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Thursday, January 16, 2020

Fiduciary safe harbor for selection of lifetime income provider

The Setting Every Community Up for Retirement Enhancement (SECURE)Act provides a safe harbor for plan fiduciaries who select a guaranteed retirement income contract, which is defined as an annuity contract for a fixed term or providing for systematic payments guaranteed by the provider to be made over the life, life expectancy or joint lives or life expectancies of a participant and beneficiary.

Retirement plan fiduciaries will be deemed to have acted prudently and will be eligible for the new safe harbor protection if they engage in and document the following process:
  • objective, thorough and analytical search for an annuity provider;
  • consideration of all costs, benefit features and terms of the contract;
  • obtain written assurances from the provider of compliance with all federal and state laws and regulations governing lifetime income solutions, including state insurance laws;
  • as a result of the analysis, the plan fiduciaries should be able to conclude that the provider has the financial strength to fulfill all its obligations under the contract; and
  • the cost of the contract is reasonable (the SECURE Act does not require that fiduciaries select the lowest cost provider).
Annuities may not be appropriate for all plans, but interested plan fiduciaries now have a safe harbor if they wish to consider including them.

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or email us at sbs@hanys.org.

Tuesday, January 14, 2020

Don’t Get Caught in the Act:

The Setting Every Community Up for Retirement Enhancement (SECURE) Act

After spending most of 2019 on hold in Congress, the SECURE Act was passed and signed into law on December 20. This is the largest retirement reform act since the Pension Protection Act in 2006 and has a broad focus on improving both the reach and quality of retirement plans, as well as updating several individual tax rules.

While most changes require no immediate action, it’s important for plan sponsors to be aware of changes that may soon impact them. Here is a chart with the most significant changes:

Tuesday, November 12, 2019

Q3 Market Recap: The Federal Reserve Past and Present

The longest bull market in history continues to run through Q3. 

Investors remain focused on three key areas: trade conflict, slowing global economic growth and the Federal Reserve monetary policy. Under the successive leadership of three chairs, the Fed has fostered the longest economic expansion in U.S. history.

Read the Q3 Market Recap to learn more about the recent history of bull markets, as well as the Q3 market drivers. Also included is an overview of key year-end notices plan sponsors may need to provide to employees according to IRS and DOL regulations.

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Tuesday, November 5, 2019

You’ve Been Put on Notice

As we enter the fourth quarter of 2019, it’s important for sponsors of calendar year retirement plans to be mindful of certain required participant notices. Sponsors of qualified retirement plans, such as 401(k) or 403(b) plans, may need to provide several of these notices per various Internal Revenue Service and Department of Labor regulations.

Notice
Purpose
Audience
General Deadline
Deadline for Calendar Year Plans
Qualified Default Investment Alternative
Informs of the plan’s default investment in the event the participant does not make an investment election.  Helps maintain 404(c) protection.
Active eligibles and terminated participants
At least 30 days ahead of plan year
Dec. 2
Automatic Contribution Arrangement
Informs of the plan's feature to automatically enroll participants to a default savings rate in the plan and the potential “refundability” of deferrals.
Active eligibles
30 to 90 days ahead of plan year
Dec. 2
Safe Harbor
Informs of the plan's intent to provide a safe harbor contribution, alongside other key plan provision details.
Active eligibles
30 to 90 days ahead of plan year
Dec. 2
Universal Availability
Informs 403(b) participants about the opportunity to establish or change their salary deferrals in the plan.
Active eligibles
Annually
Dec. 31
Plan and Investment Fee Disclosure
Summarizes fees that may be paid from participant accounts or withheld by investment companies.
Active eligibles and terminated participants
Every 14 months
Depends on timing of prior mailing
Summary Annual Report
Summarizes the plan's key financial and administrator information with respect to the prior year's Form 5500 filing.
Active and terminated participants
60 days following the plan’s regular or extended Form 5500 filing deadline
Sept. 30 or Dec. 16

Sponsors with calendar year plans that extended their Form 5500 deadline to Oct. 15 may be able to align the delivery of any applicable notices into a single mailing event.

In addition to the above notices, plans must provide a Summary of Material Modifications to participants no later than 210 days following the plan year in which an amendment was effective. Alternatively, providing an updated Summary Plan Description satisfies this requirement. Updated SPDs are required to be provided every five years if material changes are made or every 10 years if no material changes have been made. If you recently amended or restated your plan document, this upcoming annual notice mailing may provide an opportunity to satisfy the SMM/SPD requirement as part of the same mailing.

While the DOL and IRS each have rules for distributing these notices electronically, abiding by the rules can be challenging. Newly proposed DOL e-delivery regulations are a welcome development, but until they can be fully unpacked, mailing paper notices is the safest bet for those delivered in 2019. Electronic delivery of such notices is permitted where a participant has affirmatively consented to such delivery.

It’s important to note that in addition to the annual requirements, these notices should be provided to employees in your plan enrollment materials before or coincident with each participant’s eligibility for the plan.

Finally, there may be other participant notices that apply for defined benefit plans, other benefit plans or for situations such as plan terminations, blackout periods and disclosure of electronic statement delivery. Be sure to work with your service providers and make sure all applicable notices are mailed out as required by the IRS and DOL.

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Thursday, August 1, 2019

Q2 Market Recap: Powell's "Porridge"

The Fed defines success for monetary policy as when the economy is like Goldilocks’ porridge — not too hot and not too cold. Investors have enjoyed Fed Chair Jerome Powell’s “Porridge” several times in 2019 as we ushered in the longest bull market in history.

Read the Q2 Market Recap to learn more about the porridge-like conditions during Q2. Also included is update on the current buzz around a Multiple Employer Plan (MEP).

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Thursday, June 13, 2019

Strategic Benefit Services expands into the small to mid-sized market

After 40 years of providing retirement plan advisory services to large institutions, Strategic Benefit Services is taking its experience and expertise to the smaller end of the market.

Though employers with assets under $10 million may not have the same resources as larger organizations, they do have the same responsibilities and objectives: a fiduciary duty to conduct plan business in a prudent fashion and the need to offer an attractive and competitive retirement plan for their employees.

“We believe sponsors in the smaller end of the market are often underserved and may not be getting the proper fiduciary oversight,” said James Kelley, president of Strategic Benefit Services. “With our new service offering, we are looking to relieve some of their administrative burden, fiduciary responsibilities and operating expenses.” SBS has created a solution that largely shifts the fiduciary and administrative burdens to third parties while crafting a lower cost, institutionally structured retirement program.

About Strategic Benefit Services

SBS has been providing retirement services to leading healthcare, not-for-profit and corporate organizations for more than four decades. SBS provides trusted advisory and consulting services, including plan design, vendor management, investment selection and monitoring, operational oversight, and on-site education and communication. SBS also provides services in support of employer mergers and acquisitions, defined benefit plan de-risking strategies and other complex matters including Department of Labor and IRS audits. Named a PlanAdviser Top 100 Retirement Plan Adviser for 2016, 2017 and 2019, SBS conducts business in accordance with strong values in a manner that is in the best interests of its clients, with an ultimate goal of assuring clients’ employees are ready for retirement.

SBS is headquartered near Albany, with offices in Rochester, Tonawanda and Melville, New York.

Wednesday, May 1, 2019

Q1 Market Recap: Equities deliver a convincing head fake

The fourth quarter of 2018 ended with significant market volatility. Yet, the U.S. equity performance was in recovery mode in the first quarter of 2019.

In March, we witnessed the ten-year anniversary of the bull market for equities, making it the longest bull market on record. In hindsight, the sharp sell-off in the fourth quarter looks like a head fake for investors.

Read the Q1 Market Recap to learn more about the dramatic recovery for the start of 2019. Also included is a legislative and regulatory update on what's happening in the retirement market.

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

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