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Hey Joel! – Answers from a recovering former practicing ERISA attorney

Welcome to Hey Joel! This forum answers plan sponsor questions from all over the country by our in-house former practicing ERISA attorney. Hey Joel, My client wants to conduct an RFP for an ERISA attorney, what are important questions they should include? ~ Questioning the Expert   Dear Questioning, While it is a somewhat unusual step to formally RFP for an ERISA counsel search, it can be a good exercise to ensure your client finds the best fit for…

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Visualize Retirement – What Are Your Participants Saving For?

All too often, retirement planning success is measured purely by financial metrics: savings amounts (15 percent per year), income replacement ratios (75 percent of preretirement income), or withdrawal strategies (4 percent per year). And the most critical part of planning for retirement is forgotten: the plan itself. Put another way: how can an employee know how much money they’re going to need in retirement if they don’t know what they’re saving for? Seventy-four percent of 50-59-year-olds have made a…

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Department of Labor Issues Relief Guidance for Victims of California Wildfires

Bill Tugaw, Governmental Plan Practice Leader The U.S. Department of Labor (DOL) recently issued benefit plan guidance and relief for plans and participants affected by the 2018 California Wildfires. The DOL recognizes that plan sponsors and participants may be affected in their ability to achieve compliance with various regulatory requirements. The guidance generally applies to all parties involved in employee benefit plans located in areas identified by FEMA as disaster areas, listed here: www.fema.gov/disasters. The guidance provides relief from…

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January 2019 Retirement Report

Six Easy Steps to Keep Your Plan Assets Safe Joel Shapiro, JD, LLM, Senior Vice President, ERISA Compliance Cyber fraud is a growing concern globally. Individuals are typically very careful to keep their bank account and email authentication information safe, but they aren’t always smart with the rest of their personal information. Participants need to be vigilant with their retirement savings accounts as well. In the past year we’ve seen a slew of cases of attempted fraud – some…

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Hey Joel! Answers From a Former Practicing ERISA Attorney

Hey Joel, When does the five-year clock start for Roth withdrawals? -Tick Tock in Tennessee Dear Tick Tock, For most investors, it’s important to know that there is a five-year waiting period for tax-free withdrawals of earnings, and it is applied differently, depending on if you made Roth IRA contributions, converted a traditional IRA to a Roth, rolled over Roth 401(k) assets or inherited the Roth account. The five-year clock starts with your first contribution to any Roth IRA…

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Tips for Preventing Uncashed Retirement Checks

Managing uncashed retirement checks may be considered a nuisance by plan administrators. Nevertheless, the employer still has fiduciary responsibility when a former employee fails to cash their distribution. Search efforts to locate a missing plan participant consume time and money and may fail to locate the participant. Likewise, going through the process of turning over dormant accounts to the state can also consume time and resources. Decrease the burden of uncashed checks by: Discussing with terminating employees during the…

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How and When to Pay Plan Expenses With Plan Assets

Some retirement plan expenses can be paid for with plan assets — but many can’t. Which are the “reasonable and necessary” retirement plan expenses that can be paid out of plan assets? Generally, services required to maintain the plan’s compliance and administration can be paid from plan assets. Obvious examples include the annual nondiscrimination testing and preparation of the annual Form 5500. Another example is a plan amendment or restatement that is required because a legislative change. Optional services…

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Are You Prepared for an IRS Audit?

The Internal Revenue Service’s (IRS’s) Employee Benefit Audit Program is used to audit and enforce. The IRS’s emphasis, with respect to defined contribution plans is on compliance with the requirements of the Internal Revenue Code (the Code), the plan’s tax qualification and administration of all plan documents. In the event of noncompliance with regulations, the IRS can impose taxes, penalties and interest. Most IRS audits are selected at random, but certain audit triggers exist that plan sponsors should be…

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Hey Joel! Answers From a Former Practicing ERISA Attorney, Fiduciary Review

Do you have a question for an ERISA attorney burning in your heart? This forum features answers to some of the most common plan sponsor questions from all over the country, written by a former practicing ERISA attorney. Should I distribute the Fiduciary Investment Review to plan participants? – Generous in Georgia Dear Generous in Georgia, I appreciate your desire to provide detailed information to your plan participants, but hold your horses. While there is nothing legally preventing the…

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Have You Conducted a Fee Equalization/Levelization?

Fees in defined contribution (DC) plans can be complicated. Historically, fees have not been fully and simply disclosed, but the industry is changing towards greater and more understandable disclosure. Simply put, there are two basic types of fees: administrative and investment-related. The investment-related fees are deducted from earnings on participant accounts and will vary from one investment to the next. These fees are paid to the firms that are making decisions about how the various funds are invested in…

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