Do my 401(k) forms look different – YES they do!

ABGNCS has enhanced our forms for more automation!  Let's discuss some of the benefits of now having your retirement plan forms available online.

Quickly accessible.  You have 24/7 access to forms with the plan sponsor login, under the forms tab on the main page.

Pre-populated option.  When you select an employee, it populates all of their demographic information, eliminating many of the errors that could arise.  By having the forms prefilled, you can be sure we will know exactly what participant the form is for, without having to worry about illegible handwriting. In addition, distribution forms will pull the balance information, saving the sponsors and participants time and increasing accuracy.

Simplified navigation. The new forms have more defined sections, which make them easier to navigate.  With bolded titles and clearly labeled sections, we’re confident participants will have a much easier time completing these forms more accurately.

Clear delivery selections. Participants will find delivery options for distributions are clearer and easier to select. These are very important for your participants to be aware of.  Delivery options include:

• Standard delivery – This means the distribution check will be sent through the United States Postal Service.  This could take 7-10 business days to receive. 
• Overnight delivery – Once the check is requested from the trust company it will be sent overnight to your selected destination.  There is an additional fee of $20.00 for this service.
• ACH/Direct Deposit – This will be direct deposited into the selected account.  There must be a voided check included to have direct deposit.

We are continually looking for ways to streamline our forms and improve the user’s experience. When using online forms, you will always be sure you are receiving the most current balance and fund information and accessing the most up to date improvements.

Enhanced Forms

• Enrollment / Election Forms 
• Rollover Forms
• Distribution Forms
• Hardship Forms
• Loan Application
• Fund Change Form
• Beneficiary Form

We encourage you to go out to the plan sponsor website and take a look at the updated forms.  As always, please let us know if you have any questions!

The Authors from our Retirement Team:

Abbey Hullopeter, Client Support Associate
Amber Sorenson, Account Manager
Brittany Miller, Account Manager

abgncs.com

Keeping Your 401(k) Distribution Safe & Sound

A Participant requests a distribution, is there an alternative to mailing a paper check?

Yes! Taking a distribution or loan from a 401(k) account can seem to take a lot of time, but did you know an ACH or direct deposit of those funds to a checking or savings account is an option? 

• ACH/ Automatic Clearing House: a secure, nationwide electronic funds transfer network that allows credit and debit entries to personal bank accounts by all U.S. financial institutions. It is an alternative to a written check.
• Direct Deposit: The deposit of electronic funds directly into a bank account as a form of payment rather than a paper check.

An ACH or Direct Deposit of distribution or loan proceeds is reliable and often the quickest delivery option for a 401(k) distribution or loan. 

If a participant does not have a personal checking or savings account it is recommended that he/she sign up for one if planning a distribution of a 401(k) account and want ACH or direct deposit as the delivery method.  If a participant does not have a checking or savings account, a paper check will be the default delivery option.

ACH or Direct Deposit is only allowable into an account that is owned by the Participant!

A general rule every plan sponsor and participant should know - interest in a 401(k) account, including the “vested interest,” may not be alienated. This means that the account interest may not be sold, used as collateral for a loan (other than for a plan loan to the participant), given away or otherwise transferred (except at death to a beneficiary).

Why: The 401(k) plan has to distribute the balance to the participant, so that he/she can be properly taxed on a distribution and the 401(k) plan does not violate the anti-alienation rules. 

Fine Print:
(G) Assignment or Alienation. Except as provided in Code §414(p) relating to QDROs (or a domestic relations order entered into before January 1, 1985) and in Code 401(a) (13) relating to certain voluntary, revocable assignments, judgments and settlements, neither a Participant nor a Beneficiary may anticipate, assign or alienate (either at law or in equity) any benefit provided under the Plan, and the Trustee will not recognize any such anticipation, assignment or alienation. Except as provided by Code §401(a) (13), a benefit under the Plan is not subject to attachment, garnishment, levy, execution or other legal or equitable process.

The participant will need to provide a voided check copy or other proof of ownership to the account your funds are to be electronically transferred to.

Why:  The owner of an account- (if NOT the participant) - has no rights to the money at the time of distribution, so the plan cannot distribute to him/her, even if, the participant wants to transfer the funds to him/her.

I hope this has been informative - explaining why proof of ownership and depositing funds into YOUR checking or savings account is so important!

The Author: Amy Newman

Lead Transaction Support Associate
abgncs.com

anewman@abg-mn.com

Future You Will Thank You For Stashing More Money in Your HSA

The benefits of saving money in your Health Savings Account (HSA) go beyond health savings and can also help you be prepared for life at retirement. Not only can you use your health savings on health related expenses, but you can also use your investments similar to the way you would use a retirement plan.

Consider This Scenario:
The average healthy couple at age 65 today will incur over $200,000 in out-of-pocket medical expenses not covered by Medicare during their retirement years. A HSA is the best place to save for those expenses because it can be truly tax-free. At retirement HSA dollars can be used for non-medical expenses too. HSA dollars will simply be taxed just like a 401(k). As you can see, investing now will be a win-win down the road.

Investing Your HSA
The primary use of an HSA is always to pay for current out-of-pocket expenses and deductibles related to a high-deductible health insurance plan. It’s important to reserve enough cash in the account to cover the maximum out-of-pocket deductible for two consecutive years before any excess money is actually invested. Remember, investments available in the HSA are not guaranteed and can experience losses when the markets are not favorable.

Investment Options
The investment menu is very similar to that of a typical 401(k) plan. There are many different mutual fund investment options available representing the three primary asset classes: Cash, Bonds, and Stock. The Cash (Money Market) Fund pays a stated interest rate, similar to a savings account at a bank. Several different Bond Fund options seek to provide a higher fixed-income rate-of-return than a simple savings account, but can lose money in certain circumstances noting that bonds are typically much less risky than stock investments. Most of the mutual fund investment options available in the HSA are Stock (Equity) Funds, and each represents a different type of stock market investment or philosophy to allow for broad diversification. 

Choosing Your Lineup

Other than the Cash (Money Market) Fund option, the mutual fund investment options in the HSA are not intended to be used individually. The recommended method is to maintain broad diversification by taking advantage of all of the investment options available according to a strategy that makes sense. 

If all of the mutual fund investment options available in the HSA are the building blocks, the following example “Asset Allocation Strategies” are the blueprints that you can use as a basis for your own personal investment strategy based your own individual risk-tolerance and time-horizon.  

Remember, your own personal risk-tolerance and time-horizon will be different for HSA investments than for other retirement investments because you may need to spend your HSA dollars for health-related expenses before you retire.

Think About It 

Hopefully this overview has you thinking about investing your HSA. The information is very basic, so if you’d like more detailed information on HSA investing follow this link to Frequently Asked Questions for HSA Investing or contact your retirement advisor. Participants can manage their investment options within the participant website. This helpful guide to ManagingYour HSA Investment Account will help make the most of the online tools available. 

Thanks to Nick Austin for the educational investment information.

The Author: Cole Thompson with Nick Austin

Marketing Specialist

abgncs.com

cthompson@abg-mn.com

Disclaimer: This blog is of an informative nature and should not be taken as advice. Please work with the appropriate parties for those services. 

When Clients Succeed, We All Win

We are pleased to share with you that one of our clients was named a finalist for 401(k) Plan Sponsor of the Year in the Corporate 401(k) $50M-$1B category by PLANSPONSOR Magazine. Congratulations Vermeer - well deserved!

Each year, the editors of PLANSPONSOR magazine—the industry’s leading resource for retirement-benefits related news—recognize plan sponsors that demonstrate leadership in providing a more secure retirement for workers.  

Vermeer Corporation was recognized at PLANSPONSOR’s Annual Awards for Excellence dinner in New York City in March, and was featured in the March issue of PLANSPONSOR magazine.  Alliance Benefit Group has long recognized the commitment of Vermeer Corporation and the quality of the retirement program they have implemented.  To witness an industry-leading publication recognizing the strength and leadership of this sponsor is a prideful experience for our teams here on the recordkeeping side of their program. 

If you recall back in 2013, one of our greatest accomplishments was to witness our client, Mayo Clinic Health Systems - Albert Lea (MCHS-AL), receive the 403(b) Plan Sponsor of the Year award from PLANSPONSOR Magazine.

We are thrilled for the accomplishments of our clients and happy to share in the success of their retirement programs.

The Author: Timothy A. Struck, CRPS

Wholesale Retirement Marketing Consultant

abgncs.com

tstruck@abg-mn.com

Set Retirement on Autopilot

If you have trouble viewing click here: https://vimeo.com/86523190

Simplify your retirement dreams. Ask about adding auto enrollment and auto escalation to your retirement plan. 

The Author: Cole Thompson

Marketing Specialist

abgncs.com/RetirementAdministration

cthompson@abg-mn.com

Does your plan pass? Understanding Annual Nondiscrimination Testing

Test anxiety isn’t just for students.  The words “nondiscrimination testing” can strike fear into even the bravest of retirement account managers and plan sponsors alike.

Plan testing is required each year in order to make sure your 401(k) plan is in compliance with IRS regulations and maintains its qualified, tax advantaged status.  The IRS allows employees to get a tax benefit by not having to pay taxes on contributions or the earnings from contributions until they withdraw the money.  However, in order to get this tax break, the IRS wants to make sure highly paid employees are not getting a better tax break than everyone else.  

Of the required tests, the Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) tests are more significant because consequences of a failed test need to be addressed within 2 and a half months after the close of the plan year, in order to avoid penalties.  Consequences include corrective distributions or additional employer contributions.  The nondiscrimination rules in regards to these tests require average deferrals and average contributions for the highly compensated employee (HCE) group to be within a certain range of the average deferrals and contributions for the non-highly compensated employee (NHCE) group. 

Clear as mud, right?  Well that's where Alliance Benefit Group comes in to take your worry away.  We will ask you a few questions regarding your plan and have you confirm that the employee information we have in our system is correct.  If we receive this information in a timely manner, it will help us ensure the testing is completed before the deadline.  

In the event the plan fails any of the nondiscrimination tests, we will call you and talk you through the next steps of the correction method and offer guidance on how to avoid testing failures in the future, such as adopting a safe harbor plan or running preliminary tests throughout the year and making adjustments accordingly.

So, if your plan runs on a calendar year, you would have received your questionnaire from us.  If you haven't yet, we need it to be completed and returned to kick off this process.  Please return this to your administration team at your earliest convenience.

The Author: Kelly Wangsness, QKA

Retirement Services Manager

abgncs.com/RetirementAdministration

kwangsness@abg-mn.com

‘Tis the Season – For Annual Notice Distribution

For many people this time of the year is spent coordinating Thanksgiving cooking with family members, and laying out a plan of attack for their Black Friday shopping. But for plan sponsors of qualified retirement plans some time should be spent on ensuring any, and all annual notices are distributed to plan participants.

Qualified retirement plans with a December 31^st plan year end may need to issue one or more annual notices to plan participants by December 1^st. Failure to issue a required annual notice can put the plan’s qualified status in jeopardy. Below you will find the most common notices applicable to defined contribution plans:

-        401(k) Safe Harbor Notice:  All eligible participants in a safe harbor 401(k) plan must receive an annual notice that describes the safe harbor matching contribution formula or safe harbor non-elective contribution formula.

-        401(k) Automatic Enrollment Notice: If the plan provides that employees will be automatically enrolled, the plan sponsor must give eligible participants an annual notice that describes the circumstances in which eligible employees are automatically enrolled and the level of pay that will be automatically contributed to the plan.

-        Qualified Default Investment Alternative Notice (QDIA): A defined contribution plan that permits participants to direct the investment of their account balances may provide that if a participant does not give an affirmative investment direction, the portion of the account balance that is not given direction will be invested in a qualified default investment.  

Alliance Benefit Group North Central States, Inc. understands that this may seem like a daunting task for plan sponsors. Because of this, led by our Compliance Team, ABGNCS packages all required notices with delivery instructions in the “year end packet”. In addition, ABGNCS assigns a dedicated administration team to each plan in order to assist plan sponsors with administration questions.

To learn more about Alliance Benefit Group North Central States, Inc. and the services we provide please visit www.abgncs.com or email info@abg-mn.com. 

Happy Holidays! 

The Author: Seth Holstad

Account Executive

www.abgncs.com/RetirementAdministration.aspx

sholstad@abg-mn.com