 90 days) before the beginning of each plan year. The QDIA notice provides a description of the QDIA, including its investment objectives, fees, and expenses.

Automatic Contribution Arrangement (ACA) Notice – Plans that utilize an eligible automatic contribution arrangement (EACA) or qualified automatic contribution arrangement (QACA), in the absence of an affirmative election by a participant, must provide an annual notice to participants at least 30 days (but no more than 90 days) before the beginning of each plan year. The notice includes an explanation of the ACA provisions, such as the default contribution rate, how to elect not to participate, how to change the default rate, and how to make an investment election.

Participant Fee Disclosure Notice – Participants must receive an updated annual fee disclosure notice within 14 months of the date they received their last notice. The notice includes an explanation of plan level and individual fees that may be charged against a participant’s account.

Many participant notices required by the IRS can be distributed electronically if certain conditions are met. In general, the IRS allows e-delivery if the media being used is provided by the plan sponsor and participants are required to access that media as part of the participant’s job. For additional details regarding electronic delivery of IRS notices, please contact us or see

Under new rules issued by the DOL, if a plan sponsor has complied with certain rules, including providing a Notice of Internet Availability to a participant’s electronic address, covered DOL notices can now be provided electronically as well. For additional details regarding electronic delivery of DOL notices, please contact us or see