Is It Too Late to Establish a 401(k) Safe Harbor Plan for 2018?


The answer of course is – it depends. If you currently sponsor a retirement plan that includes a 401(k) feature, to use either of the standard 401(k) safe harbor provisions, (the mandatory employer matching contributions or the non-elective contributions) you must adopt those provisions before the first day of the plan year (i.e., adopt the safe harbor provisions in 2017, effective for the 2018 plan year).

But there are some exceptions as indicated below: Read More


By: David I Gensler, MSPA, MAAA, EA


Pay Attention To Your 401(k) Statements

So here is the drill – You receive your quarterly 401(k) statement and you:

a)    Review it carefully so that you are reasonably comfortable that all of your deferrals have been posted to your account

b)    Review it carefully to see that the automatic rebalancing feature that you signed up for online is being done

c)     Review it carefully to see if it might be time to shift to a different investment strategy (more conservative or more aggressive), or

d)     None of the above Read More

A SEP-IRA or a Solo 401(k) Plan – Which is Better?

By: David I Gensler, MSPA, MAAA, EA

Fortune Magazine recently ran an article touting the benefits of a Solo 401(k) over a SEP-IRA for sole proprietors or single member LLCs with no employees. And for those of you who are sole proprietors or single member LLCs who are looking to maximize your contribution (and thus your tax deduction), the Solo 401(k) is probably the way to go. The article does an excellent job of detailing the distinctions between the two types of retirement plans. I have some thoughts of my own to add. But first, let’s analyze each type of plan. Read More

Every company offers a 401(k) plan, don’t they? & What do 401(k) participants want?

By: David I Gensler, MSPA, MAAA, EA

401(k) plans are so ubiquitous that we assume that every employer offers a retirement plan to their employees. But that perception is just that; a perception. There are a fair number of small to mid-size firms that do not sponsor a 401(k) retirement program for their employees. The question is why don’t they?

According to research from Pew Charitable Trusts, the two primary reasons given for not offering a 401(k) plan was that they were “too expensive to set up”(37% of the respondents) or “my organization does not have the resources” (22%).

I find both of those statements curious. Read More

Leakage: It’s A Big Problem (But Perhaps Not The Problem That You Thought It Was)

David I Gensler, MSPA, MAAA, EA

“Leakage” sounds like something seniors need to worry about. It is certainly not a term that one would associate with a 401(k) plan. But leakage can come in many different forms. And in a recent article in the Wall Street Journal, it is leakage from their 401(k) plans that has many American companies concerned.

Leakage is a term from the retirement plan industry that is used when participants tap into or pocket retirement funds early. The article stated that this practice can cause an employee’s ultimate retirement nest egg to shrink by up to 25%.

Many employers have taken some aggressive steps (like auto-enrollment and auto-escalation) to encourage their employees to save in 401(k) plans. But like a bucket with a hole in it, while those savings find their way into a company’s 401(k) plan, there is a growing awareness that the money is not staying there. If older workers cannot afford to retire, it can create a logjam at the top, leaving little room for younger, less-expensive hires.

Leakage primarily takes two forms: loans and distributions that are not rolled over. Let’s look at each one and see how some companies have found some ways to, if not solve the problem, at least slow it down.

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Tibble v Edison – Five Lessons Learned

By: David I Gensler, MSPA, MAAA, EA

Tibble v Edison broke new ground in terms of clarifying that plan stewards have “an ongoing duty to monitor plan investments.” In the Tibble case, the Supreme Court rejected the argument that an initial fund review was sufficient when facts and circumstances may have changed to preclude the need for an ongoing assessment of a retirement plan’s fund lineup.

However, the defendants in Tibble actually did a lot of things right that many retirement plans fail to do. Here are the top five:

1. They had a formal investment committee 

Two heads are better than one, three heads are better than two, etc. ERISA does not require that the plan’s fiduciary form an investment committee. However, it does require that if you lack the requisite expertise to make the sorts of investment decisions unique to 401(k) plans (establishing the metrics that funds will be benchmarked against, evaluating the fund lineup, etc.), you should reach out to someone or an organization that has that expertise. Forming an investment committee to review the plan’s investment performance is just a wise thing to do.

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The Best Laid Plans of Mice and Men

David I Gensler, MSPA, MAAA, EA

Some of us do a really good job of planning for the future. Many of us do not.  In trying to gauge how much we need to save for retirement, we assume that our life in retirement will be pretty similar to the life we led before we retired. We forget that our paycheck serves as our ultimate “goalie.” If the refrigerator breaks and we need to buy a new one or if we get into a car accident and need to go out of pocket on our deductible, we always have the money we earn from working to back us up. Of course, we don’t really plan for these painful financial events; they happen and we swallow hard and just deal with them.

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Millennials, Student Debt And Saving For Retirement: What’s The Correlation?

By: David I Gensler, MSPA, MAAA, EA

Everyone assumes (at least I did) the following about Millennials:

  • That they are being crushed by student debt, and as a result;
  • It restricts their ability to save for retirement through their company’s’ 401(k) plan.


Well, you know that old bromide about assumptions… So what impact does the student loan debt carried by Millennials actually have? As it turns out, not much according to a white paper called “How Does Student Debt Affect Early-Career Retirement Savings?” by researchers Matthew S. Rutledge, Geoffrey T. Sanzenbacher and Francis M. Vitagliano.

What these researchers found is that the relationship between student debt and participating in their employer’s retirement plan is “small and statically insignificant.” Even more surprising was that the authors found that contrary to all expectations, individuals with large loan balances were likely to accept participating in their employer’s retirement plan, if one was offered.

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When Is A Retirement Plan Really Terminated? When The IRS Or The Department of Labor Says So, That’s When!

By: David I Gensler, MSPA, MAAA, EA

Yogi Berra once said “it ain’t over ‘til it’s over.” He was not talking about terminating a qualified retirement plan, but he could have been. If the steps necessary to terminate a retirement plan are not adhered to, and in the right order, the plan termination process can become a nightmare. As long as the plan continues to have assets in it, you are responsible for its ongoing administration (filing Form 5500, keeping track of the benefits of the participants who have not been paid out, etc.). Indeed, in certain cases failure to properly distribute all of the plan’s assets can force you to start the whole plan termination process all over again.

Note – All of the following pertains to terminating a defined contribution plan (a profit-sharing plan, a 401(k) plan, etc.).  It is not intended to be a guide to terminating a pension plan (a defined benefit plan). Terminating a defined benefit plan is a good deal more complicated than terminating a defined contribution plan.  I will deal with the nuances of that in a future blog.

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Why Should A Plan Sponsor Care About Automatic Enrollment?

By: David I Gensler, MSPA, MAAA, EA

No one could argue the fact that automatic enrollment, when properly implemented is a positive benefit for employees. Automatic enrollment, when coupled with automatic escalation (the automatic increase in deferrals rates) will help participants who might not otherwise be inclined to participate in your 401(k) plan save for their retirement.

We can easily identify the following benefits to the plan participants: Read More