Nevin's Data "Points"

Plan sponsors have a lot of responsibilities and often rely on others to help them keep their plan operating in accordance with the law. And yet, even with the most attentive plan sponsors, mistakes (still) occur. Here’s a list of some of the most common missteps: 1. Not using the plan’s definition of compensation correctly for all deferrals and allocations. The term “compensation” has several different applications in qualified retirement plan operations, depending on the particular compliance goal. For example, a plan may use one definition of compensation to allocate employer contributions and a separate, distinct one for testing whether employee salary deferrals are nondiscriminatory. Note that one of the top plan compliance concerns identified by the IRS is a failure to identify and apply the correct definition of compensation in a particular scenario. Note that while plans often use different definitions of compensation for different purposes, it’s important...

Financial literacy has long been touted as something of a “silver bullet” in helping workers make better financial decisions – and now there’s a call to make it a mandatory employment offering.  Now, we all know that lots of workers get their first (and for many only) exposure to financial markets via their workplace retirement plan. Ditto their only education about investing, diversification, or even mutual funds. Little wonder that those who are tasked with delivering those lessons have long championed the need for some basic level of financial education in school curricula. The issue was most recently raised earlier this year in a paper titled “ Defined Contribution Plans and the Challenge of Financial Illiteracy .” Authored by Jill Fisch of the University of Pennsylvania Law School, as well as financial literacy icon Annamaria Lusardi and Andrea Hasler from George Washington University School of Business, the paper compares the relative financial acumen of w...

Most of the surveys and research in our industry focus on the shortcomings – a lack of savings, of diversity in investment, of failure to maximize the employer match, or to have access to the programs that support those opportunities. There is, however, a shortfall that doesn’t garner much attention. I’m talking about time. And while time is often treated as an “enemy” of retirement planning (sometimes under the “longevity” label), certainly when there is a concern about outliving one’s resources, or perhaps when too little time remains to make preparations, there is another aspect: a retirement cut short.    This is heavy on my mind of late – not just because this week marks the anniversary of the Sept. 11 attacks, though that’s certainly a factor. My recollections  of that awful day notwithstanding, I’ve been particularly mindful of the untimely passing of three individuals of my acquaintance in recent weeks: a relative, a colleag...

Those “kids” who were just dropped off at college for the first time? By their sophomore year, their generation will constitute one-quarter of the U.S. population. How will their retirement be different? That’s according to the authors of the so-called Mindset List – now housed at Marist College, having relocated from Beloitt College – has been published each August since 1998 . Originally created as a reminder to faculty to be aware of dated references, the list provides a “look at the cultural touchstones that shape the lives of students entering college.” Not to mention those who will go on to be workers and – eventually – retirees. This fall’s college class of 2023 is the first class born in the 21st Century (2001) – and thus lack a personal memory of the September 11 attacks. According to the authors of the Mindset List: This group has never used a floppy disk (heck, they’ve probably never even seen one, except at that “save” icon). Their phone has a...