Monday, December 5, 2016

4 Questions Plan Sponsors Should Ask to Understand the Similarities and Differences Between 401(k) and 403(b) Plans

1. Which employers can offer a 403(b) plan?

  • Public education organizations such as public elementary and high schools, state colleges and universities, and boards of education.
  • 501(c)(3) nonprofit organizations such as private schools, research facilities, private hospitals, charities, social welfare agencies, healthcare organizations, and religious institutions.
  • Grandfathered Indian tribal governments.
  • Certain religious ministers of a church or related religious organizations.

2. Which employers can offer a 401(k) plan?

Almost any type of company may offer a 401(k) plan. Most private, for-profit companies are eligible. Many tax-exempt, non-profit organizations have a choice between sponsoring a 401(k), a 403(b), or both.

Monday, November 28, 2016

6 Questions Plan Sponsors Should Ask About Safe Harbor Plans

1. What are safe harbor plans?

Safe harbor plans are retirement plans that generally satisfy the non-discrimination rules for elective deferrals and employer matching contributions and therefore are appealing to organizations that are at risk of failing the ADP and ACP tests (see below). Safe harbor plans can be offered with the same flexible features as traditional retirement plans, including eligibility, participant loans, and distributions. However, employers must satisfy certain contribution, vesting, and notice requirements and employers may not apply allocation conditions to safe harbor contributions (e.g., last day of employment requirement, 1,000 hours in the year requirement, etc.).

2. What is non-discrimination testing?

Generally, the U.S. Government wants to ensure that plans do not favor highly compensated

Monday, November 14, 2016

7 Questions Plan Fiduciaries Should Ask About Target Date Fund Strategies

1. What is a Qualified Default Investment Alternative (QDIA)?

The Pension Protection Act of 2006 (PPA) encouraged employers to adopt automatic enrollment features for their participant‐directed plans by providing a new type of fiduciary liability relief for “default investments,” or Qualified Default Investment Alternatives (QDIAs). A QDIA is used when a participant fails to make his or her own election. An investment must have specific qualifications to be considered a QDIA. Importantly, a QDIA’s asset allocation strategy need only take into account participant age, and does not need to consider an individual participant’s risk tolerance or other investment assets. One of four types of allowable QDIA’s, Target Date Funds (TDFs) were the QDIA in 95% of retirement plans in 2015 (Source: Vanguard, 2016).

2. What due diligence should plan fiduciaries perform when choosing a TDF?

Thursday, November 10, 2016

12 Questions Retirement Plan Sponsors Should Ask about Adding An Automatic Enrollment Arrangement

1. What is an Automatic Enrollment Arrangement?

Traditionally, defined contribution retirement plans have required employees to affirmatively choose to save money in the plan through salary deferral. Today’s plans that adopt Automatic Enrollment are encouraging employees to save by making salary deferral the default, requiring them to opt-out or choose not to contribute to the plan.

2. What are the different types of Automatic Enrollment Arrangements?

Monday, November 7, 2016

8 Questions Plan Sponsors Should Ask About Adding a Roth Feature

1. What is a Roth?

According to the 2015 PLANSPONSOR Defined Contribution Survey, 62% of all defined contribution plans, across multiple industries now offer a Roth feature. Among 403(b) plans, 54.7% have adopted this popular design feature. A Roth is not a separate retirement plan, but simply an additional source of contributions accepted by the plan and record-kept separately so the rules applicable to Roth contributions can be followed. Once adopted, plan sponsors must give participants an opportunity at least once per plan year to make designated Roth contributions.

The basic difference between a traditional 401(k) or 403(b) and a Roth is when a participant pays taxes. Within a traditional 401(k) or 403(b), participants make contributions with pre-tax dollars, and receive a tax break up front, effectively lowering their current income tax bill. Their contributions and earnings grow tax-deferred until they take a distribution. At that time, withdrawals are considered to be ordinary income and participants pay taxes based upon their effective tax rate at the time of the distribution. They’ll also be required to pay a 10% early withdrawal penalty unless they’re over 59 ½ years of age.

Monday, October 10, 2016

Register for our live webinar:

Retirement Plan Lawsuits on the Rise

A number of prestigious colleges and universities, including several Ivy League schools, have recently appeared in the headlines as defendants in class action lawsuits relative to their retirement plans.

Starting in 2006, the law firm of Schlichter, Bogard and Denton filed a bevy of lawsuits against corporate giants relative to the 401(k) plans sponsored by each corporation. A common thread through all of the suits was excessive fees, but the overarching theme was the alleged failure on the part of the plan fiduciaries to fulfill their fiduciary responsibilities and obligations. Settlements have been reached in several of the suits, resulting in settlement amounts in the tens of millions of dollars.

Lawyers on behalf of retirement plan participants are now setting their sights on non-profit institutions, including one hospital in New York. This is a wake-up call to all non-profit organizations to make sure their retirement plan fiduciary oversight is robust and compliant.

Join this webinar to help you better understand and mitigate this often overlooked risk.The webinar will discuss:
  • an overview of retirement plan litigation;
  • the risk to the healthcare and not-for-profit industries;
  • preventative measures to avoid litigation; and
  • what the future may hold.



PRESENTER: James J. Kelley, President, Strategic Benefit Services
James Kelley directs all of the activities and services for Strategic Benefit Services. He has more than 20 years of experience in the institutional retirement market. Jim has spent much of his career working with healthcare and other not-for-profit organizations. He holds his New York State life, accident, and health and variable annuities license. He has his FINRA Series 6, 63, and 26 licenses. He is an accredited Plan Sponsor Retirement Professional. In Jim's role as senior executive for all SBS operations, he sets firm policy and has responsibility for all operations, customer service, and personnel for retirement plan services, employee benefits, and all other Advisory Services.

Monday, October 3, 2016

UPDATED REPORT! Report Offers Steps for Building an Optimal Retirement Plan Investment Menu

A retirement plan’s overarching goals are to help participants accumulate wealth during their years of employment and to provide them with income during their retirement.

The challenge for fiduciaries is to successfully navigate the options available and build an optimal investment menu that is designed to guide participant choices and improve their retirement readiness. Since plan fiduciaries may be exposed to personal liability, it is prudent to have a process in place for the selection and monitoring of investment options.

Strategic Benefit Services has outlined a four-step process for constructing an optimal investment menu that:
  • fosters ERISA compliance;
  • provides desirable investment choices for plan participants; and
  • impacts retirement outcomes.

Read 4 Steps to Building an Optimal Retirement Plan Lineup for Participants to learn more. 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.

Monday, September 12, 2016

Understanding Custom vs. Proprietary Target Date Funds

Target date funds (TDFs) are characterized as either proprietary or custom. The U.S. Department of Labor encourages plan fiduciaries to consider a custom solution. Custom TDFs are typically offered in separate account or collective trust vehicles. These vehicles are not registered as investment companies under the Investment Company Act of 1940 and therefore are precluded from use in 403(b) plans. Proprietary TDFs are defined as pre‐packaged investments that usually are comprised of underlying mutual funds of a single investment firm. Therefore, it can be challenging to ensure “best in class” managers are offered across the underlying funds within the proprietary TDF.


Monday, August 29, 2016

Target Date Fund Basic Definitions - Part 2

The U.S. Department of Labor's Employee Benefits Security Administration issued tips intended to help plan sponsors select and monitor target date funds (TDFs) in their investment lineups. These target date fund basic definitions will help plan fiduciaries navigate the Department of Labor Tips for ERISA Plan Fiduciaries.
  1. Asset classes are groups of securities that exhibit similar characteristics. The three main asset classes are equities (stock), fixed-income (bonds), and cash. Additional asset classes that may be employed within a target date fund are: world bond, emerging markets, and/or real assets like commodities and real estate investment trusts (REITs).

Tuesday, August 23, 2016

Guidelines for Reviewing Target Date Funds

In 2013, the U.S. Department of Labor’s Employee Benefits Security Administration issued tips intended to help plan sponsors select and monitor target date funds (TDFs) in their investment lineups. It is incumbent on plan fiduciaries to establish a process or fiduciary best practice for comparing and selecting target date strategies, especially when they serve as the plan’s Qualified Default Investment Alternative (QDIA). Fiduciaries should implement a process to perform periodic reviews to have a clear understanding of the investments and how they will change over time, and to compare the funds’ fees.

Monday, August 15, 2016

Target Date Fund Basic Definitions - Part 1

The U.S. Department of Labor's Employee Benefits Security Administration issued tips intended to help plan sponsors select and monitor target date funds (TDFs) in their investment lineups. These target date fund basic definitions will help plan fiduciaries navigate the Department of Labor Tips for ERISA Plan Fiduciaries.

  1. Target date funds automatically adjust their asset mix to become more conservative as an employee gets closer to his or her target retirement date.
  2. QDIA is a default investment option chosen by a plan fiduciary for participants who fail to make their own investment election. The Pension Protection Act of 2006 approved target date funds as a QDIA.

Wednesday, August 10, 2016

Using Target Date Funds as a QDIA

The Pension Protection Act of 2006 (PPA) encouraged employers to adopt automatic enrollment features for their participant‐directed plans by providing a new type of fiduciary liability relief for “default investments,” or Qualified Default Investment Alternatives (QDIAs).

A QDIA is used when a participant fails to make his or her own election. An investment must have specific qualifications to be considered a QDIA. Importantly, a QDIA’s asset allocation strategy need only take into account participant age, and does not need to consider an individual participant’s risk tolerance or other investment assets.

Tuesday, August 9, 2016

Fiduciary Checklist for Target Date Fund Decisions

As target date funds continue to garner a significant portion of retirement plan assets, it becomes increasingly important for plan fiduciaries to establish a process for comparing and selecting target date strategies.

Strategic Benefit Services has created a Fiduciary Checklist for Target Date Fund Decisions. Download the attached checklist to help plan fiduciaries stay compliant and feel confident they are following the Department of Labor Tips for ERISA Plan Fiduciaries.


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.

Monday, March 28, 2016

Plan Health: Here’s why you’re here

To assess plan health, comprehensive Annual Plan Reviews continue to be of value, and plan providers are developing more concise versions of the report — offered on paper or online. According to the Lincoln Financial Group study, You are here: Understanding financial wellness, retirement readiness and plan health, plan sponsors use plan health data to get quick, timely updates on employee retirement preparedness levels and to help meet their goals by leveraging data to make informed plan design decisions.

Next steps for plan sponsors:
  1. Review year-over-year trends to identify patterns and opportunities.
  2. Compare your plan by industry, asset size, and number of participants to set competitive goals.
  3. Work with your provider to optimize participant data to help limit assumptions and provide more accurate reporting.
  4. Continue to monitor traditional success measures — balances, contribution rates and diversification — while adding new metrics, such as income replacement rates.
  5. Work with your plan provider, advisor or consultant to prioritize the aspects of your plan health data that are most valuable to you; reporting will be more valuable with your input.

To learn more about this research or to begin developing your organization’s action plan toward optimal plan health, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Wednesday, March 23, 2016

2016 Human Resources Conference


The 2016 Human Resources Conference is designed for senior level human resource and employee benefits professionals looking for new insight and ideas to address today’s human resources challenges. Best-selling author and internationally recognized management and leadership expert Bruce Tulgan will offer a three-hour workshop sharing strategies to engage Millennials in the workplace. Additional conference sessions will be led by the industry's top thought leaders, inspiring discussion around: 
  • Workforce Design Strategies 
  • Impact of Mergers and Acquisitions on Retirement Plans 
  • Legal Trends & Updates 
  • Building a Successful Wellness Program – One System’s Example 
  • Strategic Internal Communications 

LEARN MORE

This program is offered in partnership with the Statewide Human Resources Advisory Council.

SHRM and HRCI credits pending.

Monday, March 21, 2016

Retirement Readiness: Where do you need to be?


In the Lincoln Financial Group study, You are here: Understanding financial wellness, retirement readiness and plan health, plan providers agree that retirement readiness is unique to each individual. A single, accurate income replacement rate does not completely define retirement readiness. Yet, replacement rate is the one measure that seems to be gaining momentum among plan sponsors. Whether plan participants need between 70% and 85% of pre-retirement income, or whether they plan to retire at age 62, 65, 67 or older, plan sponsors are unanimous in the belief that translating assets to potential income is critical.

Take action on retirement readiness
  1. Work with your recordkeeper, plan advisors and consultants to generate greater employee engagement, and seek an approach that makes it easy for participants to take action.
  2. Ask for employee communications to demonstrate the benefits and impacts of measured, realistic, small steps and to promote content that’s neither simplistic nor condescending.
  3. Encourage employee interaction with retirement planning tools and automated features.
  4. Ask participants to provide key data during open enrollment, when they’re already thinking about their benefits.
  5. Use your plan health reporting to monitor the plan design choices impacting retirement readiness and to identify employee groups who may need more help to get on track to meet their retirement savings goals.

To learn more about this research or to begin developing your organization’s action plan toward optimal plan health, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Monday, March 14, 2016

Financial Wellness: You could be someplace better

In the Lincoln Financial Group study, You are here: Understanding financial wellness, retirement readiness and plan health, plan sponsors reported that employees need financial education, and they believe instituting a financial wellness program leads to improved job performance and increased employee loyalty. The industry defines “financial wellness” as a program of financial topics delivered through multiple channels to help people minimize their financial challenges. Financial wellness is aspirational, and the path to wellness for participants involves setting reasonable goals and taking positive steps forward.

As financial wellness programs become more prevalent and significant over the next few years, we anticipate closer alignment with health and wellness programs. New service providers and program opportunities are rapidly emerging.

Best practice considerations
  1. Talk with your retirement plan provider, advisor or consultant about available financial wellness resources.
  2. Survey participants and build programs based on topics of highest interest, deepest need and greatest likelihood of success.
  3. When implementing a new program, start small and gradually roll out new elements to the program.
  4. Connect financial wellness delivery to health program delivery to make the most of employee time and attention spans.
  5. Offer programs to all employees, not just plan participants. Include one-on-one and group meetings and webcasts during, before and after work, at lunchtime, and over weekends to accommodate employees. Encourage employees to bring spouses and partners, and make meetings mandatory for high-impact topics. 

To learn more about this research or to begin developing your organization’s action plan toward optimal plan health, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Thursday, March 10, 2016

Strategic Benefit Services Named a PLANADVISER Top 100 Retirement Plan Adviser

PLANADVISER Magazine has named Strategic Benefit Services (SBS) as one of its 2016 Top 100 Retirement Plan Advisers. SBS was awarded in the category for large teams with more than $3 billion in retirement plan assets under advisement or more than 170 plans. The PLANADVISER Top 100 Advisers is an annual list of the retirement plan advisers and adviser teams that stand out in terms of a series of increasingly stringent quantitative measures.

Monday, March 7, 2016

Understanding financial wellness, retirement readiness and plan health

In the study, You are here: Understanding financial wellness, retirement readiness and plan health, the Lincoln Financial Group explored three emerging trends in retirement plan administration.

  1. Financial wellness programs. Similar to health wellness programs, financial wellness programs can be adopted by a plan sponsor to improve an individual’s financial health so he or she can accomplish specific financial goals, such as saving amounts sufficient for retirement. In many cases, low participation and savings rates in retirement plans are the results of an inability to save due to financial challenges, such as poor budgeting and credit card debt.

Monday, February 29, 2016

Automatic Features in Defined Contribution Plans


According to the 2014 Retirement Plan Survey conducted by Strategic Benefit Services, approximately one-half of the responding retirement plan sponsors offer automatic enrollment. Offered in conjunction with automatic escalation, such features can positively impact participant behavior and improve retirement readiness. This article examines some best practices to be considered when implementing automatic features in defined contribution plans that can produce greater results per dollar of employer cost.


Monday, February 22, 2016

Using Investment Menu Design to Improve Participant Outcomes

Many participants lack the ability, time, and/or desire to effectively make sound investment decisions and manage their accounts on an ongoing basis. Traditionally, many plan sponsors felt their responsibility was to offer a broad range of investment options together with employee education. The results, all too often, were that participants were overwhelmed with choice and rarely availed themselves of the education. In recent years, the trend has been to limit the number of investment options and guide participant behavior. The investment menu structure may be just as important as the actual investment options themselves. An effective menu design will address the various participant behaviors:



Properly done, a well-designed investment menu can direct behaviors and give participants the confidence they need to feel comfortable with their investment decisions.

Read Improving Participant Outcomes: An Action Plan for Plan Sponsors and start developing your action plan to improve participant outcomes. 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.

Monday, February 8, 2016

Using Plan Design to Improve Participant Outcomes

Plan sponsors should review their current plan design features and consider how they drive participant behavior. Studies have shown that participants will often choose deferral rates at a level to obtain the maximum employer match. By stretching out the matching formula, the employer cost stays the same but the employee is encouraged to save more. For example, a plan that matches 100% on the first 5% could move to a 50% match on the first 10% of salary. The employer cost remains constant at 5% while at the same time employees are motivated to contribute up to the 10% level.

It is important to limit participants’ ability to use the money for something other than its intended purpose: retirement. Plan sponsors should consider limiting, if not eliminating, loan availability within their plans. Participants rarely understand the true impact of taking a loan from their account—“borrowing from themselves” is a common justification employees use. Although the current economic environment may not be the best time to eliminate loans, it should be something to consider for the future.

Read Improving Participant Outcomes: An Action Plan for Plan Sponsors and start developing your action plan to improve participant outcomes. 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, February 4, 2016

What's Driving the Recent Stock Market Volatility?

January 2016 was a particularly difficult month for equity investors, with the major U.S. equity indices in correction territory. China's economic slowdown and negative earnings in the energy sector are the most commonly cited factors for the possibility of a global economic slowdown.

This paper, What's Driving the Recent Stock Market Volatility?, provides retirement plan fiduciaries and investors insight into the stock market volatility, including:
  • the role of China and the energy sector as market drivers; 
  • "dashboard" metrics showing where equity investors should focus their attention in 2016; 
  • an analysis of the long-term relationship between corporate earnings trends and S&P 500 Index performance; and 
  • an overview of the price/earnings (P/E) ratio and how much investors are willing to pay for those earnings. 
If you have any questions about this paper, or would like to begin talking to a trusted advisor, then please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Monday, February 1, 2016

Participant Outcomes vs. Participation Rates: How to Succeed in Both Areas

Until recently, participant outcomes were not a great concern to most plan sponsors; even now, a relatively few number of plan sponsors use income replacement as a measure of plan success. A recent survey conducted by PLANSPONSOR magazine showed just 3.5% of plan sponsors use projected retirement income as a metric to assess their plans.1 Instead, the goal was to offer a plan with good investment choices, competitive fees, and a recordkeeping platform that would minimize the administrative burden on the employer.


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