Category: Blog

Records and Their Expiration Dates

“What records should I keep? How long should I keep them? How should I organize my files?”

Advisors have been asked these questions time and time again by plan sponsors looking for a general guideline for record expiration dates.

Record retention doesn’t need to be a mystery, and the filing system doesn’t need to become a tomb. For audits, remember the following requirements.*

As for organizing your fiduciary file, we suggest a format that includes the following sections:

1. Documents with all plan documents, amendments, tax filings and so on.

2. Administrative for all audit results, contribution records, Fiduciary Plan Review meeting minutes, fee benchmarkings, participant complaints.

3. Participant Communication containing copies of enrollment materials, communications and memos, and meeting sign-in sheets.

4. Investments with a listing of fund menu with expenses, Fiduciary Investment Review meeting minutes.

If a participant, auditor, or DOL agent requested plan information, could you find it quickly? The key is twofold: keep the things you need and store them so you can find them easily.

Of course, these are only general guidelines. For questions about your specific case, contact your plan advisor to discuss best practices for keeping records.

*For litigation purposes, we recommend that documents be retained indefinitely.

January 2019 Plan Sponsor Webinar

Click here to register for 2019 – What’s in Store For the Year Ahead?
Thursday, January 31st
at 11:00 AM ET / 10:00 AM CT / 9:00 AM MT / 8:00 AM PT

We hope that you will join us for our first webinar of 2019. Robert Wagner (Chief Investment Officer for
SRP) and Jim Robison (Managing Director, Great Lakes) will share a review of 2018 and the major
financial trends expected for 2019.

If you are interested in the impact of Government Shut Down and Political Turmoil, Trade Conflict, Fed
Policy, and the overall Economy then this is a can’t miss webinar.

New Participant Education Webinar Series for 2019!

Plan Sponsors:  The following message is intended for you as well as the participants within your retirement plan.  Will you please help us share the great news about the 2019 Participant Webinar Series by forwarding this announcement to you participants and eligible employees?  Thank you!

Dear Valued Retirement Plan Participants:

We meet with you, our MVPs (Most Valuable Participants), for group meetings and one-on-ones and have helped many of you enroll in a 401(k) for the first time. We’ve strategized about your retirement goals and encouraged you to keep saving, even during stressful financial situations. As a result, we’ve delighted in celebrating many retirements along the way. At SRP, we take pride in truly understanding what your needs and goals are, as well as what questions and concerns you may have during your retirement planning journey. We have valuable knowledge and we want to continually share it with you! Our upcoming Participant Webinar series will make it possible to share information and deepen our relationship with you, our MVPs.

Retirement Plan Participants:  Please join us on Tuesday, February 5th at 1:00 pm EST / 12:00 pm CST for our first webinar: “The Market Is Down, Now What?!” Click here to register. 

A rocky few months for the stock market has created worry among investors, and it’s not over yet. Many investors opened their 2018 year-end 401(k) statements and did not like what they saw and may be worried about what’s to come in 2019. You may be asking:

“Should I adjust my contributions?” “Should I change my investments?” “How does my age factor in?” “What do I need to know during times of market volatility?”

Join Greg Gavran (Managing Director, Wisconsin) and Sarah Krapec (Director of Participant Education) for a 30-minute webinar to address your most pressing questions related to the ups, and especially the downs, of today’s market. We’ll discuss target date funds, age considerations as well as explore when “staying the course” really makes sense.

Don’t Forget About the Savers Credit

Now is an ideal time for your employees (and you!) to look at their retirement plan contributions to be sure they are maximizing the Savers Credit. For those eligible the Savers Credit offers a valuable incentive, which could reduce your federal income tax liability, for contributing to your company’s 401(k) or 403(b) plan. Those who qualify may receive a Tax Saver’s Credit of up to $1,000 ($2,000 for married couples filing jointly) if they made eligible contributions to an employer sponsored retirement savings plan. The deduction is claimed in the form of a non-refundable tax credit, ranging from 10% to 50% of your annual contribution.

Remember, when contributing a portion of each paycheck into the plan on a pre-tax basis, employees are reducing the amount of your income subject to federal taxation. And, those assets grow tax-deferred until they receive a distribution. The Savers Credit may even further reduce their taxes.

Eligibility depends on Adjusted Gross Income (AGI), your tax filing status, and retirement contributions. To qualify for the credit, you must be age 18 or older and cannot be a full-time student or claimed as a dependent on someone else’s tax return.

Use this chart to calculate your credit for the 2019 tax year. First, determine your AGI – your total income minus all qualified deductions. Then refer to the chart below to see how much you can claim as a tax credit if you qualify.

For more information on the Savers Credit, visit this link on the IRS website.

SRP Hits NAPA’s “Top” Lists

In the last month, SRP and its Managing Directors have been recognized on three different “Top” lists by The National Association of Plan Advisors (NAPA).

Kristen Deevy, Managing Director, Rocky Mountains and Lisa Petronio, Managing Director, Upstate New York were named on the 2018 NAPA Top Woman Advisors list in late November. Lisa was honored as Captain this year, her second year on the list. Kristen was honored as an All-Star for the fourth year in a row. The list recognizes the contributions of the top women financial advisors who specialize in serving retirement plans. This is the fourth annual NAPA Top Women Advisors list, produced independently by the National Association of Plan Advisors. NAPA asked the nominees to respond to a series of questions, both quantitative and qualitative, about their experience and practice. Those questionnaires were then reviewed on an anonymous basis by a panel of judges and voted on by the public. The lists were drawn from nearly 500 nominations submitted by NAPA Firm Partners. Roughly 15,000 votes were cast in support of these individuals.

In December, SRP was named to the inaugural list of the NAPA Top DC Multi-Office Firms and 14 of our offices were named to the NAPA Top DC Advisor Teams list. Unlike other lists, the Teams list focuses on individual firms, or what may be referred to as a team, or office. While the Multi-Office list focuses on capturing the DC assets of an entire firm, or a multi-office arrangement.

Jeff Cullen, Managing Partner for SRP, said, “We are excited to have so many of our advisors and offices recognized on these lists by NAPA, and in the case of Kristen and Lisa, recognized year after year. Each of these advisors and offices is dedicated to creating the best possible retirement outcomes for the companies and employees that they work with and for. We are honored that their commitment to clients, participants and the industry has been recognized.”

 

 

Who should serve on my retirement plan committee?

Do we need a retirement plan committee?
If your plan requires an independent audit, you should have a retirement plan committee in place and meet regularly. Your auditor is likely to request committee meeting minutes as part of their audit. Smaller plans are moving to adopt this best practice, as it creates proof of prudent fiduciary process. When you’re responsible for making decisions that impact the financial livelihood of others, this is best practice you want to adopt.

How many representatives should be on the committee?
The committee should be large enough to share the responsibilities – but not too big to make it unmanageable. The most efficient committees have between three and seven members. The larger and more complicated the plan, the more committee members are likely to be involved to share the workload.

Who should serve on the committee?
Some positions on the committee may seem obvious, seeking to include representation from various functions in the organization – notably finance, HR and legal. Sometimes plan sponsors choose to include other key representatives on the committee.

  • If the plan includes both union and non-union employees, you may consider including a union representative on the committee.
  • If the plan sponsor is a not-for-profit organization, you may consider including a board member or finance committee member on the committee.
  • The plan sponsor may consider having individuals representing key divisions, functions or constituents serve on the committee.

Ultimately, committee members are taking on personal liability by serving as a fiduciary to the plan. All committee members must take their role on the committee seriously and be willing to dedicate time to reviewing materials in advance, asking challenging questions and employing strategic thinking for the plan.

Do I need investment expertise to serve on the committee?
While having some level of investment expertise is certainly helpful when serving on a committee, it is not required. Most plans hire a retirement consultant to assist with educating the committee, preparing investment monitoring reports and making recommendations to the committee. The committee member should be engaged in the learning process, willing to ask questions and make decisions based on information learned from their consultants.

Should there be term limits?
This concept is gaining traction, especially for larger organizations with larger committees. For smaller organizations, this can be challenging as there may not be any other suitable representatives. Each plan should evaluate their circumstances to determine if this makes sense for their organization.

 

Powerhouse Retirement Advisory Practice joins SRP

Strategic Retirement Partners (SRP), one of the leading retirement plan aggregators in the US, announced today that White Oak Advisors, LLC has joined its team. This closes out a banner year for growth, with SRP’s advisors in 17 offices consulting on over 750 plans totaling assets of $11 billion.

Jim Robison, Founder of White Oak Advisors, LLC and SRP’s new Managing Director, Great Lakes, states: “We are thrilled to be joining Strategic Retirement Partners! Ric Clouse and I have known many of the Managing Directors for a number of years and have noted the national depth and breadth of consulting capabilities, dedication to the ongoing improvement in participant and plan sponsor outcomes, the scope of operational support for our office and clients, a strong cultural alignment and, most importantly, the strength of character of our co-owners.”

The White Oak team adds eight new colleagues to SRP’s ranks, including Jim Robison and Ric Clouse who will be Managing Directors in the Great Lakes region.

“White Oak Advisors has grown from a true start-up in 2004 to a firm providing consulting and advisory services to Plan Sponsors who have in excess of 70,000 Employees and $3.5 billion assets in their respective Plans,” said Jim Robison, Managing Principal for White Oak Advisors, LLC. “We have enjoyed our client relationships and the fulfillment of the services provided yet have observed a need for greater bench depth in certain service areas. Being with SRP addresses the team-depth challenges and allows us to work within a collegial, Managing Director owned environment in-which collaboration is encouraged and occurs.”

SRP’s Managing Partner, Jeff Cullen, shared, “We are extremely fortunate to have Jim, Ric, and the entire White Oak team on board with SRP. They have evolved their decades of retirement plan experience into a repeatable process that uniquely equips their clients to take their plans from an additional corporate expense into an optimized asset that can help facilitate corporate strategy.”

SRP Shows Strong Presence at Excel

The Excel 401(k) conference took place in Las Vegas in October, bringing together some of the best and brightest retirement focused advisors across the country. SRP had a strong presence again this year at the conference.

Jeff Cullen, SRP’s Managing Partner conducted a session called, “Is your retirement practice designed to double in size?” where he discussed how achieving exponential growth in a consulting practice requires the proper allocation of resources in the form of human capital, intellectual capital, and time to the four pillars of a retirement practice: consulting, sales and marketing, technology, and operations. This session examined the allocation of these precious resources and insights into the four pillars of a successful practice.

Then Jeff Cullen, Jamie Worrell – Managing Director, Northeast, and Phil Senderowitz – Managing Director, Central Florida were part of a panel discussion called, “Why Advisors Need Their Own Investment Committee.” This session explored the trend with elite advisors that have established their own Investment Committee Charter as a competitive edge. Issues addressed during the session covered a proper investment selection and monitoring process, why the appointment of indexes for comparative purposes is critical, how the process should align with ERISA’s due diligence obligations, how judicial decisions impact the investment process, and what role technology plays in the delivery of better recommendations.

Linking Retirement Plans and Student Loan Repayments

In August, the Internal Revenue Service issued a private letter ruling (PLR) clarifying that employer contributions to retirement plans may be tied to student loan payments.

Since the great recession of 2008-09, student loan debt in the U.S. has significantly increased. It is estimated that Americans now hold approximately $1.5 trillion in student loans. As a result, many employers are looking for ways to assist their employees in paying off this debt.

Studies show, not surprisingly, that the burden of student loan debt hampers the ability to save for retirement. A recent study indicates that by age 30, employees with student loans have saved 50 percent less, on average, through their employer’s retirement plan, as compared to employees who do not have student loans.

Employers may make additional contributions to retirement plans for virtually any reason so long as these contributions do not favor highly compensated employees. The PLR clarifies that this includes profit sharing contributions that may be tied to student loan payments made outside of the retirement plan.
The plan sponsor requesting the ruling proposed making profit sharing contributions to its retirement plan based on student loan payments. In other words, an employee making loan payments, rather than electing to defer into the retirement plan, would receive a profit sharing contribution which would be the equivalent of a matching contribution if they had instead deferred into the retirement plan.

It should be noted that only the taxpayer who receives a letter ruling may explicitly rely on it. However, letter rulings simply reflect black letter law and are a good indicator of the IRS’s thinking with regard to the matter addressed.

Budget Act Changes Hardship Regulations

President Trump signed into law the Bipartisan Budget Act of 2018 (“Budget Act”) on February 9th of 2018. The Budget Act includes several provisions affecting hardship withdrawals that become effective for plan years beginning on or after January 1, 2019:

Elimination of Six-Month Contribution Suspension. Under current Internal Revenue Service (IRS) regulations, a plan participant is permitted to take a hardship distribution only if the distribution is necessary to satisfy an immediate and heavy financial need. The regulations include a “safe harbor” under which a distribution will automatically be treated as meeting this requirement if, among other things, the participant’s right to contribute to the plan is suspended for at least six months after the hardship withdrawal. The Budget Act directs the Secretary of the Treasury to modify the regulation to delete the six-month contribution prohibition from the safe harbor.

Expansion of Hardship Withdrawal Sources. The Budget Act expands the sources of contributions under a 401(k) plan that may be accessed for hardship withdrawals. The sources now include earnings on elective deferrals, safe harbor contributions, “qualified non-elective contributions” and “qualified matching contributions” (i.e., contributions plan sponsors can make to remedy a plan’s failure to pass nondiscrimination testing) and earnings on such contributions.

Elimination of Requirement to Take Loans. The Budget Act eliminates the requirement that a participant take all available loans under the plan as a condition to receiving a hardship distribution. Further guidance from the IRS is needed interpreting the Budget Act provisions and implementing the directive to remove the suspension provision from the safe harbor definition. There are several unanswered questions relating to the implementation of the revised regulations, not the least of which is what may apply to participants who are suspended when the new regulations take effect.

In the meantime, service providers are developing solutions to accommodate the revised regulations while awaiting further guidance and will notify our clients when such guidance is issued.