Top of Mind


Showing entries with the topic “Retirement Readiness”.

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25

Jun 2020

The Retirement Problems — and Solutions — for Younger Boomers

The latest State of the Participant 2020 report from John Hancock brought some unwelcome news, echoed in other recordkeeper reports: the younger half of the Baby Boomer generation — those aged 56 to 65 — are generally unprepared for retirement. In the report, the two age cohorts spanned …

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11

Jun 2020

Replacing Mandatory Employee Contributions with Automatic Enrollment

While mandatory contributions are a necessity in defined benefit plans to ensure proper funding, I have never been a proponent of them in defined contribution plans, except when they serve as the only way to make pre-tax contributions to a qualified retirement plan (such as 414(h) pickup contributio…

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21

May 2020

The COVID-19 Pandemic Sheds Light on Questionable Retirement Plan Features

With many optional plan features, plan sponsors have a great deal of choice when it comes to designing their retirement plan: make the right choice and the plan is attractive to participants without being too difficult to administer; make the wrong choice and it may lead to the opposite situation. …

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14

May 2020

Is Now the Time for a Roth Conversion?

Allowed by some retirement plans, a Roth conversion permits the transfer of pre-tax dollars to Roth, with income taxes paid on the transferred amount, instead of upon the distribution of the pre-tax funds. (once certain qualifications are met, Roth balances are not taxed at all upon distribution). …

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07

May 2020

Tips to Avoid Taking that Retirement Plan Withdrawal

In a recent Top of Mind, we discussed how accessing retirement plan funds during the COVID-19 pandemic is not the greatest idea. But how can employees avoid a withdrawal or loan when they really need the money? Here are a few tips to help individuals achieve better financial footing without raiding …

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23

Apr 2020

CARES Act Loan Provision: The "Fly in the Ointment"

In a recent Top of Mind post, we discussed why plan sponsors should be wary of blindly adopting all of the CARES Act loan and distributions provisions. Well, it turns out that there is quirk in the CARES Act provisions regarding COVID-19 loans that is giving plan sponsors a reason to pause. This is…

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09

Apr 2020

Before You Adopt Those COVID-19 Loan and Distribution Provisions…

The new CARES Act retirement plan distribution and loan provisions for participants affected by the COVID-19 pandemic are apparently quite popular with retirement plan recordkeepers, so much so that at least one large recordkeeper told their plan sponsors that they had just five days to opt out, or …

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02

Apr 2020

Before You Take that Retirement Plan Withdrawal…

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) signed into law last week makes it easier than ever to take distributions and loans from a retirement plan, with fewer tax consequences. Beyond this provision, employers may also voluntarily make it easier to take withdrawals and loan…

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26

Mar 2020

Putting Retirement Plan Losses in Perspective

I’m not thrilled with the recent market volatility, and I suspect that you’re not either! Like many, my retirement plan account has suffered, and, as someone in my 50s, this is not great news. However, it has not suffered as much as the Dow Jones Industrial Average (down 25.7% year-to-date, as of 3/…

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12

Mar 2020

Looking to Buy an Annuity? You May Already Have One!

Annuities, a form of investment that can provide a future stream of income payments to their owners, are aggressively marketed in retirement plans. And, it appears that the recent market uncertainties will only exacerbate the situation. While annuities serve as an important component in retirement p…

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