Nevin's Data "Points"

  There are a handful of institutions in the benefits world that have become so woven into the daily rhythm of the industry that it’s hard to imagine the business without them. For many of us, BenefitsLink was one of those institutions. And now, after more than three decades, effective June 30 it’s coming to an end. [i] Back in 1995 — when most of us were still figuring out what the internet was, much less what it might become — Dave Baker and Lois Baker launched something that would fundamentally change how the retirement and benefits community shared information. It’s difficult to fully explain to those who came later just how revolutionary that was — and the inspiration it provided for a whole generation of benefit news sources, including my own “baby,” PLANSPONSOR’s NewsDash. [ii] Before BenefitsLink, finding timely information on retirement plans, executive compensation, health benefits, ERISA litigation, or regulatory guidance was often a scavenger hunt involving trade publi...

 What’s the most used and least understood/appreciated acronym in the retirement plan industry? Well, for my money, it’s “TPA”—short for “third-party administrator.” It’s a term that is widely bandied about, but I think misunderstood by many. The origins are plain enough—“administrator” in the sense that a TPA deals with plan administration process and issues. The issues and process, it bears noting, that ERISA (not to mention the IRS and DOL) presumes are the responsibility of the plan fiduciary. We’re talking about things like ensuring that the terms of the plan document are adhered to, that non-discrimination tests are properly applied, and that contributions are timely deposited.  Where things seem to get confused is the “third party” reference. At its simplest, it’s merely an acknowledgement that the entity performing those vital plan administration functions is someone other than the entity responsible under the law. They are, quite simply, a party exter...

Several years ago, we had in mind that it would be fun to get an aquarium for our home, and (even) I got excited at the prospects of filling it with a variety of all kinds and sizes of exotic fish.  Sadly, those hopes were dashed when I discovered that , despite the massive displays of what appeared to be whole schools of fish in similarly sized tanks at the pet store, our specific-sized tank would only support a handful of the fish I had hoped to display. Apparently, the more fish you want to have (that live), the bigger the tank you need. The reason: they need room to thrive and grow. At long last the IRS  last week  announced the new contribution and benefit limits for 2022. Considering the run-up in inflation this year, expectations were similarly high for increases in those limits. And sure enough, among other things, the 401(k) limit was bumped $1,000 (to $20,500) and the defined benefit plan limit rose from $230,000 to $245,000, though the limit...

Last week, Senate Democrats unveiled a bill that would, among other things, enhance the Saver’s Credit – a provision which retains bipartisan support, even as the take-up rate disappoints. Here are six things that people who don’t get the Saver’s Credit often don’t “get.” The Saver’s Credit is, of course, a tax credit from the federal government for low- to moderate-income workers who are saving for retirement. For those who qualify, 1 in addition to the customary benefits of workplace retirement savings, the amount of the credit is 50%, 20% or 10% of retirement plan (or IRA or ABLE account) contributions depending on adjusted gross income. Credit ‘Limits’? And yet, some of the things that seem to be holding back the take-up rates could surely be addressed with a legislative “fix” – and here we’re talking about the relatively low income thresholds to which it applies, the fact that while it’s a credit, it’s not a refundable credit (and thus you have to have a fe...

People often talk about the significance of the “free” money associated with the company match in retirement savings – but there’s another source of “free” money that is often overlooked. I’m talking about the so-called Saver’s Credit, more precisely the Retirement Savings Contributions Credit. It’s a credit, not a deduction – a dollar-for-dollar reduction of tax liability. Income Limits For those who qualify, in addition to the customary benefits of workplace retirement savings, it could mean a $1,000 break on their taxes — twice that if married and file a joint return. In fact, for a moderate income saver, it can offset 50%, 20% or 10% of retirement plan or IRA contributions up to $2,000 ($4,000 if married filing jointly), depending on adjusted gross income. Speaking of which, the Saver’s Credit can be claimed by: married couples filing jointly with incomes up to $61,500 in 2016; heads of households with incomes up to $46,125 in 2016; married individuals filing separatel...

The headlines are all about revenue-sharing, conflicts of interest and statutes of limitation — but the things that are likely to get plans and plan sponsors in trouble are a lot more mundane. Here are seven that are more likely to gum up the works for your average plan sponsor. 1. Not following the terms of the plan document regarding the administration of loan provisions (maximum amounts, repayment schedules, etc.) or hardship withdrawals. Plan documents routinely provide that hardship distributions can only be obtained for certain very specific reasons, and that participants first avail themselves of all other sources of financing before applying for hardship distributions. (These conditions often are incorporated directly from the requirements of the law.) Similarly, loans are permissible from these programs only when they comply with certain standards regarding the amount, purpose and repayment terms. Failure to ensure that these legal requirements are met can, of course,...

Several months back we acquired an aquarium, and I looked forward to filling it up with all kinds and sizes of exotic fish – only to be disappointed to find out that, despite the massive displays of what appeared to be whole schools of fish in similar sized tanks at the pet store, our tank would only support a handful of the fish I had hoped to display. The reason; they need room to thrive and grow. The more fish you want to have (and live), the bigger the tank. The IRS has now announced the new contribution and benefit limits for 2015 . Most were increased, notably the annual contribution limits for 401(k), 403(b), and 457 plans (from $17,500, where it has been for the past two years, to $18,000) and the catch-up contributions for those over age 50 (from $5,500, where it has remained since 2009, to $6,000). But since industry surveys suggest that “only” about 9%-12% currently contribute to those levels, does it matter? It’s worth remembering, of course, that these adjustments ...

Recently, the Internal Revenue Service (IRS) announced that it was sending a questionnaire out to about a thousand 401(k) plan sponsors. The IRS said it developed the questionnaire because of the “critical role 401(k) plans play in our private retirement system” (see “ IRS Provides 401(k) Questionnaire Details ”). Make no mistake: It’s going to take some effort to respond to the questionnaire—and respond you must. Described as a “compliance check,” the IRS notes that “failure to complete the Questionnaire will result in further enforcement action.” So, what does the IRS want to know? Well, there’s a lot of information to be gathered about the plan from plan years going back to 2006: the number of employees, participants, their deferral levels, eligibility standards, service and age requirements, the existence and administration of loans and hardship withdrawals, the results of nondiscrimination tests, the determination of top-heavy status, the level(s) of match, and any changes to t...