What Steps Can Plan Sponsors and Retirement Plan Committee Members Take to Protect Themselves?

Category: Retirement Plans

What Steps Can Plan Sponsors and Retirement Plan Committee Members Take to Protect Themselves?

Posted On: August 25, 2020 | Categorized as: Retirement Plans

What Steps Can Plan Sponsors and Retirement Plan Committee Members Take to Protect Themselves? When managing a qualified retirement plan, there are certain duties the plan sponsor and committee members have to the plan and participants as named fiduciaries. These duties create liability for the plan sponsor and committee members for decisions made regarding the plan. In recent years, retirement plan lawsuits relating to fees have become more prevalent. Additionally, these suits are beginning to impact smaller plans, such as the Greystar 401(k) plan in 2019 which had less than $250,000,000 in assets. How can plan sponsors and committee members ensure that they are taking all the necessary steps to protect themselves? Develop Well Documented and Structured Processes to Monitor Investments Investment selection goes beyond lowest cost or best performing investment. Instead, a holistic review of the fund’s fees, performance and other metrics leads to better investment options for the…


Put Your Advisor to the Test

Posted On: July 27, 2020 | Categorized as: Retirement Plans

Put Your Advisor to the Test Ask these critical questions to test the knowledge of future plan advisors. A knowledgeable plan advisor is an important component in the successful operation of your qualified plan. However, selecting the right candidate requires more than simply reviewing typical Request for Proposal (RFP) responses. RFPs are an important part of the process, but boilerplate questions may draw generalized, high-level responses that reveal few details about a potential advisors’ knowledge. You should make sure the potential advisor possesses broad industry experience and expertise that applies to your unique situation. It only takes a few questions to put them to the test. So, as you consider prospective plan advisors, here are some non-boilerplate questions that you can ask to assess their knowledge. Under what scenario would my plan need a BRF test? Sometimes, plan designs create different benefits for different classes of participants. The BRF (Benefits,…


COVID-19 Impact on Retirement Plan Discrimination Testing

Posted On: May 20, 2020 | Categorized as: Retirement Plans

retirement plan binder with glasses

COVID-19 Impact on Retirement Plan Discrimination Testing As a result of COVID-19, many employers have made financial, operational, and employment-related changes. Plan sponsors need to consider how the following actions may impact the results of their 2020 retirement plan discrimination testing: Changing or Discontinuing the employer 401K match Retirement plan design changes Furloughing, laying off, or termination of employees Employee deferral changes, including the discontinuation of deferrals If your organization has taken any of these actions or notice a change in participant behavior, we suggest you take a proactive approach to understand the impact on your non-discrimination testing. It is important to get a better understanding NOW of how any of these changes may negatively impact your retirement plan as corrective actions may be available prior to your plan year end. If would like a complimentary Retirement Plan Impact Analysis, please click here.  


Paycheck Protection Program (PPP) Loan Forgiveness Application

Posted On: May 19, 2020 | Categorized as: HR Consulting, Retirement Plans

paycheck protection program loan application

Paycheck Protection Program (PPP) Loan Forgiveness Application On Friday, May 15th the SBA has released their forgiveness application with detailed instructions on how to complete the form.   While the release promised further guidance on loan forgiveness, Innovative has received a lot of questions surrounding the calculation of Full Time Equivalent (FTE) Employees and payroll costs that employers must report on their application. A few highlights relating to these questions are summarized below: Payroll Cost Calculation The application advised there are options for borrowers to calculate payroll costs using an “alternate payroll covered period” that aligns with a borrower’s regular payroll. cycle. Employers will not have to change payroll dates to obtain maximum forgiveness. There is flexibility for employers to include eligible payroll and non-payroll expenses paid or incurred during the eight week period after receiving their PPP loan. FTE Employee Calculation The Loan Forgiveness Application made clear that FTE employees are…


4 Tips for a Volatile Market

Posted On: April 29, 2020 | Categorized as: Retirement Plans

The COVID-19 National Emergency has impacted nearly every part of our daily lives and the investment market is no exception. When account balances fluctuate, it is tempting to make quick investment decisions. Before you do, consider a few investing tips to guide your investments through volatile markets. Remain Calm Many investors will hear bad news about the stock market performance and get nervous. Their instinct might be to sell stocks and move to bonds or cash, essentially trying to time the market to avoid losses. A word of caution: trying to time the market is very challenging in that you have to be right twice – when to get out (before the drop, which you likely missed) and when to get back in. Trying to time the market can cause investors to miss the highest- performing days, which can have a significant impact on growth. You should focus on your…


CARES Act: Impact on your Retirement Plans

Posted On: April 7, 2020 | Categorized as: Compliance, Retirement Plans

CARES Act: Impact on your Retirement Plans The CARES Act is the stimulus package the government recently enacted to support the country and economy during and after the coronavirus pandemic. The 880-page Act has many programs and features that affect a wide range of the economy. The points below are some of the highlights and potentially overlooked aspects of how the Act deals with retirement plans. One item to note at the beginning, is that adding these programs or features will require a plan amendment. The deadline for creating this amendment is not until 2022 as the government does not want paperwork slowing down these changes. For more information on all aspects of the CARES Act or any bills we are watching, please consult Innovative Benefit Planning. This is an evolving situation that we will continue to closing monitoring and keep you updated as events happen. Coronavirus Related Distribution (CRD)…


Student Loan Relief Due to COVID-19

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

Overview On March 13, 2020, the U.S. Department of Education announced that it would waive interest charges, allow for suspended payments and provide assistance to borrowers of defaulted loans for 6 months. All information can be found at StudentAid.gov. Who Is Affected? All borrowers who have an outstanding federal student loan, including defaulted and non-defaulted Direct Loans, Federal Perkins Loans and defaulted and non-defaulted Federal Family Education Loans (FFEL) owned by the U.S. Department of Education can receive relief. What Type of Relief is Available? Interest Waiver All interest charges on loans are automatically waived starting on March 13, 2020 through September 30, 2020 (relief period). The U.S. Department of Education could extend this period depending on the status of the COVID-19 national emergency. Administrative Forbearance Monthly payments on all applicable loans will be automatically suspended from March 13, 2020 through September 30, 2020. Any automatic payments processed in the…


Market Performance: Tips for Addressing Employee Concerns and Prudent Plan Management

Posted On: March 31, 2020 | Categorized as: Retirement Plans

The coronavirus (COVID-19) pandemic and recent market volatility have undoubtedly presented you with new challenges as you care for your employees, families and community. We encourage you to lean on Innovative Investment Fiduciaries as a source for stability during these times. Below is our recent plan sponsor brief with some best practices for addressing the current market situation. This piece includes information on how to handle employee concerns and plan provisions to consider for review. Download PDF here To review your options, feel free to contact Innovative Investment Fiduciaries. We have extensive experience guiding plan sponsors through these decisions. As a CEFEX certified advisor, our fiduciary processes have been vetted and confirmed as following the best industry practices.


Ways Employers Can Deal With Employee Student Loan Debt

Posted On: February 25, 2020 | Categorized as: Employee Benefits, Retirement Plans

Ways Employers Can Deal With Employee Student Loan Debt February 25th, 2020 Student debt has increased dramatically in recent years, creating a financial burden on employees’ ability to save for retirement. Many employers have begun implementing programs to help employees manage student loan debt. Millennials (and their families) are often burdened with significant student loan debt. More than 70 million millennials make up 50% of today’s workforce, and that number is growing. Also, many older workers in the “sandwich generation” are saving for their children’s college. Both of these scenarios provide opportunities for employers to design programs that help employees reduce their financial stress (which often affects productivity), as well as make the company more attractive to talented candidates. To review your options, feel free to contact Innovative Benefit Planning. We have extensive experience guiding clients through these decisions, and would be more than happy to help.


Myth Series #12: I can’t offer a student loan program in my retirement plan.

Posted On: December 19, 2019 | Categorized as: Retirement Plans

With student loan debt reaching astronomical numbers, employers are increasingly looking for ways to add student loan assistance programs to their benefits packages. While current student loan repayment programs can relieve financial stress, they do not offer tax benefits to employees. However, a recent IRS Private Letter Ruling allowing a major pharmaceutical company to add loan repayment benefits to its 401(k) plan has sparked interest in this approach. See how you may be able to design a solution that aligns with the IRS ruling here. Adding student loan repayment to a qualified plan is not the right solution for everyone. If you are considering this enhancement, contact Innovative to discuss your specific situation and objectives.


Broker vs. Fiduciary: The differences you must know

Posted On: December 19, 2019 | Categorized as: Retirement Plans

For plan sponsors, running a 401(k) plan can be complex and time consuming. Some plan sponsors hire outside advisors to help the plan stay compliant with IRS and ERISA laws. It is crucial to understand the difference between hiring a broker versus hiring a fiduciary. 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 for the given situation. Fiduciary advisors: Are held to stricter rules, known as the fiduciary standard of care. This standard legally requires the investment representative to act in the best interest of the investor. The fiduciary duty is the highest standard of care under American law1. Commissions…


Required Minimum Distributions

Posted On: November 20, 2019 | Categorized as: Retirement Plans

As the calendar year draws to a close, older plan participants may have to consider taking a required minimum distribution (RMD) from their qualified retirement plan. A required minimum distribution is a withdrawal from a qualified retirement plan for participants who have reached the age of 70½. While many qualified plans have services to notify participants that they have to take an RMD, it is important for plan sponsors to understand the mechanics and rules governing required minimum distributions. How is an RMD Calculated? An individual’s RMD is normally calculated using the “Uniform Lifetime Table,” which is an IRS chart that assigns a “Life Expectancy Factor” to each age. The previous 12/31 balance is divided by the “Life Expectancy Factor” to calculate the required minimum distribution. Other tables are used if either: The spouse is the sole beneficiary and they are more than 10 years younger than the participant. OR…


Innovative Myth Series #11-As a plan sponsor, I shouldn’t consider adding a 3(16) service to my plan.

Posted On: November 14, 2019 | Categorized as: Retirement Plans

An existing client had experienced problems with their 401(k) plan audit for several consecutive years due to internal operational issues. The client requested our help in determining whether they should spend the money for a 3(16) service to help improve efficiencies and eliminate some of the operational errors they were experiencing. See how Innovative helped the client determine if it was the right strategy, move to the 3(16) and reduce their costs and audit error rate. Download full case study here. Let Innovative perform a complimentary review of your plan, contact our retirement planning team here.


Innovative Benefit Planning Earns Specialized Advisor Recognition

Posted On: November 12, 2019 | Categorized as: Retirement Plans

Our firm was founded on the principles of integrity, professionalism and exceptional client service. We are also deeply committed to continuous improvement. Our dedication to doing what is best for you, our clients, prompted us to engage CEFEX, the Centre for Fiduciary Excellence, LLC to audit our processes. In June of 2019, we contacted the CEFEX organization and requested an independent analyst provide us with a comprehensive independent review.  The process was rigorous and their assessment took months to complete. Now, after going through the audit and carefully evaluating our procedures, we are proud to share with you that Innovative Benefit Planning is a CEFEX certified Investment Advisor. This certification signifies our commitment to uphold the highest level of fiduciary care and that has a direct impact on you, your plan and your employees. As a plan sponsor, the Department of Labor (DOL) identifies the following as your fiduciary responsibilities:…


Innovative Myth Series #10: When Transferring Service Providers, There are no Pitfalls, Part 2 – Market Value Adjustments and Fixed Accounts

Posted On: October 24, 2019 | Categorized as: Retirement Plans

A new client engaged Innovative after they decided to transfer their current plan to a new service provider. After our initial investment review, we noticed there was an existing Stable Value Fund, which was subject to a market value adjustment (MVA). When an MVA is being applied, a complete fund liquidation may result in a loss to the plan and participants. See how Innovative helped our client in moving their assets with no loss to the participants. Download full case study here. Let Innovative perform a complimentary review of your plan, contact our retirement planning team here.


Should you Consider a Safe Harbor Contribution Feature?

Posted On: October 23, 2019 | Categorized as: Retirement Plans

Does your organization’s retirement plan frequently refund money to highly compensated employees (HCE)? Do you want to provide a great incentive to your employees to save for retirement and perhaps allow them to retire earlier? Would the owners and highly compensated employees like to save more of their own money? Do your key employees own a significant portion of plan assets? These are among the common reasons a company might implement a Safe Harbor contribution feature for their retirement plan. If a company agrees to make a Safe Harbor contribution to their retirement plan, then the plan is exempt from nondiscrimination testing for the plan year. These include: Average Deferral Percentage tests, Average Contribution Percentage tests, and Top Heavy tests. Depending on your company, it might be wise, for several reasons, to avoid these tests and the actions required from failing them. There are several contribution calculation methods that qualify…


5 Reasons To Hire the Right Financial Advisor For Your Retirement Plan

Posted On: September 18, 2019 | Categorized as: Retirement Plans

As an organization offering a retirement plan to their employees, plan sponsors are faced with decisions that can affect the entire organization.  The plan design, investment line-up, and who the recordkeeper will be are typical for all plans. Beyond these standard decisions, there is the issue of knowing and understanding the ERISA laws that govern retirement plans. Depending on the complexity of your organization and business, not every advisor has the background to help. Plan decision makers usually have other job responsibilities that can divert their attention, yet since they are considered fiduciaries of the plan, decision makers must act in the best interest of the plan participants and their beneficiaries.  How can they if they don’t know what the standards are?  The same is true of advisors.  Not all are well versed in ERISA law, which is complex and sometimes difficult to interpret. Hiring the right plan advisor can…


Innovative Myth Series #9: When Transferring Service Providers, There Are No Pitfalls. Part 1-Protected Benefits

Posted On: September 13, 2019 | Categorized as: Retirement Plans

A new client engaged Innovative to transfer their current plan to a new service provider. During the course of our detailed review, we discovered that certain employees had annuity contracts with death benefits that exceeded the value of their plan investments. If the client executed the transfer, these participants would have lost those benefits, which is a violation of ERISA laws. See how Innovative helped our client navigate their retirement plan transition to a new service provider and avoided a potential ERISA violation. Download full case study here. Let Innovative perform a complimentary review of your plan, contact our retirement planning team here.




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