COVID-19 has Boosted Desire for Retirement Planning and Financial Help
Participants are hungry for financial guidance and would welcome assistance through their employers with figuring out how to catch up to their retirement savings goals and managing their expenses.
According to Charles Schwab’s 2021 401(k) Participant Study:
- Twenty-two percent want help with figuring out how to catch up to their retirement savings goals and managing their expenses so that they can save more for retirement.
- More than six in ten participants (61%) believe their financial situation warrants professional advice, an increase compared with 2020 (50%).
- Thirty-nine percent want specific advice on how to invest in their 401(k)s.
- Thirty-five percent want help figuring out an income stream at retirement.
It is encouraging that according to Bank of America’s 11th annual Workplace Benefits Report, 92% of 834 employers surveyed feel a sense of responsibility for the financial wellness of their employees, up from 81% in 2015.
What can plan sponsors do to help?
- Contact your financial advisor about creating a communications program for your plan participants.
- Ask your recordkeeper if they have any participant education materials that address financial planning topics that you can distribute to employees.
- Host online or in-person events with your financial advisor to review debt consolidation, creating an emergency savings outside of retirement, and other topics.
If you’d like more ideas about helping to address participant concerns, reach out to your SRC account representative.
–Chris Oneal, President, Stones River Consulting
DOL AND LEGISLATIVE CORNER
Highlights of the 2021 Biden Tax Plan and Federal Tax Proposals
The Biden administration has proposed about $4 trillion of new federal spending over 10 years, partially funded with higher taxes on individuals and businesses, while prominent members of the House and Senate have put forth bills that include everything from increases in capital gains and corporate income taxes to new individual and business tax credits.
- The American Families Plan would raise the top marginal income tax rate from 37% to 39.6%.
- The American Families Plan would increase Internal Revenue Service (IRS) funding for individual income tax enforcement and enact new reporting requirements for financial institutions.
- The American Families Plan would tax long-term capital gains and dividends as ordinary income for taxpayers with taxable income above $1 million.
- The American Jobs Plan would increase the federal corporate income tax rate from 21% to 28%.
- The American Jobs Plan would repeal certain credits and deductions for the fossil fuel industry.
- The American Families Plan would make permanent the American Rescue Plan’s expanded Child and Dependent Care Tax Credit (CDCTC), which covers up to 50% of qualifying childcare expenses up to $4,000 for one child and $8,000 for two or more children.
Stones River Consulting will closely watch the movement of this legislation and keep you informed.
Important Deadlines to Remember
- 15: IRS deadline for adopting a retroactive amendment to correct a 410(b) Coverage or 401(a)(4) Nondiscrimination failure. (TPA, Plan Sponsor)
- 15: For C Corps and Sole Proprietors with a tax extension, employer contributions must be remitted in order to take a tax deduction. (TPA, Plan Sponsor)
- 15: Deadline to adopt a profit sharing plan for 2020 for C Corps or Sole Proprietors with a tax return extension. (TPA, Plan Sponsor)
- 1: Last day to provide the annual SIMPLE IRA or SIMPLE 401(k) plan notice to eligible employees as to whether the employer-required contributions will be matching or non-elective contributions. (Plan Sponsor, Advisor)
- 30: Deadline to convert an existing 401(k) plan to a Safe Harbor plan using a 3% non-elective contribution. (TPA, Plan Sponsor)
- 1: IRS/ERISA deadline for sending annual Safe Harbor, Qualified Default Investment Alternative (QDIA), and Automatic Contribution Arrangement (ACA) notices to participants. (TPA, Plan Sponsor)
- 15: ERISA-extended deadline for distributing Summary Annual Notices (SARs) to participants. (TPA, Plan Sponsor)
7 Signs Your Retirement Plan Needs an Upgrade
Retirement plans can be very complex if plan sponsors don’t have the right partner by their side to help navigate the ins and outs.
Stones River Consulting created a new guide titled, 7 Signs Your Retirement Plan Needs an Upgrade, that helps plan sponsors understand:
- What the four critical areas of a retirement plan are that need to be properly managed to maintain a successful retirement plan.
- Warning signs that a plan may be in danger of falling outside of compliance.
- How to get help to maintain a compliant retirement plan that benefits both the plan sponsor and its employees.
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