Employer-sponsored retirement plans are a cornerstone of financial security for many employees. They provide a structured way to save for the future and offer significant benefits, including tax advantages, employer contributions and automated savings mechanisms.   This post will delve into the various types of employer-sponsored retirement plans, their benefits and how they are managed to ensure compliance and effectiveness.  What is an employer-sponsored retirement plan?  An employer-sponsored retirement plan is a financial arrangement created by employers to help their employees save for retirement. These plans offer a variety of investment options and often include contributions from the employer, making them a valuable tool for employees' financial security. They provide tax benefits, automated savings and the potential for employer contributions, which can significantly boost retirement savings.    What makes these plans especially beneficial is thei...

Cryptocurrency’s use and popularity have recently skyrocketed. What was once considered a fringe technology has since become mainstream. According to a recent Pew Research Center study, 86% of Americans are at least somewhat aware of cryptocurrency . Of course, money has followed that notoriety and the total global market capitalization of all cryptocurrencies exceeded $1.28 trillion as of May 2022 . It stands to reason that the retirement industry, particularly defined contribution plans, would attempt to take advantage of the buzz surrounding digital assets. Fidelity recently announced its intention to be first in line by allowing 401(k) plan sponsors to offer cryptocurrency in its core 401(k) investment lineups. Fidelity made its announcement on April 26, 2022, only a little more than a month following the DOL’s publication of a Compliance Assistance Release on the same topic. In that release, the DOL directs fiduciaries to “exercise extreme care” in considering a cryptocurrency o...

ERISA requires a retirement plan’s assets to be held in a trust in order to ensure that the assets are used solely to benefit the plan’s participants and beneficiaries. The employer sponsoring the retirement plan is responsible for timely depositing participants’ contributions into the plan’s trust. The Department of Labor (DOL) requires employers to make these deposits as soon as the amounts can reasonably be segregated from the employer’s general assets. In addition, the DOL has established a safe harbor deadline for employers to deposit participant contributions into small retirement plans. An employer that sponsors a small plan (one with fewer than 100 participants at the beginning of the plan year) has the option of using this safe harbor for meeting the deadline for depositing employee contributions into the plan. To take advantage of the safe harbor, employers must deposit employee contributions (including plan loan repayments) within seven business ...

The first step to understanding your retirement benefits is to understand your employer’s plan. There are two major types: defined benefit and defined contribution. A defined benefit plan promises a specified payment amount at retirement. This may be stated as an exact dollar amount or may be calculated through a formula that includes factors such as your salary, age and time with the company. In a defined contribution plan, you and/or your employer contribute to an account. Your contributions are invested and the value of your account upon retirement depends on the amount contributed and how your investments perform.   DEFINED BENEFIT PLAN DEFINED CONTRIBUTION PLAN Employer Contributions and/or Matching Contributions   Employer funded. Federal rules set amounts that employers must contribute to plans. There are penalties for failing to meet these requirements.   For most plans, there is no requirement that the employer c...

The U.S. equity markets delivered exceptional performance again in the second quarter of 2021. The U.S. economy is rebounding from the pandemic more powerfully than expected--growing at a rate not seen since the early 1980s. Read the Q2 Market Recap to learn more about the drivers of the Q2 record-breaking market performance, including a chart on the three- and five-year annualized performance differentials between the equity and fixed income indices. If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by  email  or by calling (800) 388-1963.

Retirement plan administration has advanced in recent decades with the rise of the Internet and other digital technologies. However, that has made retirement plans a target for cyber criminals. Armed with stolen personal data, hackers now see trillions of American retirement dollars as a new favorite target. The retirement industry has had to strengthen its defense against cyberattacks and, as a natural extension of this effort, the due diligence practices of plan sponsor fiduciaries have entered the spotlight. The U.S. Department of Labor released new cybersecurity guidance for plan sponsors in April and is already making it a priority topic of audits as DOL underscores the “obligation to ensure proper mitigation of cybersecurity risks.” The DOL guidance includes: Tips for hiring a service provider with sound cybersecurity practices: These tips include asking about the service provider’s security standards, evaluating any historical breaches or litigation and seeking favorable contra...

On March 11, President Joe Biden signed the American Rescue Plan Act. This $1.9 trillion coronavirus relief bill includes provisions for much-needed aid for single employer and multiemployer defined benefit plans. For single employer DB plans, the total value of all participants’ accrued benefits as of the beginning of the year is known as the plan’s “funding target.” The value of the increase in the funding target from the beginning of the year to the end of the year is the “target normal cost.” The excess of the funding target over the total amount of the plan’s assets is considered a “funding shortfall.”   To ease the burden of funding shortfalls for single employer DB plans, plan sponsors were permitted to amortize (spread) contributions needed to make up for these shortfalls over seven years. The American Rescue Plan Act allows plan sponsors to extend this period to 15 years.  Since the required contribution a plan sponsor must make equals the target normal cost plus...

HANYS Benefit Services does not believe there is a single definition or statistic that appropriately defines risk for investors, especially when it comes to the nuances of investing for retirement. Instead, we focus on both the art and the science of evaluating risk, and how both approaches can help investors make informed decisions. Statistical measures (the science) primarily focus on an investment’s historical price movement, which can shed light on the predictability, or lack thereof, of an investment’s returns. Understanding one’s own circumstances (the art) can be a great complement to the science in deciding what risks an investor should take on as they prepare for retirement. What is volatility? A popular interpretation of risk is a statistical measure called standard deviation, which measures how wide an investment moves around its average price; or said differently, the dispersion of its returns. Lower standard deviation percentages indicate that the majority of the returns i...

  Thank you for joining for another episode in our video series: For Your Benefit with HANYS Benefit Services. It's the start of a new year and in this episode, we're introducing our 2021 Retirement Services Compliance Calendar. To ensure plan fiduciaries begin the year with their best foot forward, we're also providing a summary of fiduciary best practices. Tune in to each episode as we discuss regulations, investments, compliance and all things benefits. Hear from leading experts as we share insight on the employee benefit topics and trends that matter most. If you have any questions on content from our video or would like to begin talking to a retirement plan advisor, please get in touch by  email  or by calling (800) 388-1963.

  Thank you for joining for another episode in our video series: For Your Benefit with HANYS Benefit Services. It's the start of a new year and in this episode, we're introducing our 2021 Retirement Services Compliance Calendar. To ensure plan fiduciaries begin the year with their best foot forward, we're also providing a summary of fiduciary best practices. Tune in to each episode as we discuss regulations, investments, compliance and all things benefits. Hear from leading experts as we share insight on the employee benefit topics and trends that matter most. If you have any questions on content from our video or would like to begin talking to a retirement plan advisor, please get in touch by  email  or by calling (800) 388-1963.

The U.S. equity market recovery that began on March 24 continued in earnest in Q3. However, the Index performance masks significant underperformance in the industries that continue to be impacted by the pandemic. Any failure of the presidential election process to determine a clear winner will likely provide fuel for near-term volatility.  Read the Q3 Market Recap for a brief review of the market performance and chart shows the average annualized return for the S&P 500 Index under the presidential terms dating back to Franklin Roosevelt. Also included is an article describing how HANYS Benefit Services has been Staying Connected to Meet Retirement Goals in spite of the pandemic. If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by email or by calling (800) 388-1963.

A handful of companies have led the way when it comes to student loan debt assistance for their employees. There’s also legislation pending in Washington that could impact the issue. Watch episode #2 in our video series: For Your Benefit with HANYS Benefit Services. We’re taking a closer look at two such companies that have come up with creative, new employee benefits solutions to tackle the issue and possible legislation coming down the pike.  The trailblazers: Abbott Labs and Fidelity Abbott Labs The problem: Abbott wanted to match student loan repayments. But since student loan repayments are not paid into a retirement plan, but to student loan issuer, they couldn’t directly apply a match contribution. The solution: Contribute to the non-elective or profit sharing contribution type under section 401(a). The details: To be sure they weren’t violating the code, Abbott Labs requested a private letter ruling to get IRS approval to make contributions with respect to the student lo...

A handful of companies have led the way when it comes to student loan debt assistance for their employees. There’s also legislation pending in Washington that could impact the issue. Watch episode #2 in our video series: For Your Benefit with HANYS Benefit Services. We’re taking a closer look at two such companies that have come up with creative, new employee benefits solutions to tackle the issue and possible legislation coming down the pike.  The trailblazers: Abbott Labs and Fidelity Abbott Labs The problem: Abbott wanted to match student loan repayments. But since student loan repayments are not paid into a retirement plan, but to student loan issuer, they couldn’t directly apply a match contribution. The solution: Contribute to the non-elective or profit sharing contribution type under section 401(a). The details: To be sure they weren’t violating the code, Abbott Labs requested a private letter ruling to get IRS approval to make contributions with respect to the student lo...

Thank you for joining for another episode in our video series: For Your Benefit with HANYS Benefit Services. Hear from leading experts as we share insight on the employee benefit topics and trends that matter most. In episode 2, we’re expanding on the student loan debt conversation we started in part one , taking a look at some creative solutions companies are using to tackle this major issue. Tune in to each episode as we discuss regulations, investments, compliance and all things benefits. If you have any questions on content from our video or would like to begin talking to a retirement plan advisor, please get in touch by email or by calling (800) 388-1963.

Thank you for joining for another episode in our video series: For Your Benefit with HANYS Benefit Services. Hear from leading experts as we share insight on the employee benefit topics and trends that matter most. In episode 2, we’re expanding on the student loan debt conversation we started in part one , taking a look at some creative solutions companies are using to tackle this major issue. Tune in to each episode as we discuss regulations, investments, compliance and all things benefits. If you have any questions on content from our video or would like to begin talking to a retirement plan advisor, please get in touch by email or by calling (800) 388-1963.

Why now? The plan sponsor community has been woefully unprepared to meet the increased scrutiny of 403(b) plan operations by the IRS, Department of Labor and private auditors. There has been a material spike in plan correction applications, investigations and regulatory penalties. But don’t just take our word for it. Let your fellow plan sponsors’ experiences tell the tale. Our webinar featured real life stories about sponsors just like you. Each of them had a “What, me worry?” attitude where their plan was concerned, confident that they had everything well in hand—until everything changed. Watch this webinar to learn: the pros and cons of conducting a plan operational review; when you should do it; and how much you can expect to spend. Webinar Recording FEATURED SPEAKERS: Carol Idone Vice President, Consulting HANYS Benefit Services Eric Paley Partner Nixon Peabody Claire Rowland Counsel Nixon Peabody

U.S. equities continued to roar leading into 2020. The Federal Reserve reversed course on monetary policy in 2019, stimulating both the economy and securities markets. Read the  Q4 Market Recap  for a brief review of the 2019 stock market performance and outlook for 2020. Also included is an update on important provisions in the Setting Every Community Up for Retirement Enhancement (SECURE) Act. If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by  email  or by calling (800) 388-1963.

U.S. equities continued to roar leading into 2020. The Federal Reserve reversed course on monetary policy in 2019, stimulating both the economy and securities markets. Read the  Q4 Market Recap  for a brief review of the 2019 stock market performance and outlook for 2020. Also included is an update on important provisions in the Setting Every Community Up for Retirement Enhancement (SECURE) Act. If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by  email  or by calling (800) 388-1963.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act After spending most of 2019 on hold in Congress, the SECURE Act was passed and signed into law on December 20. This is the largest retirement reform act since the Pension Protection Act in 2006 and has a broad focus on improving both the reach and quality of retirement plans, as well as updating several individual tax rules. While most changes require no immediate action, it’s important for plan sponsors to be aware of changes that may soon impact them. Here is a chart with the most significant changes: Topic Summary Considerations Effective Date Multiple employer plans (MEPs); Pooled employer plans Perhaps the most significant portion of the bill provides an updated structure to facilitate open multiple employer plan arrangements, or “pooled employer plans” for unrelated employers. The Act also provides relief from plan disqualification by eliminating the “one bad apple” rule, which held all e...

The Setting Every Community Up for Retirement Enhancement (SECURE) Act provides a safe harbor for plan fiduciaries who select a guaranteed retirement income contract, which is defined as an annuity contract for a fixed term or providing for systematic payments guaranteed by the provider to be made over the life, life expectancy or joint lives or life expectancies of a participant and beneficiary. Retirement plan fiduciaries will be deemed to have acted prudently and will be eligible for the new safe harbor protection if they engage in and document the following process: objective, thorough and analytical search for an annuity provider; consideration of all costs, benefit features and terms of the contract; obtain written assurances from the provider of compliance with all federal and state laws and regulations governing lifetime income solutions, including state insurance laws; as a result of the analysis, the plan fiduciaries should be able to conclude that the provider has the finan...