Findings from MassMutual’s 2018 “State of the American Family” illustrates that on average, respondents expect to retire at age 62, as opposed to age 64 when the study was last conducted five years ago in 2013. Surprisingly, 40% of the respondents from the study intend to retire before age 60, up from 32% from that same 2013 study. With all of this optimism, did any of the percentages go down? Well yes, actually. 22% of respondents now expect to retire after age 65, down from 30% from the 2013 study. So there was a decrease in the percentage of folks who expect to retire after age 65 and an increase in the percentage of folks who expect to retire before 65. Read More

401(k) Plans, Student Loans & the Private Letter Ruling AND The 2019 Maximums Are Out

David I Gensler, MSPA, MAAA, EA

401(k) Plans, Student Loans & Saving For Retirement

For many Millennials saving for retirement has become a binary choice. Either they choose to pay down their student debt or they choose to save for retirement. Either one or the other. As many Millennials are in the earliest years of their working careers, difficult choices about how to allocate their hard earned paychecks must be made. Therefore, for many Millennials, paying down their student loan trumps deferring into their company’s 401(k) plan.

According to the Society for Human Resources Management (SHRM), only 4% of the companies that they surveyed indicated that they offer student loan payment benefits. That is why a recent IRS private letter ruling (PLR-131066-17) has prompted questions to companies’ HR departments. In the PLR, the IRS gave their consent to an unnamed company to allow for their employees to seemingly have the best of both worlds: to pay down their student debt and still receive company matching contributions into their retirement account. And with unemployment near historic lows, something like this program can certainly give your company an edge when you are looking to attract the top candidates.

The unnamed company wanted to know that they had relief from the “contingent benefit rule” embedded in ERISA. Under this provision of the 401(k) tax code, employers cannot make other company benefits contingent on an employee making retirement contributions (the notable exception being the matching contribution to the company’s 401(k) plan). So a company cannot say that “if you do not defer 3% of your salary into our 401(k) plan then you will be ineligible for our group health plan.”

The company wanted to amend its plan to allow workers to opt into a student loan repayment program. If the employee could prove that they were paying at least 2% of their salary toward student loan debt, then the company would make a 5% matching contribution into their 401(k) plan, even if the employee was not currently deferring anything into their 401(k) plan. This is certainly a novel idea that seems to benefit only the employees. However, prior to amending their plan to allow for this, the company wanted to make sure that they did not run afoul of the contingent benefit rule so they sought IRS guidance, via a PLR. The IRS concluded that as long as the program was voluntary and that an employee could opt out at any time, the proposed amendment would not violate the contingent benefit prohibition.

Where Do We Go From Here?

A PLR is the equivalent of “don’t try this at home.” A PLR is just that: a ruling that the IRS has published on a very specific set of facts to a specific question raised by one unnamed company. PLRs only apply to the taxpayer requesting the ruling. In a recent client alert, the Groom Law Group (a top ERISA law firm) advised their clients that while the PLR “provides helpful comfort for employers who provide a similar program for employees, it may not be legally relied upon by taxpayers generally.” Companies wishing to implement a similar program could get their own PLR (an expensive proposition) or wait for broader guidance from the IRS (that could be a long wait). Because even though this PLR certainly gives us a window into the IRS’ thinking, and even though such a program only benefits the employees, assuming that your company can just go ahead and implement a similar program would, I feel, be unduly optimistic.

Other questions remain. The cost of the match would undoubtedly go up. Is that OK? Would older employees, who have no student debt, feel the company is unfairly benefiting their younger employees at their expense? What if the plan requires a formal CPA’s audit? Will the auditor issue an opinion on something this unproven without the subject plan having its own PLR?

Any employer moving forward without going the PLR route better have a very high tolerance for risk.

The 2019 Cost Of Living Adjustments (COLAs)

The qualified retirement plan cost of living adjustments for 2019 were recently announced by the IRS.

2018 Qualified Plan Limits 2019 Qualified Plan Limits
401(k)/403(b) Annual Deferral $18,500 $19,000
401(k)/403(b) Annual Catch Up $6,000 $6,000
Annual Defined Contribution Limit $55,000/$61,000* $56,000/$62,000*
Annual Defined Benefit Limit $220,000 $225,000
Highly Compensated Employees $120,000 $125,000
Annual Compensation Limit $275,000 $280,000
Social Security Taxable Wage Base $128,400** $132,900

*With Catch Up

**It was $128,700 – The IRS lowered it to $128,400


By:  David I Gensler, MSPA, MAAA, EA

A recent article in the Wall Street Journal (WSJ) highlighted the fact that many middle-class boomers are financially unprepared for their “golden years” and how this led to social tensions within a specific retirement community. Read More


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



When it comes to growing your retirement nest egg, conventional wisdom calls for us to start early and then to save 10% – 15% of your income. That’s great but for many of us, totally unrealistic. The day to day expenses of the child rearing years, coupled with the need to save for college can cause many of us to not save enough for retirement. A recent article in the Wall Street Journal (WSJ) suggests that all is not lost. By following a certain strategy and sticking to that plan, empty nesters can make up for the years where not enough was set aside for retirement. I do have some questions about their assumptions, but we will get to that later. 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

The Fidelity Bond vs. Fiduciary Insurance – Which one MUST you have?

Clients sometimes get confused between a fidelity bond vs. fiduciary insurance. They are not the same thing. One is mandated, one is not.

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

Has It Really Been Forty Years?

By: David I Gensler, MSPA, MAAA, EA

Madison Pension Services first opened its doors on July 1, 1978. Being an actuary, it is not hard to figure out that July 1, 2018 will represent our fortieth year in business. Forty years is a long time and it has gone by in the blink of an eye. For you millennials and Gen Xers, let’s take a look back at what life was like in 1978. Read More

What People Fear the Most

By: David I Gensler, MSPA, MAAA, EA

When I looked at various top ten lists of what people fear the most, public speaking was invariably number one. Also making the top ten list was a fear of heights, flying, snakes, spiders, zombies and clowns. But I noticed that a new fear had emerged. And as baby boomers age out of the work force, it seemed to be moving up the list rather rapidly (although I doubt that it will ever replace the fear of public speaking as number one). That fear is the very real concern about running out of money in retirement. Read More