Long Term Part Time Plan Sponsor

Category: Retirement Plans

Long Term Part Time Plan Sponsor

Posted On: November 10, 2023 | Categorized as: Retirement Plans

The Long-Term Part-Time (LTPT) rule is a provision of the Secure Act 1.0 and 2.0 that addresses the retirement security of part-time employees. Starting on 1/1/2024, the LTPT rule requires 401(k) plan sponsors to allow employees who meet the following requirements to participate in their employer retirement plan:500 hours of consecutive service annually for the prior three consecutive yearsAttain the plan’s eligibility agePlan sponsors are not required to provide a match or non-elective contribution to LTPT employees. However, if the plan sponsor decides to provide a match, the contribution will be subject to the plan’s vesting schedule, similar to full-time employees.Effective 1/1/2025 under the Secure Act 2.0, the Long-Term Part-Time eligibility requirement will be shortened from three consecutive years with 500 hours worked to two consecutive years and will apply to both 403(b) plans and 401(k) plans.It is important for plan sponsors to understand whether their plan currently excludes any…


PS Plan and Retroactive Amendment

Posted On: October 12, 2023 | Categorized as: Retirement Plans

Under the SECURE Act, employers can adopt a profit-sharing plan for the prior year, as long as the plan is established before the employer's tax-filing deadline, including extensions. This means that an employer could potentially adopt a profit-sharing plan as late as October 15th of the following year. Effective on 1/1/2024 under the SECURE Act 2.0, employers will also could retroactively amend their company retirement plan up until their tax return due date, plus extensions. The amendments can be applied to employer stock bonus plans, pension plans and profit-sharing plans to increase benefits. Matching contribution amendments are not covered under this provision. The ability for retirement plan sponsors to retroactively amend their existing plan or adopt a profit-sharing plan provides greater flexibility and potential tax benefits. However, employers should carefully consider the implications of this provision and consult with a financial advisor or tax professional before making any decisions. For…


Ways to Improve Retirement Planning

Posted On: September 13, 2023 | Categorized as: Retirement Plans

As a plan sponsor, enhancing retirement plan performance is vital for the benefit of both participants and the plan's long-term success. Effective strategies to improve retirement plan performance include: Implementing automatic features, such as enrollment and deferral escalation Offering a diverse menu of investment options for participants of all investment levels Fee management, alongside transparent disclosure, helps control costs and protect plan fiduciaries Surveying your employees to gauge areas of interest and promote participation Adjusting the plan design such as changing matching contributions and vesting schedules encourage greater participant engagement Offering group and 1-on-1 plan education One of the most prudent steps plan sponsors can take to improve retirement plan performance is engage a qualified retirement plan advisor. A financial advisor brings specialized expertise to the table, aiding in investment selection, plan design optimization, and guidance on navigating the complexities of retirement plans. They offer insights that help align the…


Fee Transparency

Posted On: August 8, 2023 | Categorized as: Retirement Plans

Fee analysis and transparency are vital for successful retirement plans. Understanding fee impacts and conducting benchmarking helps plan sponsors make informed decisions and protect themselves as fiduciaries. Below, we explore various fee types, and offer guidance for effective fee management in retirement plans. Fee analysis affects plan performance directly. Transparent disclosure fosters trust between participants and sponsors, ensuring clear understanding of expenses. Properly disclosing and documenting fee analysis also helps protect plan sponsors since they are fiduciaries to the plan. Retirement plan advisors can assist sponsors with the fee analysis, education and documentation, as added fiduciary protection. Retirement plans have fees like investment management, administrative, advisory, and transaction fees. High fees can reduce returns and hinder participant growth. Guidance on Effective Fee Management: To manage fees effectively: 1. Conduct Regular Fee Benchmarking: Compare fees against industry benchmarks for competitiveness. 2. Negotiate with Service Providers: Use benchmarking data to negotiate better…


Fiduciary Responsibility

Posted On: July 18, 2023 | Categorized as: Events, Retirement Plans

As a plan sponsor, fulfilling fiduciary responsibilities is essential for a successful retirement plan. In this blog, we will discuss plan sponsors' fiduciary duties, offer guidance on effective fulfillment, and highlight best practices for managing duties and reducing risks. Fiduciary Responsibilities of Plan Sponsors: Plan sponsors have duties like acting in participants' best interests, exercising prudence, diversifying investments, following plan documents, and monitoring service providers. Fulfilling Fiduciary Responsibilities Effectively: To fulfill fiduciary responsibilities effectively:      1. Educate Yourself: Stay informed about retirement plan regulations and best practices through training and advisors.      2. Create an Investment Policy Statement (IPS): Develop a comprehensive IPS outlining investment objectives, risk tolerance, and criteria for selecting and                        monitoring investments.      3. Document Your Process: Keep detailed records of decision-making, meetings, and communications with service providers.      4. Conduct Regular…


Participant Retirement Readiness

Posted On: June 22, 2023 | Categorized as: Retirement Plans

Assessing the effectiveness of your retirement plan is vital for ensuring participants' readiness for retirement. By measuring retirement readiness, evaluating your plan's performance, and implementing key strategies, you can improve participants' preparedness. In this blog, we will discuss the importance of measuring retirement readiness, provide insights into evaluating plan effectiveness, and highlight strategies for enhancing retirement preparedness.Importance of Measuring Retirement Readiness: Measuring retirement readiness helps identify gaps and areas for improvement in participants' preparedness. It allows plan sponsors to tailor plan features and educational initiatives to better meet participants' needs.Evaluating Retirement Plan Effectiveness: To evaluate the effectiveness of your retirement plan:Participant Engagement: Assess participation and contribution rates to determine employee engagement levels. Low participation may indicate a need for enhanced communication and education efforts.Plan Participation: Evaluate the percentage of eligible employees actively enrolled in the retirement plan. Low participation rates may call for increased awareness and enrollment promotion.Savings Rates: Examine…


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…


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