5 Reasons to Hire a Financial Advisor for Your Retirement Plan

Category: Retirement Plans

5 Reasons to Hire a Financial Advisor for Your Retirement Plan

Posted On: May 25, 2023 | Categorized as: Retirement Plans

When managing a retirement plan, plan sponsors are faced with decisions that can affect the entire organization such as plan design, investment line-up, and who the recordkeeper will be. Unfortunately, many plan sponsors are not experts in qualified retirement plans or the ERISA laws that govern them. Decision makers for the retirement plan usually have other job responsibilities that don’t allow them to give the proper attention to ensure the plan is compliant, efficient, and beneficial to participants. Plan sponsors are considered fiduciaries of the plan, which means they must act in the best interest of the plan participants. ERISA law is complex and sometimes difficult to interpret. Hiring a plan advisor can help plan sponsors keep the plan efficient and compliant4. Employers should consider hiring a retirement plan advisor for the following reasons:1. Plan advisors can help limit the plan sponsor’s risk of large losses resulting from lawsuit penalties,…

Missing Participant and Uncashed Checks

Posted On: April 26, 2023 | Categorized as: Retirement Plans

As a plan sponsor of a company retirement plan, it is important to have a process for locating missing participants and notifying participants of uncashed checks. Failure to do so can result in penalties and fines from regulatory agencies, as well as potential litigation from participants.Missing participants are those who cannot be located by the plan sponsor due to an address change or contact information change. Most retirement plan recordkeepers will track returned participant mail and can provide a report of anyone with an incorrect address. These participants may have a vested balance in the plan, and it's the plan sponsor's responsibility to make a prudent effort to locate the participant. All steps taken to locate the participant should be documented, especially if the participant is not located. If the Department of Labor (DOL) questions the plan sponsor about a missing participant and the plan sponsor’s effort to locate the…

Profit Sharing Plan and Retroactive Amendment

Posted On: March 24, 2023 | Categorized as: Retirement Plans

As a follow-up to last month’s blog on the benefits of retroactively establishing a profit-sharing plan, the Secure Act 2.0 also gives retirement plan sponsors the ability to retroactively amend their existing plans to increase plan benefits as long as the plan is amended prior to the filing of the entity tax return.   This added flexibility provides additional tax planning opportunities for plan sponsors.  For more information on how you can maximize your company retirement plan for you and your employees, contact the Innovative Investment Fiduciaries team at (856)-242-3328 or email resources@iifria.com. 

Tax Planning and Profit Sharing Plan

Posted On: February 24, 2023 | Categorized as: Retirement Plans

If you're a business owner looking to save for retirement while also reducing your taxable income, adding a profit-sharing component to an employer retirement plan could be an attractive option. Not only does it allow you to set aside a portion of your profits for your retirement, but a profit-sharing plan also provides tax advantages to help increase overall savings. Below, we'll explore some of the key tax advantages of a profit-sharing retirement plan and how they can benefit business owners. First, let's define a profit-sharing plan: Essentially, it's a retirement plan that allows a company to contribute a portion of its profits to the retirement accounts of its employees. The contributions are typically based on a percentage of each employee's salary, and the amount of the contribution can vary from year to year depending on the employer’s flexibility. Below are some tax advantages of a profit-sharing retirement plan for…

The Secure Act 2.0 – Expanded

Posted On: January 17, 2023 | Categorized as: Retirement Plans

The Secure Act 2.0 - Expanded

The Secure Act 2.0 has been signed into law with the goal of promoting retirement security among Americans. The bill contains dozens of provisions that will impact various aspects of retirement plans. As a plan sponsor, it’s important to understand how the Secure Act 2.0 will impact your organization and employees. Below are several significant provisions contained within the legislationRequired Minumum Distribution ChangesThe required minimum distribution age increased to age 73, effective January 1, 2023. By 2033, the required minimum distribution age will be 75.The penalty for missing a required minimum distribution has been reduced from 50% to 25%. Catch-Up Contribution ChangesBeginning in 2025, participants between the ages of 60-63 can make catch-up contributions of up to $10,000 per year. The limit will be indexed to inflation.For employees with income greater than $145,000, Catch-Up contributions must be made on a Roth basis Increased Tax Credits To Offset Start-Up Costs For New PlansBeginning…

Secure Act 2.0

Posted On: December 28, 2022 | Categorized as: Retirement Plans

The Secure Act 2.0 is poised to be signed into law with the goal of promoting retirement security among Americans. The bill contains dozens of provisions that will impact various aspects of retirement plans. As a plan sponsor, it’s helpful to understand how the Secure Act 2.0 will impact your organization and employees. Below are several major provisions contained within the legislation:RMD Age Increase Required Minimum Distribution age is increased to age 73 starting on January 1, 2023 and age 75 starting on January 1, 2033.Increased Catch-Up Limit to $10,000 for employees ages 60-64.Increased tax credits to offset start-up costs for new plans.Mandatory Automatic Enrollment and Automatic Escalation for new plans.Student Loan Payment Matching without hurting nondiscrimination testing.No Early Withdrawal Penalty for Emergency Withdrawals from a retirement plan.Long-Term Part-Time employees required eligibility reduced from 3 consecutive years with 500 hours of service to 2 consecutive years with 500 hours of…

Retirement Plan Solutions to Address the Tight Labor Market

Posted On: July 18, 2022 | Categorized as: Retirement Plans

woman with calculator and pen

Employers who face staffing challenges in the current worker-driven labor market are implementing innovative retirement plan solutions to help them recruit new candidates and retain experienced personnel.Over the past two years, organizations have lost millions of valued team members as the Great Resignation and the Great Retirement boosted turnover. Filling those positions means competing in a tight labor market where high-demand candidates have the upper hand.One way companies can better compete in this challenging environment is by leveraging options within and outside of their retirement plans to support recruiting and retention. Here are several strategies that can strengthen your initiatives to recruit strong candidates and keep them in place for years to come.Paying Signing Bonuses Via Their Retirement Plan Using signing bonuses to attract new employees is a proven strategy. However, some employers also encourage retention by earmarking some portion of those bonuses as contributions to their retirement plans These…

Three Major Differences Between a Broker and Fiduciary Plan Sponsor

Posted On: April 14, 2022 | Categorized as: Retirement Plans

For plan sponsors, managing a 401(k) plan can be complex and time consuming. Some plan sponsors hire outside advisors to help the plan stay compliant with the various IRS and ERISA regulations. When hiring outside advisors, many plan sponsors are unaware of the added benefits of hiring an investment fiduciary as opposed to a broker to manage their plan investments. Each has a unique set of regulatory standards governing their behavior which can affect the range and quality of services offered to the plan. Below are a few key differences between brokers and fiduciaries: Standard of Care: Brokers: Are held to a suitability standard. Under this standard, brokers can only recommend investments that they reasonably believe are appropriate at the time of the recommendation. Fiduciaries: Are held to stricter rules, known as the fiduciary standard of care. This standard legally requires the advisor to act in the best interest of the…

The DOL’s Compliance Assistance Release No. 2022-01 401(k) Plan Investments in “Cryptocurrencies”

Posted On: March 16, 2022 | Categorized as: Compliance, Retirement Plans

As plan advisors, we’ve had increasing questions from plan sponsors and committees about the availability and merits of Crypto backed investment options.   With their release last week, the DOL has made their position very clear: they will investigate plan fiduciaries who make these types of investments available, even through brokerage windows. The following was released from the DOL: In recent months, the Department of Labor has become aware of firms marketing investments in cryptocurrencies to 401(k) plans as potential investment options for plan participants.1 The Department cautions plan fiduciaries to exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu for plan participants. Under ERISA, fiduciaries must act solely in the financial interests of plan participants and adhere to an exacting standard of professional care. Courts have commonly referred to these prudence and loyalty obligations as the “highest known to the law.” Fiduciaries who…

Tax Planning Opportunities Through Proper Retirement Plan Design

Posted On: March 2, 2022 | Categorized as: Retirement Plans

Many business owners, principals, and executives are not aware of the tremendous personal and corporate tax benefits that can be achieved through the proper retirement plan design. Most retirement plans are designed for administrative efficiency – not for tax planning purposes. As a result, most businesses are not aware of the options available for designing a tax-efficient plan. Retirement plans can offer considerable flexibility that can provide tax benefits for: Owners, executives, principals, and family members. Plans can be designed to help these individuals reduce personal income taxes, and to grow significant assets while deferring taxes on those assets. Retirement plan assets are also exempt from the claims of creditors. Your organization Contributions to a retirement plan can reduce taxes at the entity level. Retirement benefits can also provide a powerful employee recruitment and retention tool. Plans where employer contributions are subject to a vesting schedule can help with employee…

End-of-Year Reminders for Companies with Retirement Plans

Posted On: December 15, 2021 | Categorized as: Retirement Plans

As 2021 draws to a close and everyone begins preparing for a new year, employers with qualified retirement plans should review several factors that could affect their plans before moving on to 2022.The fourth quarter presents a perfect opportunity for plan sponsors to take a snapshot of the year’s activities, review potential impact on their retirement plans, and perhaps make some adjustments. Employers should also revisit corporate activities such as ownership changes, acquisitions, and profit-sharing contributions to understand the potential impact on taxes and plan status – and anticipate how these events may affect their retirement plans in the New Year.Here are seven topics that are helpful to review prior to yearend: Remember to take advantage of available tax credits for adding auto-enrollment features to an existing plan or adopting a new plan during 2021. Small employers (up to 100 employees) can get a new tax credit of up to…

Innovative Investment Fiduciaries Receives CEFEX Certification for 3rd Consecutive Year

Posted On: November 1, 2021 | Categorized as: Retirement Plans

Over the years, we have worked hard to earn a trusted reputation, which is why we are honored to announce our certification renewal with CEFEX, the Centre for Fiduciary Excellence, LLC, for the third consecutive year. CEFEX is an independent global assessment and certification organization. Its mission is to promote and verify excellence by assessing and certifying conformity to high professional standards of conduct. Our annual CEFEX certification renewal involves a comprehensive audit of our business and fiduciary practices by an independent third party.  During this three-month audit, CEFEX reviews all our internal and external practices including proper client documentation, thorough reporting, and substantial due diligence to support all business decisions. The certification means that we understand the importance of having a documented investment process, thereby helping promote our client’s confidence that their retirement plans are being prudently organized, formalized, implemented, and monitored. We believe that our CEFEX certification demonstrates…

Benefits of a CEFEX Certified Advisor

Posted On: July 8, 2021 | Categorized as: Retirement Plans

Benefits of a CEFEX Certified Advisor A CEFEX (Centre for Fiduciary Excellence) certified advisory firm adheres to a standard representing the best practices in their industry. They abide by a global fiduciary standard of excellence with specific criteria covering 21 best practices. In fact, the documented repeatable processes and the evidence-based decision-making that CEFEX demands are more likely to generate higher investment returns over time. Additionally, because the firm voluntarily agrees to a rigorous annual audit, investors can rest assured that their advisor continues to work to the highest professional standards.  This independent verification is even more critical for trustees and investment committee members of retirement plans who are legally required to conduct regular due diligence on their service providers, which CEFEX certified firms complete at no expense to the plan. So, Why Work with a CEFEX Certified Advisor? As an investor, you want peace of mind. You need to…

Discover How We Helped One Client Reduce Their Retirement Plan Fees by 30%

Posted On: May 18, 2021 | Categorized as: Retirement Plans

Discover How We Helped One Client Reduce Their Retirement Plan Fees by 30% When offering your plan directly with a qualified plan provider, many employers are not aware of what they might be missing. As a result, we often find that many Plan Sponsors are paying more and receiving less. Innovative’s experience allows us to assist and educate our clients on the most effective ways to negotiate better fees and receive additional services. We have found that: Many plans are often overpriced – we have been able to reduce fees in some cases by 50%. Additional services at no charge – we’ve been able to add more services, such as -hardship distribution services, QDRO services, and Annual Required Notice Distribution Services (SAR, QDIA, 404(a)(5)). Administration and recordkeeping savings- we are also able to free up funds to add advisory services, proving further fiduciary protections for plan sponsors and resources for…

5 Steps to Create a Financial Wellness Program

Posted On: May 5, 2021 | Categorized as: Retirement Plans

5 Steps to Create a Financial Wellness Program Many employers offer health wellness programs for their organization. However, financial wellness is equally as important. Studies show that 47% of employees are stressed about their finances, which can impact their productivity in the workplace. While starting a financial wellness program may seem intimidating, here are five steps that you can take to create a successful financial wellness program: Step One: Discovery Period Understand your organization's goals and objectives for the program. Review the plans demographics and survey your employees to identify concerns and engage the financial literacy. Step Two: Analyze Review the information from your discovery to understand where changes might need to be made. Review resources available to the plan that can be utilized by employees and prioritize the goals by importance. Step Three: Design Your Program Once you understand the data and resources you have available, it's time to…

Environmental, Social and Governmental (ESG) Fund Best Practices for Plan Sponsors

Posted On: April 8, 2021 | Categorized as: Retirement Plans

Environmental, Social and Governmental (ESG) Fund Best Practices for Plan Sponsors Socially responsible investing has grown in popularity as investors become more aware of how organizations operate from an environmental, social and governance perspective. Environmental factors may include a company’s carbon output, overall resource consumption and impact to air and water quality. Social factors include the types of business relationships the company maintains and how the organization treats people overall. Structural or governance factors include the level of transparency, conflicts of interest and Board composition. As a result, plan sponsors are considering Environmental, Social and Governmental (ESG) fund options as employee’s interest in ensuring their money has a positive impact on society continues to grow. Rules Surrounding ESG Funds: In December of 2020, the DOL released a rule for plan sponsors when considering Environmental, Social and Governmental (ESG) focused investments as options in their retirement plans. The rule required that…

2021 Plan Sponsor Considerations

Posted On: January 11, 2021 | Categorized as: Company News, Retirement Plans

The events of 2020 created many new considerations for plan sponsors as individuals were faced with uncertainty and sought safety both financially and personally. The CARES Act was passed to assist individuals and businesses impacted by the pandemic, and investors witnessed a volatile investment market causing many to adjust their investment strategy. Plan sponsors should consider how regulatory changes and investor behavior impacted their retirement plans. Below are 3 important retirement plan considerations for plan sponsors to review in the first quarter of 2021: Non-Discrimination Testing (NDT) Impacts As employee populations were impacted by the pandemic, it is important to understand how any changes in plan participation will affect your Non-Discrimination Testing. Employment uncertainty and market volatility caused many participants to lower or stop their 401(k) contributions. In addition, there were reductions in force, including layoffs and furloughs, which need to be reviewed for potential partial termination issues and whether…

IRS Announces 2021 Plan Limitations

Posted On: November 2, 2020 | Categorized as: Compliance, Retirement Plans

IRS Announces 2021 Plan Limitations The IRS has recently announced the qualified plan limitations for 2021, which are determined based on annual increases in the cost of living index. Because there was only a modest increase in the index, most of the plan limits have not changed from 2020. For your convenience we have included a downloadable compliance bulletin, detailing the current and new plan limitations: 401k Deferral Limit remained the same: $19,500 The maximum amount that can be contributed by and for a participant to a defined contribution plan - Increased to $58,000 The maximum amount of compensation taken into account for plan purposes - Increased to $290,000 The catch-up contribution for participants who have attained age 50 remained the same: $6,500 The compensation-based definition of highly compensated employee remained the same: $130,000 The maximum annual benefit payable from a defined benefit plan remained the same: $230,000 The definition…

How Working With a Qualified Plan Advisor Can Improve Your Audit Experience

Posted On: November 2, 2020 | Categorized as: Retirement Plans

How Working With a Qualified Plan Advisor Can Improve Your Audit Experience Hiring a quality qualified plan advisor provides many advantages to employers that sponsor a retirement plan. Specifically, one of those advantages is improving your annual qualified plan audit. As each audit season begins, employers often dread having to coordinate with their accounting firm while juggling their day-to-day tasks. The good news is, we have outlined three ways your qualified plan advisor can improve this administrative burden. Quick Access to Information Audits by nature involve many questions and requests for data. In some cases, the information in question is not regularly requested, making it difficult for employers to find. Advisors on the other hand have knowledge of the plan and recordkeeping systems to access certain information quickly, saving valuable time for everyone. Relationship with the Auditor Many advisors develop relationships with various auditing firms. By doing so, the advisor…

Dust Off That Old Policy: Why Now is a Good Time to Review Your Life Insurance Policies

Posted On: October 8, 2020 | Categorized as: Retirement Plans

Dust Off That Old Policy: Why Now is a Good Time to Review Your Life Insurance Policies As a result of the COVID-19 National Emergency, insurance companies have modified their underwriting requirements to help individuals secure additional life insurance protection. Through new “relaxed” underwriting guidelines, insurers are offering coverage without an exam that requires a nurse to visit your home or office. These relaxed guidelines offer a convenient way to increase insurance amounts, with death benefits up to $3,000,000 available for most age groups.  Due to these relaxed guidelines, now is a good time for employers and individuals to review their existing in force policies for key person, buy/sell or estate planning purposes. Innovative recommends the following when reviewing your life insurance programs: Term Insurance Understand your conversion options, particularly the date at which the conversion period ends. Does the period end at a specific age, a specific number of…

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