Employee Benefits Update February/March 2018

This issue’s topics include:

Identity theft threat puts plan participants and sponsors at risk

News of commercial database hackings involving millions of people’s personal information seems commonplace. While many of these stories focus on bank and credit card accounts, many plan sponsors and participants don’t realize that 401(k) plan assets may be at risk — which can be a problem not only for participants, but sponsors as well. While no sponsor wants to see participants sustain financial hits, this article covers when, depending on how a cybertheft unfolds, sponsors could be left holding the bag. A sidebar offers tips for avoiding being a victim of fraud.

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Fiduciary rule’s tortured path to implementation

What this means for plan sponsors
Controversy, complicated legal wrangling and legislative maneuvering have been swirling around the Department of Labor’s “fiduciary rule” governing financial advice given to retirement plan participants. Delays, modifications, phased effective dates, and the involvement of the Securities and Exchange Commission have left confusion and headaches in their wake. This article briefly reviews what plan sponsors need to know.

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Tax cut law a mixed bag for retirement plan sponsors

Despite early indications that Congress was prepared to do much more, the Tax Cuts and Jobs Act (TCJA) that was passed in December largely left retirement plans unscathed, save for changes pertaining to plan loans and IRA conversions. This article reviews areas that are affected, as well as what could be ahead.

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2017 vs. 2018 retirement plan limits

This chart contains updated retirement plan limits for 2018.

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Compliance alert

This feature lists a few key tax reporting deadlines for February through April.

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As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

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Employee Benefits Update: Year End 2017

This issue’s topics include:

Deciding what to do with orphaned 401(k) plan accounts

Sponsors of qualified retirement plans with orphan accounts need to consider whether such accounts are a problem. This article examines the state of orphan accounts and why the way plans charge administrative fees can help determine whether it’s beneficial to keep them in the plan. A short sidebar discusses the plan sponsor’s fiduciary duty to all plan participants, whether they’re active employees, former employees who have moved on to other jobs, retirees or beneficiaries.

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How high can you go?

Participants willing to accept higher default deferral rates

It’s generally accepted that a 3% deferral rate won’t get many employees where they need to be financially as they approach retirement. Most employees will need a figure closer to 10%, yet 3% has traditionally been the most common default deferral rate used by plans that auto-enroll participants. This article highlights why this is changing.

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Reimbursement road map for sponsor services

When retirement plan sponsors perform administrative services on behalf of the plan, they can be reimbursed by the plan for those services. This brief article examines why meticulous expense documentation is essential and reviews a recent case on the subject.

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Why adding a Roth 401(k) option could boost employee savings

A decade after they first became available, Roth 401(k) plans are now offered by many employers. Employees are also getting on board — particularly the younger ones — even without fully understanding how they work. This article looks at the pluses and minuses of Roth 401(k)s compared to traditional 401(k)s and Roth IRAs and reviews some data that highlights how employees are reacting to the Roth 401(k) option.

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Compliance alert

This feature lists a few key year-end tax reporting deadlines.

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As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

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Employee Benefits Update: October/November 2017

This issue’s topics include:

Staging a comeback

Stable value funds are back in the spotlight

It’s been awhile since stable value funds reigned as a top investment choice for 401(k) plan participants. Very low prevailing interest rates and a booming stock market have diminished their status. Although no one is predicting they’ll unseat target date funds as the top investment election for retirement investors, stable value funds have staged a bit of a comeback recently. This article explores just what’s behind the renewed interest.

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Are you going to file Form 5500 on time?

Play it safe and avoid penalties

Missing filing deadlines for Form 5500, Annual Return/Report of Employee Benefit Plan, for retirement and health and welfare plans can be extremely costly. The best way to avoid trouble is to ensure that meeting filing deadlines never falls between the cracks. This article summarizes the penalties for delinquent filing of Form 5500 and whether plan sponsors can use the DOL’s Delinquent Filer Voluntary Compliance Program.

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Target date fund labels can obscure their investment strategy

The proliferation of target date fund (TDF) varieties can bewilder many plan sponsors. One survey found that, while 65% of plan sponsors consider investment performance the most important selection criterion when choosing a TDF, 54% aren’t confident about how to benchmark the TDFs against others in the marketplace. This article examines how to compare competing TDFs by segmenting them into logical categories.

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GAO report: Some plan designs may reduce retirement savings

Retirement plan sponsors have ways to limit their outlays for very young employees, and those that move to other employers soon after coming on board. The General Accountability Office (GAO) recently analyzed those plan design opportunities, and is sounding alarm bells. This short article highlights the GAO’s concerns that these options can reduce employees’ ultimate retirement savings potential.

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Compliance alert

This feature lists a few key tax reporting deadlines for October and November.

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As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

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Employee Benefits Update: April/May 2017

This issue’s topics include:

Understanding IRS determination letter program changes
How changes affect individually designed retirement plans

Since the beginning of the year, sponsors of individually designed retirement plans generally have no longer been able to receive a periodic official regulatory compliance seal of approval from the IRS in the form of a routine determination letter. While this has been a source of concern to many plan sponsors and their advocates, options remain. This article summarizes the reasons for the change, the option of a mass-submitter plan and possible problems brought on by the change. A sidebar reviews some of the industry concerns about the change.

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The uncertain future of Form 5500
Will compliance burden increase?

January 1, 2019, might seem like a long way off, but to critics of the Department of Labor’s proposed overhaul of Form 5500, it’s right around the corner. That’s because proposals will require setting up systems to collect and report detailed data. This article reviews the proposal’s rationale, as well as industry concerns.

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Be prepared for your next — or first — QDRO

Domestic relations orders entitle an “alternate payee” to a portion of a participant’s retirement benefits. However, it’s up to the plan sponsor or administrator to determine whether the order is qualified, making it a qualified domestic relations order. The article discusses common errors that plan sponsors encounter when qualifying a domestic relations order and how to handle the rejection of an order.

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When is it best to claim Social Security?
Online “claiming strategy” tools to help your employees

Employees’ retirement timing decisions will depend on a variety of factors, including their accumulated vested assets in an employee benefit plan. Another key variable is Social Security. But the Social Security benefit “claiming strategy” that’s best for them isn’t always easy to determine. This brief article highlights online Social Security benefit calculators that can help.

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Compliance alert

This feature lists a few key tax reporting deadlines for April and May.

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As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

Join the Group

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Employee Benefits Update: February/March 2017

This issue’s topics include:

Get your fiduciary house in order
DOL’s newest regulations require plan sponsor action

The majority of the U.S. Department of Labor’s complex regulations mandating fiduciary status for individuals dealing with retirement investment decision-making involve investment advisors. But the regulations, which are scheduled to take effect on April 10, 2017, also require plan sponsors to take certain steps. Remember, plan sponsors are always the fiduciary, and the regulations expand the definition of fiduciary status. A sidebar discusses the distinction between investment education and investment recommendations or advice.

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Who’s to blame?
Court equitably apportions fiduciary misdeeds

When a fiduciary breach occurs, some fiduciaries may be more culpable than others. And when that’s the case, the court can order those parties to indemnify other fiduciaries who were, despite their technical status as fiduciaries, without blame. This article summarizes a recent case of the U.S. Court of Appeals for the Seventh Circuit where the court equitably apportioned relief in a fiduciary duty setting.

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Hardship withdrawal programs require strict administration

While not required, most 401(k) plans offer a hardship withdrawal option. The IRS recently updated its guidance on how plan sponsors can remedy errors in the administration of hardship withdrawals. This article highlights the basics of hardship withdrawals and how to correct mistakes when administering a hardship withdrawal program.

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2016 vs. 2017 retirement plan limits

This chart contains updated retirement plan limits for 2017.

Read More

Compliance alert

This feature lists a few key tax reporting deadlines for February through April.

Read More

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

Join the Group

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Employee Benefits Update: Year End 2016

This issue’s topics include:

Using eligibility rules to control plan enrollment

Plan sponsors have more flexibility than they may realize when it comes to setting eligibility rules for 401(k) plan participants. Even though ERISA sets many rules for eligibility, plan sponsors have leeway to meet the demands of the employment market. This article offers some thoughts for plan sponsors to consider when determining plan enrollment.

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Too many investment options may increase litigation risk

Giving plan participants a wide range of investment options is a good thing — but only to a point. That’s one of multiple allegations in recent class action lawsuits filed against several prominent universities. This article reviews recent litigation, and offers a cautionary note for plan sponsors who offer a high number of investment options.

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Where’s Waldo?
Locating missing plan participants

It’s not uncommon for previously active employed plan participants to fall off the radar screen. They include retirees and former employees that move away without informing the plan administrator. Before anyone realizes it, they become “lost” participants. This article sets out the steps to take when dealing with these participants.

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IRS permits high-earner Roth IRA rollover opportunity

As highly compensated employee (HCE) 401(k) plan participants approach retirement, a potentially useful tax-efficient IRA rollover technique may be a valuable savings tool. This brief article reviews IRS rules about how HCEs can allocate both pretax and after-tax employee contribution 401(k) assets between standard and Roth IRAs.

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Compliance alert

This feature lists a few key tax reporting deadlines for December and January.

Read More

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

Join the Group

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Seven Prominent Universities Sued Over 403(b) Plan Fees

The 403(b) community has become the target of retirement plan fee litigation. Lawsuits have been filed against Duke, Johns Hopkins, MIT, NYU, UPenn, Vanderbilt, and Yale on behalf of plan participants. The complaints allege that the plan sponsors failed to monitor excessive fees, did not replace expensive, poor-performing funds with cheaper ones, and generally failed to provide appropriate fiduciary oversight in the administration of their retirement plans. These complaints allege that these failures cost tens of millions of dollars in retirement funds. While 401(k) plan sponsors are more than familiar with these types of claims, this is the first time that nonprofit organizations have been targeted. Read more about the recent lawsuits here and here.

Prestigious Colleges and Universities Sued over Retirement Plan Fees

Are the services your plan receives reasonably priced? Knowing the answer is a vital fiduciary duty. ERISA expects more from plan fiduciaries than simply shopping around for plan providers offering rock bottom rates. Rather, the question turns on whether fees are reasonable in light of services provided. So, in addition to knowing how much the plan is paying, you must determine whether the level of service rendered is appropriate. As a plan sponsor, you should: (more…)

Client Update: Spring 2015

This issue’s topics include:

  • Adjust your tax and financial course for 2015
  • Tax “extenders” are extended again for 2014
  • 2015 Tax Numbers
  • Postpone taxes by exchanging property
  • Wealth is just a matter of time
  • Time matters in your business too

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Click Here to Download

Insero & Company understands that when it comes to your business there is no one-size-fits-all formula to success – and your relationship with your CPA should be just as unique. That’s why we promise to deliver The Highest Standard of client service built on a foundation of frequent communication.
This newsletter is just one of the ways we help you stay up-to-date on tax and financial issues that impact small business owners. From year-round tax planning to tips on how to maximize profits, this valuable resource is a must read.

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Client Update: Winter 2014

This issue’s topics include:

  • Should you treat your home as an investment?
  • Last-minute tax savers for 2014
  • To grow or not to grow?
  • Lending money to family members could be taxing
  • Inform your employees about their total pay package
  • IRS posts taxpayer “Bill of Rights”
  • 2015 HSA limits announced

ClientUpdateWinter2014_Page_1

Click Here to Download

Insero & Company understands that when it comes to your business there is no one-size-fits-all formula to success – and your relationship with your CPA should be just as unique. That’s why we promise to deliver The Highest Standard of client service built on a foundation of frequent communication.
This newsletter is just one of the ways we help you stay up-to-date on tax and financial issues that impact small business owners. From year-round tax planning to tips on how to maximize profits, this valuable resource is a must read.

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

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