primark-benefits

It’s Not Too Late: Employers Can Still Set Up Retirement Plans and Unlock Significant Tax Savings for 2025

Thu, 23 Apr 2026 16:13:32 GMT

Many business owners assume that once tax season passes, the opportunity to reduce last year’s tax bill is gone.

That’s often not the case.

If you filed a tax extension, you still may have time to establish and fund a retirement plan for the prior year and generate meaningful tax deductions .

The Missed Opportunity Many Employers Don’t Realize

Retirement plans are one of the most powerful tax planning tools available to business owners. Plans can allow for substantial deductible contributions, often far exceeding what’s possible through IRAs or basic 401k plans alone. However, many employers assume these plans must be set up by December 31 in order to count toward the prior tax year. In reality, provisions like SECURE and SECURE 2.0 have made the rules more flexible in recent years, especially when a tax extension is involved.

If you filed an extension, you didn’t just delay paperwork: you extended your retirement planning window. For many business entities, including S corporations and partnerships, the extended filing deadline is September 15 .

That matters because retirement plan contributions can generally be made up until the extended tax filing deadline. In many cases, certain plans can also be established during this extended period and still apply to the prior tax year. For calendar-year businesses, this often creates a final funding window that runs through September 15.

Important (and often misunderstood):

Even if you file your extended tax return early (in, say, May), you may still have until September 15 to establish and fund a retirement plan , provided you file an amended return with the new plan details.

This creates a unique opportunity to revisit your tax situation with full clarity, add a retirement plan after the fact, and capture deductions you didn’t plan for during the initial filing.

With rising incomes and evolving tax policy, proactive planning matters more than ever in the current 2025 / 2026 tax years. Filing an extension is no longer just about buying time; it’s about creating space for better decisions. As many advisors now position it, an extension can serve as a strategic pause that allows for more thoughtful tax planning rather than rushed compliance.

For business owners, that often means evaluating whether income was higher than expected, identifying missed deduction opportunities, and implementing a retirement plan that aligns with long-term goals

Additional Flexibility for Sole Proprietors

Under SECURE 2.0, certain sole proprietors have even more flexibility.

If a sole proprietor files a tax extension, they may be able to establish a new 401(k) plan as late as October 15 and still make employee deferral contributions for the prior year.

This creates a unique, last-minute planning opportunity that wasn’t previously available, but proper setup and timing are critical to ensure compliance.

What Types of Plans Still Work After the Deadline?

Not all plans are created equal when it comes to timing. But several options may still be viable after the initial tax deadline, particularly with an extension:

SEP IRA – Often the simplest option, with flexibility on timing
Profit-Sharing Plans – Can allow for significant discretionary contributions
Cash Balance Plans – Ideal for higher-income owners looking for larger deductions

Each comes with specific rules, deadlines, and design considerations, so proper structuring and working with a plan consultant who can help tailor the right plan(s) for you is critical.

The real opportunity isn’t just that these plans can still be implemented—it’s that they can be implemented strategically. When you wait until after April 15, you’re working with finalized (or near-finalized) numbers, which means you can design contributions with precision and avoid guesswork, reducing the risk of over- or under-contributing.

Don’t Let the Window Close

For many businesses, the period between April and September is an overlooked planning window. Once that extended deadline passes, the opportunity to impact the prior year is gone. If you filed an extension, you may still have time—but not much.

Retirement plans are not just compliance tools—they are one of the most effective ways to reduce taxes and build long-term wealth. But timing and design matter.

Working with an experienced plan consultant, such as Primark Benefits, one who understands contribution deadlines, extension rules, and advanced plan design strategies, can help ensure you don’t miss opportunities that are still very much on the table.

Q1 2026 Newsletter

Tue, 14 Apr 2026 16:12:08 GMT

As we move further into 2026, one thing is clear: retirement plan administration continues to get more complex and more important to get right.

This past quarter, we published several articles addressing common (and costly) misconceptions, emerging compliance challenges, and structural issues we’re seeing across plans of all sizes. Below is a quick summary of what you may have missed, along with a few important reminders for the year ahead.

What We're Seeing

Across Retirement Plans:

2026 Compliance Calendar

Beyond tracking dates, effective compliance requires coordination between payroll, plan documents, and regulatory requirements. To help you stay ahead, we’ve put together a 2026 Retirement Plan Compliance Calendar outlining key deadlines throughout the year for calendar-year plans.

2026 Annual Limits Reminder

Updated contribution limits and thresholds are now in effect and may impact both plan administration and participant strategy.

We continually update the Annual Limits page on our website.

We hope you enjoyed our article roundup! If you have ideas for topics you'd like us to cover, our team of experts at Primark Benefits is here to assist you and answer any questions you may have.

Seasonal Workforces and Retirement Plans: What Wineries Need To Know

Tue, 14 Apr 2026 11:06:02 GMT

Due to its seasonal nature, the winery industry operates on a business cycle fundamentally different from most other industries. From harvest and tourism season workforce spikes, to fluctuating tasting room staffing, wineries manage a highly variable employee base throughout the year.

In addition, many wineries operate across multiple business lines—production, distribution, and retail, for example—often structured as separate legal entities.

Aside from the day-to-day operational complexity these factors imply, they also have important and material implications for a winery’s retirement plan(s), primarily from a federal tax perspective. The complexity inherent in the classification of various employee types introduces unique challenges, which we discuss below.

Seasonal Employees and Their Eligibility to Take Part in a Retirement Plan

Many winery workers are hired on a temporary and / or part-time basis during peak seasons. As their payroll providers know all too well, accurately monitoring those workers’ hours of service can get tricky.

That trickiness spills over into determining which employees are eligible to participate in an employer-sponsored retirement plan. If an employee’s hours are not tracked consistently and accumulated correctly, their eligibility determination could be incorrect. In other words, some employees may be deemed ineligible, when they should be included in the plan (or vice versa)

Another common retirement plan compliance risk for wineries involves this calculation of hours for seasonal employees. . Over time, these errors may result in improper exclusion of eligible employees from the retirement plan, which can trigger required corrective contributions and potential compliance violations under IRS and Department of Labor (DOL) rules.

In the event of a retirement plan audit, these eligibility issues are often closely examined, increasing the likelihood of audit findings and associated remediation costs.

Multiple Entities and Their Impact on Compliance

Many wineries operate through multiple related entities, such as a production company, a tasting room or retail location, and a separate distribution business. While this structure can provide operational and even tax advantages, it also raises important considerations about retirement plan compliance.

If there is overlapping ownership across any of these entities, a concept called controlled group rules may apply. Under these rules, employees of all related entities must be considered together, as one single entity, for purposes of retirement plan coverage and nondiscrimination testing.

Failure to properly identify and apply controlled group status can lead to significant compliance issues, including plan testing failures, missed employee eligibility, and required plan contributions. These risks are particularly common when retirement plan administration is handled separately for each entity, without a coordinated compliance strategy.

Documentation and Other Administrative Gaps for Seasonal Workforces

The cyclical nature of winery hiring practices can also create gaps in retirement plan documentation and other administrative processes. Especially during busy hiring periods, key compliance steps—such as distributing eligibility notices, providing enrollment materials, and maintaining accurate employee records—may be overlooked or inconsistently applied.

These documentation gaps can become problematic during an audit or regulatory review, where plan sponsors are expected to demonstrate consistency when it comes to adherence to plan procedures and compliance requirements.

Establishing and executing on standardized onboarding and documentation processes, even during peak seasons, is critical to maintaining retirement plan compliance.

The Bottom Line: Winery Businesses Need To Be Proactive about Their Retirement Plan Administration

Wineries are best served by a retirement plan administration strategy that is specifically designed to address the realities of seasonal employment and multi-entity operations. This includes implementing reliable systems for tracking employee hours, accurately evaluating controlled group status across related entities, and maintaining consistent documentation practices throughout the year.

Given the inherent workforce volatility in the wine industry, proactive compliance oversight is essential. Without it, seemingly routine operational patterns—such as seasonal hiring or entity structuring—can quietly increase retirement plan risk exposure over time.

By aligning retirement plan design and administration to their operational model, wineries can reduce compliance risk, avoid costly corrections, and ensure their retirement plans remain both effective and compliant.

Retirement Plan Design Challenges Facing Architecture and Design Firms

Tue, 14 Apr 2026 11:04:24 GMT

Architecture and design firms face a unique set of retirement plan design challenges that differ significantly from those of other professional services organizations. Unlike firms with stable, predictable compensation structures, these firms often operate with project-based revenue, fluctuating bonuses, and gradual ownership transitions.

Senior leaders typically prioritize maximizing retirement plan contributions, while junior staff compensation may vary widely from year to year. This combination introduces complexity in plan administration and can increase compliance and fiduciary risk if not carefully managed.

Project-Based Bonuses and Nondiscrimination Testing Volatility

One of the most significant challenges is the impact of variable compensation on annual nondiscrimination testing. When compensation includes project completion bonuses, profit-based distributions, or irregular incentives, testing outcomes become highly sensitive to both timing and compensation definitions.

If these compensation elements are not applied consistently, issues can arise quickly. Inconsistent inclusion or exclusion of bonuses may lead to ADP/ACP testing failures, creating unexpected corrective contributions or refunds to highly compensated employees (HCEs).

Proactive testing projections and clearly defined compensation structures are essential to reducing volatility, avoiding additional costs, and maintaining compliance.

Partner Buy-Ins and Ownership Transitions

Ownership transitions are another defining characteristic of architecture and design firms. Many firms regularly admit new partners or implement phased buy-in structures over time. While these transitions support long-term continuity, they can significantly impact retirement plan compliance.

Changes in ownership may affect HCE status, introduce controlled group considerations, and shift contribution allocation strategies. Without coordination between ownership planning and retirement plan design, firms may unintentionally create compliance gaps or inefficient outcomes.

As a best practice, any ownership change should be reviewed alongside retirement plan provisions to avoid regulatory issues and unnecessary costs.

Growth and the Transition to Required Audits

As firms grow, they may exceed 100 eligible plan participants—triggering the ERISA requirement for an independent retirement plan audit. This milestone represents a meaningful shift in administrative complexity.

At the audit stage, documentation and procedural discipline become critical. Auditors closely review how compensation is applied, how eligibility is tracked, the accuracy of testing, and whether plan amendments are adopted on time.

Firms without strong administrative processes in place may face increased scrutiny, higher costs, and potential compliance findings during their first audit.

Proper plan operations and plan design can also help avoid this necessity as long as possible.

The Bottom Line

Architecture and design firms benefit most from retirement plans that are intentionally aligned with their compensation structures and ownership models. This includes accommodating variable income, anticipating ownership changes, and conducting testing projections before year-end.

A a retirement plan isn't just a benefit for your employees. Just as important is working with a retirement plan administrator who understands these nuances. The right partner can help identify risks early, guide plan design decisions, and ensure ongoing compliance—allowing firms to minimize surprises, control costs, and better support both leadership and staff over the long term.

Hidden Risks of Low-Quality Retirement Plan Services – Part I: Complexity and Operational Risk

Fri, 27 Mar 2026 14:28:08 GMT

When evaluating retirement plan service providers, business leaders often evaluate pricing, overlooking the importance of quality, or service levels. Obvious service quality questions may include:

How quickly can we expect a response when we have questions? Will questions be answered accurately the first time? Will the person responding be at all familiar with our particular plan(s), or will it be a general customer service agent?

While these are important considerations in vendor selection decisions in many service industries, there’s an additional layer with retirement plan administration which is a fundamental reality: it is inherently complex. As we explore in the article below, that complexity makes operational errors not just possible, but likely, as proactive oversight is typically not found with low-cost, low-quality retirement plan service providers.

Retirement Plan Administration Is Complex

Employer retirement plans operate at the complex intersection of payroll, nondiscrimination testing, regulatory compliance, participant eligibility, government reporting, and much more. All these elements must align precisely for the plan to function correctly.

Recent legislative changes, such as provisions in the SECURE 2.0 Act, have added new requirements: expanded automatic enrollment rules, updated catch-up contribution limits, and additional reporting obligations for certain employers. Keeping pace with all these constant changes requires careful attention and, more importantly, proactive service, which many delivery models are not designed to provide.

Service models that rely primarily on responding to issues reactively – i.e., after they arise - are not built to manage this level of complexity. When the various service providers for a retirement plan are siloed or rely primarily on reactive support, small discrepancies can persist unnoticed. Conversely, a proactive administration team helps monitor operations continuously, flag potential concerns early, and provide guidance before issues escalate.

A Common Compliance Issue? Operational Errors

Many retirement plan errors are unintentional and operational in nature and frequently reveal the hidden costs of minimal administrative oversight. These errors often go unnoticed until either annual testing, regulatory filings, or audits reveal them.

These operational oversights can quietly develop into costly, time-consuming compliance issues. Whether it’s a failed nondiscrimination test, a late Form 5500 filing, or discrepancies found during a regulatory audit, gaps in administration often surface only after the fact—and correcting them can require retroactive contributions, interest payment adjustments, or formal filings with the IRS or DOL. Even with government correction programs, sponsors face extensive documentation requirements and administrative work. A proactive service approach, however, helps reduce these risks by identifying operational inconsistencies early.

The Importance of Coordinated Service

Many plans involve multiple vendors: recordkeepers, advisors, payroll providers, and plan administrators. While this structure can be effective, it requires clear communication and coordination. When responsibilities are unclear and / or siloed, compliance gaps can develop, because no single party is actively monitoring them.

High-quality service providers take a holistic approach, ensuring that operational processes, plan documents, and compliance requirements all remain aligned. They anticipate potential risks, track regulatory changes, and coordinate with other vendors to prevent issues before they affect the plan or its participants.

Protecting Your Fiduciary Responsibility

Even when day-to-day administration is outsourced, such as to a Third-Party Administrator (TPA), fiduciary responsibility ultimately rests with the plan sponsor. This includes selecting qualified service providers, monitoring plan operations, ensuring regulatory compliance, and acting in participants’ best interests. Evaluating service quality is therefore a governance decision, not just a customer service matter.

Proactive administration ensures that plan sponsors can meet these obligations. Monitoring payroll data and eligibility continuously, conducting early testing projections, and performing periodic plan design reviews all contribute to smoother operations and reduced fiduciary risk.

A Proactive Approach Makes a Difference

Quality service is more than convenience - it’s risk management. In fact, it can directly impact a company’s compliance with federal ERISA regulations and the fiduciary responsibilities plan sponsors carry under those laws – revealing the true costs of a retirement plan.

By partnering with a plan administrator that is proactive versus reactive, plan sponsors gain early insight into operational trends, receive guidance on regulatory changes, and resolve minor issues before they grow into costly problems.

This is what transforms service levels from a convenience into a critical component of risk management.

In Part II, we will explore how these differences in service models translate into long-term financial and operational costs for the plan, the company, and its employees.

How Your Business Entity Type Can Actually Affect Your Retirement Plan

Wed, 04 Mar 2026 16:46:40 GMT

Most business owners focus most of their attention on revenue and growth, thinking about taxes only when necessary. Yet the structure of a business plays a pivotal role in retirement planning, influencing contribution limits, deductions, and long-term outcomes. Understanding the relationship between entity type and retirement planning is critical to maximizing contributions, deductions, and long-term retirement income.

LLC, LLP, S Corp: What Does It All Really Mean?

When we ask business owners to provide their business entity type – i.e., whether they are a partnership, sole proprietorship, or S corporation – many respond, “I’m an LLC” or “I’m an LLP.” While these latter designations do, in fact, describe one’s legal entity under state law, they don’t determine federal tax classification. In fact, an LLP or LLC can be federally taxed in several ways: as a partnership, a sole proprietorship, an S corporation, or even a traditional C corporation.

For retirement planning purposes, a key question is: How is your business taxed federally ? Tax treatment determines how compensation is defined for retirement plans, which directly affects contribution limits and deductions. While nearly every business owner—whether a sole proprietor, partner, or corporate officer—can ultimately contribute a similar percentage of their income, the way those contributions get calculated can differ. Those differences largely stem from how Social Security and self-employment taxes get factored.

The S Corporation “Trap”

Possibly the most common misconception that we encounter is this: Many business owners are advised by their CPAs or accountants to form an S corporation, conceivably to reduce their FICA and self-employment taxes. While it’s true that S corp owners can divide their income classification, namely into salary and distributions, only S-Corp W-2 wages count for retirement plan purposes, not distributions. This can create unintended consequences for retirement planning.

For example, suppose a business owner previously earned $300,000 / year as a sole proprietor. As a potential tax-saving strategy, they form an S corp and begin paying themselves a smaller salary, say $50,000. This allows them to treat the remaining $250,000 as S corporation distributions rather than wages, thereby avoiding both Social Security and Medicare taxes on that portion.

However, this strategy may backfire in both the short- and longer-term. In the short-term, since pension plan contribution limits are calculated based on compensation levels, the lower salary under an S Corp arrangement limits how much you (and your spouse) can contribute to a plan and deduct on your taxes.

Longer, term, you’ll be setting yourself up for lower Social Security benefits at retirement. : A $50,000 salary generates far lower benefits than $300,000 would have.

Why Salary Matters for Retirement Plans

Many high-earning business owners want to maximize contributions for themselves, while also minimizing any costs they incur for employees. Here’s the catch: To be in compliance with ERISA laws, retirement plans must pass annual nondiscrimination tests, which ensure a plan isn’t biased unfairly toward highly-compensated employees. Many people don’t realize that both compensation and age are taken into account when making these calculations.

So, if a business owner’s salary is lower than average staff salaries, it’s difficult to allocate large plan contributions to himself; he’d have to also give disproportionately high contributions to his employees in order to remain in compliance with ERISA. This is because nondiscrimination testing compares contributions as a percentage of plan compensation, not just raw dollar amounts. As a result, a low owner salary essentially caps how much that owner can contribute, unless he is willing to increase contributions for the broader employee group.

Instead, raising the owner’s salary can actually reduce overall employee costs in the plan while allowing the owner to contribute significantly more for retirement, which more than makes up for any additional FICA taxes the owner will owe.

Key Takeaways

Legal entity vs. tax classification: Your LLC or LLP designation as a legal entity is separate from your corp designation for tax treatment. For retirement purposes, what matters is whether you’re taxed as a sole proprietorship, partnership, or corporation.

S corp strategies can backfire: While trying to avoid taxes, low owner salaries both limit current retirement contribution amounts AND reduce future Social Security benefits. Salary drives retirement potential: To optimize defined benefit, cash balance, or profit-sharing plans, owners often need to maintain higher compensation relative to employees.

Nondiscrimination rules matter: Both employee age and compensation affect how contributions can be allocated, impacting retirement benefits for employees and owners.

Net-net: Ultimately, the goal is to balance tax planning with retirement optimization. Sometimes, taking a slightly higher salary today can mean significantly larger retirement benefits tomorrow.

Why Payroll Platforms Weren’t Built to Be Retirement Plan Administrators

Sat, 21 Feb 2026 02:26:30 GMT

For many employers, payroll is the operational backbone of the organization. It touches compensation, taxes, benefits, and reporting—so it’s understandable why retirement plans are often bundled there as well. If payroll providers offer a 401(k) solution, it can feel efficient to keep everything under one roof.

But efficiency in payroll processing is not the same as effectiveness in retirement plan administration.

As retirement plan regulations grow more complex—particularly under SECURE 2.0—many plan sponsors are discovering that payroll platforms simply weren’t designed to handle the interpretive, judgment-based responsibilities required to administer a qualified retirement plan.

Payroll Systems Are Built to Process Data, Not Interpret Rules

Payroll platforms excel at what they were designed to do: calculate wages, withhold deferrals, and transmit payments accurately and consistently. They follow instructions.

Retirement plan administration, however, requires interpretation:

Applying plan-specific compensation definitions
Determining eligibility and entry dates
Monitoring contribution timing under Department of Labor rules
Running and interpreting nondiscrimination and coverage testing
Ensuring operations align with the written plan document

A payroll system can process perfectly accurate data—and still produce a noncompliant outcome if the underlying assumptions are wrong.

This distinction has become more important under SECURE 2.0, which introduced new contribution rules, Roth treatment requirements, eligibility expansions, and automatic enrollment provisions. These changes require coordination, interpretation, and active oversight—none of which payroll platforms were built to provide.

The Illusion of “Seamless” Retirement Plan Administration

Payroll providers often market their retirement plan offerings as seamless. From a user interface perspective, that may be true. But behind the scenes, these arrangements are rarely as simple as they appear.

In many cases, the payroll company is not actually performing core retirement plan functions. Compliance testing, plan design analysis, government filings, and regulatory interpretation are often outsourced to third parties.

The result is a fragmented structure:

Payroll processes the data
Another vendor runs testing
Another prepares filings
No single party owns the full compliance picture

When issues arise, plan sponsors may find themselves caught between vendors, each responsible for a narrow task but none accountable for the outcome. And beyond questions of accountability, there is another consideration that often goes unnoticed: whether the plan itself is designed to accomplish as much as it could.

Because payroll-provider retirement plans are built to scale across thousands of employers, they typically default to standardized, “vanilla” plan designs—safe harbor matches, basic profit-sharing allocations, and limited flexibility around contribution formulas. While this structure may be sufficient for some organizations, it can leave significant strategic value on the table. An experienced third-party administrator (TPA) can design advanced allocation structures —s such as cross-tested profit sharing, integrated cash balance strategies, or carve-out plan design —that align contributions more precisely with ownership and leadership goals while remaining compliant. Payroll platforms generally are not built to model, test, or proactively recommend these higher-level design opportunities.

When Payroll Errors Turn Into Compliance Risk

Retirement plan compliance depends heavily on payroll data, which is why payroll-related errors account for the majority of plan issues. Incorrect deferral amounts, misclassified employees, and improperly excluded participants are common examples.

When payroll and plan administration are tightly bundled without independent oversight, these errors can cascade. A small payroll mistake can quietly flow into:

Incorrect contribution allocations
Failed nondiscrimination tests
Late or incomplete deposits
Operational failures under IRS rules

What makes this risk particularly challenging is timing. These issues often go unnoticed until:

The plan becomes audit-required at 100+ participants
Form 5500 preparation begins
A corporate transaction or restructuring occurs
The IRS or Department of Labor requests information

By then, corrections can be costly. Even minor errors may require corrective contributions, interest, or filings under the IRS Voluntary Correction Program (VCP). SECURE 2.0 has increased penalties for late or incorrect filings, raising the financial and fiduciary stakes for sponsors.

Growth and Audits Expose Structural Weaknesses

Most sponsors don’t encounter problems when the plan is small or static. Issues tend to surface during periods of growth, complexity, or scrutiny.

As organizations add employees, introduce new compensation structures, or cross the audit threshold; retirement plans require more than transactional accuracy—they require governance.

Auditors and regulators don’t just examine whether contributions were made. They examine whether:

The plan was operated according to its document
Eligibility and compensation were applied consistently
Compliance decisions were made deliberately and documented

Payroll platforms were never designed to provide that level of fiduciary oversight.

Why Independent Administration Still Integrates Seamlessly

Importantly, separating payroll from retirement plan administration does not mean sacrificing efficiency.

Independent TPAs and recordkeepers routinely integrate with major payroll platforms, allowing employee data to flow electronically while maintaining independent compliance oversight. Payroll continues to do what it does best, while retirement plan specialists handle:

Plan interpretation
Testing and filings
Regulatory change management
Proactive risk identification

This structure provides clearer accountability, stronger governance, and greater confidence—especially as regulatory complexity continues to increase.

The Bottom Line

Payroll platforms play a critical role in retirement plan operations—but they were never built to serve as retirement plan administrators.

As SECURE 2.0 reshapes compliance expectations and audits become more common for growing plans, sponsors are reevaluating whether convenience alone is enough. For many, the question is no longer whether the plan runs, but whether it would stand up to scrutiny.

Understanding the limits of payroll-based administration is the first step toward building a retirement plan structure that is compliant, defensible, and designed to grow with the organization.

It’s Not Just You: 2026 Feels More Complicated for Retirement Plans, because It IS More Complicated!

Tue, 17 Feb 2026 23:50:59 GMT

If administering a retirement plan feels more complicated than it used to, you’re not imagining it.

The changes taking effect in 2026 are a continuation of several years of phased-in legislation, inflation adjustments, and regulatory guidance, much of it stemming from the SECURE 2.0 Act of 2022. Add in changes that took effect in 2024 and 2025, and the result is a retirement plan environment with more moving parts than many employers and participants are equipped to manage.

Here’s what’s changing, and why 2026 stands out.

How 2026 Is Different

In past years, retirement plan updates had been relatively predictable: contribution limits increased modestly, income thresholds were adjusted based on inflation, and plan sponsors would make routine updates to their plans.

2026 is different because:

Multiple, delayed SECURE 2.0 provisions finally take effect at one time
Contribution strategies, not just amounts, are shifting
Employers are managing overlapping compliance timelines
Participants and employers are navigating new tax rules, particularly for catch-up contributions

In other words, it’s not simply more numbers; it’s also more decision-making. Throughout this article we break down the various ways 2026 is more complicated, and how to make it easier.

Delayed SECURE 2.0 Provisions Are Finally Arriving

One of the biggest reasons 2026 feels more complex is that it represents a turning point for SECURE 2.0. While the law passed in late 2022, many of its most impactful provisions were intentionally delayed to give employers, recordkeepers, and payroll providers time to prepare.

Now, that runway has ended.

In 2026, plan sponsors are no longer just planning for SECURE 2.0—they’re having to actively administer to it. That means moving from theoretical discussions to real operational changes and challenges, including with plan amendments, payroll coordination, and participant communication. For many employers, this is the first year that multiple SECURE 2.0 changes intersect at once, rather than being addressed one at a time.

Contribution Strategies Are Changing—Not Just the Limits

Every year has historically brought new retirement plan contribution limits; most employers are accustomed to that rhythm. What’s different in 2026 is that the strategy around contributions is becoming a key part of the discussion, along with the typical changes to contribution amounts.

New rules around catch-up contributions and evolving eligibility thresholds are forcing employers and participants to think differently about how compensation strategies and savings are structured. For higher earners in particular, maximizing retirement savings may now involve additional coordination with their payroll providers and tax advisors, rather than making a simple increase to their deferrals.

Beginning January 1, 2026, Mandatory Roth Catch-Up Contributions take effect. That means that participants age 50+ who earned more than $150,000 in the prior year (2025) must make catch-up contributions on a Roth (after-tax) basis versus via a traditional, pre-tax basis, which are no longer permitted for these higher-earning participants.

This is a fundamental change in the way many individuals have approached retirement savings later in their careers, which has several implications:

Participants may see higher current-year taxes
Long-term tax planning assumptions may need to be revisited
Employers must ensure their payroll providers are operationally capable of handling Roth catch-ups. Some examples include tracking who falls into this category and having policies and procedures in place for these new rules.

For some savers, taking advantage of the mandatory Roth catch-ups will be straightforward and beneficial. For others, it may require rethinking cash flow and tax strategies. This shift can feel uncomfortable, especially for participants who have relied on the same savings approach for years. And for employers, it raises a new challenge: explaining why someone’s contribution experience may look different, even if their income hasn’t changed dramatically.

More Rules Mean More Decisions

Taken together, these changes explain why 2026 feels heavier than prior years. It’s not just that there are more rules—it’s that those rules require more judgment.

Employers are making decisions about possibly changing plan design, enhancing payroll processes, and expanding communication strategies. Participants are making decisions about how and where to save, often with new tax implications in mind. Advisors and administrators are helping bridge the gap between regulation and real-world impact.

The good news is that complexity doesn’t have to mean chaos. With the right planning, clear communication, and coordinated support, 2026 can be managed thoughtfully—and even used as an opportunity to improve plan outcomes. The addition of an experienced and conscientious TPA (Third Party Administrator) can help to bring order to the regulatory chaos.

For now, take a look at the Employer Checklist we put together to help Plan Sponsors see the changes ahead and make sense of them.

If you have questions about how these updates apply specifically to your plan, or would like a proactive review, our team is here and ready to support you.

Why Do So Many Non-profits Have the Wrong Type of Retirement Plan?

Mon, 05 Jan 2026 02:18:43 GMT

There are an estimated two million non-profit organizations in the U.S. This includes public charities, private foundations, and other types of organizations, such as schools and religious institutions. These entities operate under different tax laws and structures than for-profit companies do.

Because non-profit employees tend to receive lower salaries than their for-profit counterparts, non-profit organizations often try to provide enhanced employee benefit packages. The 403(b) plan was created in 1958 as one way to enable employees of non-profits to more effectively save.

Despite the fact that it has been around for almost 70 years, the 403(b) plan goes largely unnoticed by many financial professionals, who are often unaware of the many advantages for non-profit organizations. Payroll companies, for example, and bundled retirement plan providers often stick to and recommend what they’re most comfortable with, which is the ubiquitous 401(k).

This is why many non-profits end up providing a 401(k) plan to their employees. But just because a plan is “convenient” or “familiar” for the retirement plan provider doesn’t mean it’s the right fit for the organizations who use them or the individuals they employ.

What Gets Missed When a Non-profit Is Placed into a 401(k)

For retirement plan providers managing thousands of client plans, offering a single type of plan, such as a 401(k), is efficient for the provider. However, that one-size-fits-all approach causes clients to miss out on the flexibility and advantages a 403(b) plan is designed to provide.

Non-profits have unique considerations, such as budget limits, workforce turnover, leadership compensation, and programmatic priorities. 403(b) plans are specifically designed for non-profits and offer significant advantages and options not in a 401k) plan.

Even if a 401(k) works operationally, it can leave non-profits without the full range of advantages specifically designed for them, with real financial consequences for both employers and employees. Some of the key benefits often overlooked include:

1. Fewer Tests Required
401(k) plans are subject to nondiscrimination tests, such as the Actual Deferral Percentage (ADP) test. When a plan fails any of these tests, employers need to take corrective actions, sometimes including refunding their employees’ retirement plan contributions. This is often a time-consuming, frustrating process, especially for employees who were planning to avail themselves of the tax advantages inherent in making plan contributions.

Because 403(b) plans are regulated differently than 401(k) plans, they don’t require ADP tests. This allows non-profit employees to contribute up to the annual limit without triggering corrective actions.

2. Not Subject to Top-Heavy Rules

When an organization has a 401(k) and their officers hold more than 60% of the plan’s assets, the plan becomes what’s called “top heavy”. This designation may require an employer to make contributions for additional employees in order to no longer test as top heavy.

On the other hand, 403(b) plans are not subject to top-heavy rules, reducing potential compliance surprises for smaller nonprofits.

3. Enhanced Catch-Up Opportunities

Since many non-profit leaders earn less than they could in the private sector, saving for retirement can be more challenging. In recognition of that, certain 403(b) plans allow for special catch-up contributions that are unavailable in 401(k)s.

4. Penalties Often Do Not Apply

For a variety of reasons, late payroll deposits are a common occurrence for many organizations, both for- and non-profit. In a 401(k), they usually trigger excise taxes and IRS filings.

Though non-profits that sponsor 403(b) plans do not pay excise taxes, some providers still apply the same correction process, either out of habit or lack of knowledge, therefore charging their clients needless fees that do not apply to them.

Starting With the Right Question

What this all boils down to is that choosing a retirement plan should not start with what is easiest to administer - it should start by asking, “Who is the employer?”.

For non-profits, this means considering tax-exempt status, compensation realities, and the needs of mission-driven staff. When that conversation happens first, 403(b) plans often emerge as a better fit.

If your non-profit ended up with a 401(k), it may be time to reexamine. 403(b)s exist for a reason: they offer flexibility and advantages designed specifically for non-profit organizations.

Q4 2025 Newsletter

Wed, 31 Dec 2025 16:17:17 GMT

As we wrapped up 2025, one theme came through clearly: small oversights in retirement plans can quickly turn into costly problems—but with the right awareness, they’re often avoidable.

In Q4, we focused on the real-world issues plan sponsors are facing today, from understanding updated 2026 contribution limits to navigating new rules like Roth catch-up requirements for higher earners. We also continued our How to “Break” a Retirement Plan series, highlighting the operational and compliance missteps the IRS most commonly finds—and how seemingly minor errors can escalate if left unchecked.

At the same time, we challenged a few persistent misconceptions. From the limitations of state-run retirement programs to the risks of relying on “one-size-fits-all” solutions, these articles reinforce an important idea: retirement plans are more nuanced than they often appear, and thoughtful design and administration matter more than ever.

Below is a quick recap of what we covered—and what it means for you and your clients heading into 2026.

What We're Seeing

Across Retirement Plans:

2026 Compliance Calendar

2026 Annual Limits Reminder

Updated contribution limits and thresholds are now in effect and may impact both plan administration and participant strategy. We continually update the Annual Limits page on our website.

We hope you enjoyed our article roundup! If you have ideas for topics you'd like us to cover, our team of experts at Primark Benefits is here to assist you and answer any questions you may have.

2026 Retirement Plan Limits

Mon, 24 Nov 2025 05:27:17 GMT

As we approach the end of the year, it’s time for employers, plan sponsors, and participants to review the new retirement plan limits for 2026. Each year, the IRS updates the thresholds for contributions, compensation, and catch-up amounts to account for inflation and statutory changes. Staying on top of these numbers is critical for plan compliance, participant communications, and overall retirement strategy.

We’ve updated our Annual Plan Limits page to reflect the 2026 figures, providing a central location for referencing the most current limits for 401(k), 403(b), 457, IRA, defined contribution, and defined benefit plans.

Here are some of the key 2026 updates:

401(k), 403(b), and 457 Plan Elective Deferrals: Increased to $24,500 .
Catch-Up Contributions (Age 50+): Increased to $8,000 , while the “super” catch-up for ages 60–63 remains at $11,250 .
Mandatory Roth Catch-Up Income Threshold: Applies if prior-year FICA wages exceed $150,000 (up from $145,000)
IRA Contribution Limits: Increased to $7,500 , with the catch-up contribution now $1,100 .
Defined Contribution Plan Limit: Increased to $72,000 .
Defined Benefit Plan Maximum Annual Benefit: Increased to $290,000 .
Compensation Limits: The annual compensation limit rises to $360,000 .
Top-Heavy and Key Employee Thresholds: Officer limit increases to $235,000 , while 1% owner remains at $150,000 .
Social Security Taxable Wage Base: Rises to $184,500 .

Ensuring your plans are updated to reflect the new limits helps avoid compliance issues and keeps your employees on track for retirement.

For a full, detailed list of the 2026 and 2025 limits side-by-side, visit our updated Annual Plan Limits page .

Tip for Employers:
Even minor changes in contribution limits or compensation thresholds can affect plan design, testing, and allocations. Consider reviewing your plan documents and participant notices to ensure they reflect the 2026 limits.

At Primark Benefits, we’re committed to keeping you informed and helping you manage your retirement plans efficiently. Check out the updated limits today and make sure your plans are ready for 2026.

The Roth Catch-Up Trap

Thu, 06 Nov 2025 14:52:08 GMT

The Roth Catch-Up Trap: What High Earners Need to Know

New rules can create costly surprises for older employees.

The SECURE 2.0 Act brought sweeping changes to retirement plan rules, and one of the most confusing is the new Roth catch-up requirement for high earners. We previously published a blog post detailing new requirements for employ ers . (To read that, click here .)

If you made more than $145,000 in FICA wages last year, any catch-up contributions (i.e., the additional amount those age 50+ can contribute) must now go into a Roth account using after-tax dollars, instead of going into their “traditional” account using pre-tax dollars.

It sounds simple enough, but the new rule can create unexpected tax consequences, especially for employees nearing retirement. This is why we at Primark Benefits are calling it the Roth catch-up “trap.” In this blog article we are outlining some of the common pitfalls we see ensnaring well-meaning participants as this new rule takes effect.

The Five-Year Rule

One of the biggest surprises for participants using the Roth catch-up is the Five-Year Rule. Simply put, in order to take tax-freewithdrawals from a Roth account, the account must have been open for at least five prior tax years .

Timing matters: For example, if you start Roth catch-up contributions at age 63 and retire at 65, you won’t meet the five-year requirement. Any earnings on those contributions could be subject to ordinary income taxes when withdrawn.
Rollovers reset the clock: Even if you already have a Roth 401(k) or 403(b), rolling funds into a new Roth IRA restarts the five-year timeline. That means a strategic rollover intended to consolidate accounts could unintentionally trigger taxable earnings if you withdraw too soon.
Earnings vs. contributions: Keep in mind that the rule applies to earnings , not the contributions themselves. Your contributions can always be withdrawn tax-free, but any growth or investment gains could be taxable if the five-year rule isn’t met.

Roth contributions can be powerful, but starting late in your career or rolling into a new account without planning can create unexpected tax exposure. Reviewing timing and account strategy with your CPA or plan advisor can help avoid the “trap” and maximize the tax benefits of Roth contributions.

Timing and account history matter, especially for employees close to retirement.

Higher Taxable Income

Because Roth contributions are made with after-tax dollars versus pre-tax, they increase one’s adjusted gross income (AGI) for the year. This can have several unintended consequences for high earners:

Medicare premiums: Medicare uses a two-year income lookback to calculate Part B and Part D premiums. A spike in AGI from Roth catch-up contributions or conversions could push you into a higher premium tier, potentially adding thousands of dollars to your healthcare costs.
Tax bracket impact: A higher AGI may move you into a higher federal or state tax bracket, increasing the overall taxes you owe for the year.
Loss of other tax benefits: Certain deductions, credits, and phaseouts are tied to AGI. For example, you might see reduced itemized deductions, limits on the student loan interest deduction, or restrictions on other retirement-related credits.

Even well-planned Roth contributions can create a ripple effect if the timing and total contribution amounts aren’t carefully considered. That’s why it’s important to review your full tax picture before making large Roth catch-up contributions, especially in your final years of employment.

Underpayment Penalties

Another potential pitfall comes from late-year Roth catch-up contributions or conversions, which can trigger IRS underpayment penalties. Here’s why:

The IRS expects taxpayers to pay taxes on income as it’s earned. Large, unexpected Roth contributions can increase your tax liability mid-year.
If your estimated tax payments or withholding haven’t been adjusted accordingly, the IRS may assess penalties for underpayment, even if you pay the full amount when you file.

To avoid surprises, your CPA may need to file Form 2210, which explains the timing of your payments and can prevent unnecessary penalties. This step is often missed by both taxpayers and software programs, leaving some participants unexpectedly on the hook for interest or penalties.

Coordinating Roth contributions with your CPA or tax advisor is essential, especially for last-minute contributions at the end of the year. Proactive planning can help you capture the benefits of Roth contributions without creating unexpected costs.

Bottom Line:

Roth contributions can be powerful, but timing matters. For employees close to retirement, the “Roth catch-up” rule can create short-term tax pain with little long-term benefit. Here are some ways to protect yourself from being ensnared in the Roth Catch-Up “Trap”:

If eligible, consider opening a Roth IRA now. Even a small contribution starts the five-year clock. Use the ‘backdoor’ funding strategy if necessary.’Coordinate with your CPA to review income impacts and avoid surprises.
Evaluate timing. For some high earners, pre-tax deferrals may still deliver greater overall tax efficiency.
The team at Primark Benefits is here to help you and your advisors model both pre-tax and Roth strategies to optimize contributions before year-end.

How to “Break” a Retirement Plan, Part III: What the IRS Finds Most Often

Thu, 23 Oct 2025 01:34:35 GMT

Welcome back to our series, How to “Break” a Retirement Plan” In Part I , we examined structural mistakes—the foundational missteps in plan design, contribution handling, and payroll processes that can quietly set a plan on the wrong path. Part II focused on operational blind spots, showing how day-to-day execution errors, from auto-enrollment missteps to mishandling former employees’ accounts, can derail even a well-designed plan.

Now, in Part III, we turn our attention to what happens when the IRS takes a closer look. When a retirement plan is audited, the IRS isn’t searching for obscure loopholes; it’s looking for a familiar set of recurring problems. These are the same types of errors that often start small but can grow into significant compliance issues. Understanding where auditors tend to focus can help plan sponsors stay ahead of “issues” before they become “findings”.

Out-of-Date Plan Documents

A plan document is only as good as its most recent update. To comply with the law, plan rules must reflect current tax legislation, which means updating documents at least every six years and making interim amendments for major changes. Using outdated plan language can create inconsistencies between how the plan is written and how it operates, a classic compliance misstep.

Tip : Maintain a tracking calendar for required restatements and amendments, and work with your TPA or document provider to ensure all updates are executed and signed on time.

Mis-defining Compensation

All contributions — whether profit-sharing allocations, match formulas, or employee deferrals — must align with the plan’s official definition of compensation. Including the wrong types of pay, or leaving out eligible earnings, leads to incorrect contributions and compliance test failures.

This issue often stems from payroll coding errors or incomplete system integration. It underscores the importance of tight coordination among HR, payroll, and plan administration; better yet, implement direct payroll integration with your recordkeeper or TPA to reduce manual errors.

Eligibility Mistakes

Though determining eligibility may seem straightforward, errors are surprisingly common. Missing an employee who should be enrolled - or allowing someone to participate too early - can cause failed compliance tests and trigger required corrections.

Poorly-defined eligibility rules create structural risk, but that is just half of the story: Even well-written rules fail if they aren’t applied consistently. Sponsors should ensure systems are accurately tracking hours, hire dates, and service history, especially for long-term part-time (LTPT) employees, a new area of regulatory focus.

Loan Failures

Retirement plan loans are a popular feature, and they come with strict IRS rules regarding borrowing limits, repayment schedules, and cure periods for missed payments. Common violations include failing to withhold repayments through payroll or exceeding the maximum loan balance.

Even a plan that is structurally sound and operationally disciplined can face compliance trouble if loan administration isn’t monitored carefully. Regular audits of loan activity and close coordination with payroll are critical to avoid costly reclassifications or taxable distributions.

Impermissible In-Service Withdrawals

Withdrawals taken before a participant reaches the allowable age or without meeting other plan-specific criteria can jeopardize a plan’s qualified status. Like hardship withdrawals, these distributions require strict adherence to plan rules and full documentation to prove eligibility.

A single unauthorized distribution can trigger cascading correction requirements, so maintaining clear approval processes and documented authorization is key.

Required Minimum Distribution (RMD) Failures

Participants who reach the required age for RMDs must receive payments on time. Missing or miscalculating an RMD isn’t a small clerical mistake; it’s a violation that can create significant tax penalties for participants and compliance issues for the plan.

This is another area that highlights the importance of ongoing operational vigilance. Automated tracking systems and annual participant data reviews can help ensure RMDs are processed accurately and on schedule.

Failed Non-Discrimination Test Corrections

Plans must ensure contributions do not disproportionately favor highly compensated employees (HCEs). When a plan fails an ADP or ACP test, corrections must be made promptly, either through refunds to HCEs or additional contributions for non-HCEs.

These failures often reflect a disconnect between plan design and workforce demographics, illustrating the interplay between structure and execution. Proactive midyear testing and plan design reviews can prevent last-minute surprises.

Top-Heavy Contribution Failures

When a plan’s assets are concentrated among “key” employees, the law requires minimum contributions to other participants in order to maintain fairness. Failing to meet this requirement is a major compliance red flag and often stems from misaligned plan design or misapplied calculations, themes we’ve explored throughout this series.

Regular top-heavy testing and ongoing contribution monitoring help ensure the plan remains balanced and compliant.

Excess Annual Contributions

Plans must monitor total contributions to ensure participants don’t exceed IRS limits for overall annual additions. Overfunding accounts may seem like a “good problem to have,” but it can result in costly corrections and participant tax complications.

This again underscores the importance of close coordination among payroll, HR, and plan administrators to verify contribution limits are respected and adjusted as needed.

The Bottom Line: Lessons from IRS Audits

Across Parts I and II, we’ve seen how structural missteps and operational blind spots can quietly set a plan on the path toward trouble. Part III shows that when the IRS audits a plan, it’s usually these same issues — document errors, eligibility oversights, and compensation miscalculations — that surface again and again.

The good news: most of these problems are entirely preventable, and easily repairable if caught early. Awareness, routine compliance reviews, and strong communication between your payroll team, HR department, and third-party administrator can keep your plan running smoothly and audit-ready.

A retirement plan is only as strong as its foundation, its daily operations, and its ongoing oversight. By learning from the patterns the IRS most frequently identifies, plan sponsors can protect participants, avoid penalties, and keep their plans far from “broken.”

Q3 2025 Newsletter

Tue, 07 Oct 2025 18:50:35 GMT

At Primark Benefits, we’re committed to helping employers and advisors navigate the complexities of retirement plans with clarity and confidence. This quarter, we’ve published a range of new articles designed to inform, debunk misconceptions, and highlight opportunities—especially those that can still make a difference for this year. Next quarter, we'll be continuing our new How to "Break" a Retirement Plan Series and discussing other timely and important topics.

Here's What You Need to Know

How to "Break" a Retirement Plan: Part II

Tue, 07 Oct 2025 18:45:13 GMT

Operational blind spots that often (or can) trip up plan sponsors

Welcome back to our series, How to "Break" a Retirement Plan." In Part I , we explored the structural missteps that often set a plan on the wrong path from day one, such as choosing the wrong type of plan, mishandling contributions, and payroll errors. While getting the foundation right is critical, even the strongest plan can unravel if daily operations aren’t tightly managed. The rules are strict, and mistakes (no matter how seemingly small, or well-intentioned!) can trigger costly corrections or even regulatory scrutiny.

Below are some of the most common operational missteps that can silently “break” a retirement plan from the inside out:

Errors with Auto-Enrollment and / or Auto-Escalation

Automatic features have been proven to be among the most effective tools for helping employees save. However, they also introduce potential points of failure. Forgetting to enroll an eligible employee, applying an incorrect deferral percentage, or failing to escalate contributions on schedule can all set off a chain of compliance issues that must be fixed with corrective contributions.

For example, a company that automatically enrolls new employees into their plan, and applies automatic annual escalation, might run into problems if a data sync issue exists between payroll and the recordkeeper, preventing a new hire’s deferral from being applied for during her first several pay periods.

The mistake could go unnoticed, often until the employee reviews their first quarterly statement. At that point the employer must make a missed deferral contribution (typically 50% of the amount that should have been deferred), plus any missed matching contributions and earnings. If the same issue occurs for several employees, costs can add up quickly.

Because these features are often managed by payroll, recordkeeping, and HR teams simultaneously, even a small communication gap can lead to significant compliance headaches. Regular reconciliations and clear accountability are your best defenses. A missed data feed, outdated eligibility file, or timing mismatch between payroll and the recordkeeper can quickly lead to missed deferrals, incorrect matches, or late deposits, all of which require correction under IRS and DOL rules.

The best safeguard is tight payroll integration. When your payroll system communicates seamlessly with your recordkeeper and third-party administrator, automatic features work as intended—eligibility is tracked accurately, deferrals are processed on time, and escalations happen automatically. Integrated systems dramatically reduce manual touchpoints and the potential for human error.

Mishandling Forfeitures

When an employee leaves a job before their retirement account is fully vested, the unvested portion of their balance becomes what’s known as a forfeiture. These amounts typically arise in plans with employer matching or profit-sharing contributions that vest over time; one example is 20% vesting per year over five years. If an employee terminates employment before reaching full vesting, the unvested funds revert to the plan as a forfeiture, rather than being paid out to the participant.

By law, those forfeitures can’t just sit in limbo. The plan document specifies exactly how and when they must be used; typical examples include reducing future employer contributions, paying allowable plan expenses, or getting reallocated among active participants.

The IRS generally expects forfeitures to be used or allocated no later than the end of the plan year following the year in which they arise. Letting forfeitures accumulate over multiple years, or using them inconsistently with the plan’s stated terms, can lead to an operational failure that requires correction under the IRS’s Employee Plans Compliance Resolution System (EPCRS).

Mishandling forfeitures may seem like a small administrative oversight, but it can flag you for audit and create unnecessary administrative work. A clear forfeiture policy, regular monitoring, and reconciliation during annual plan reviews can keep your plan compliant and avoid costly fixes.

Ignoring the Plan Document

The importance of the plan document is often understated. As the legal backbone of the plan,it dictates eligibility, contributions, distributions, and more. One of the most common operational errors is, surprisingly enough, a simple failure to read and follow it. When actual operations diverge from what’s written - perhaps payroll is applying eligibility rules inconsistently, for example, or HR is approving hardship withdrawals without verifying the criteria described in the document - the plan becomes out of compliance, and corrective filings under the IRS’s Employee Plans Compliance Resolution System (EPCRS) may be necessary. Treat the plan document as your operational GPS. If you don’t follow it, you’ll eventually end up lost.

Missing Long-Term, Part-Time Employees

Recent legislation requires certain long-term, part-time (LTPT) employees to participate in retirement plans. Plans that fail to track and enroll these workers risk noncompliance and potential penalties. The challenge often lies in tracking accurate service and hours data, the information used to determine whether and when an employee becomes eligible to participate, after a certain number of hours worked and / or years served.

Employees who remain part-time over long periods of time may work just enough hours each year to meet eligibility thresholds, but those hours can be spread unevenly across weeks, months, or plan years. Many payroll and HR systems weren’t built to monitor multi-year service histories across fluctuating schedules or apply eligibility rules that depend on both tenure and hours worked.

Sponsors need to work closely with their payroll providers and plan administrators to ensure these employees aren’t slipping through the cracks. Integrating payroll and recordkeeping systems can help capture and track hours accurately, reducing the risk of overlooking LTPT employees. This is one area where “we didn’t know” won’t hold up with regulators.

Hardship Withdrawals Lacking Proper Proof

A hardship withdrawal is a permanent withdrawal of funds from a participant’s retirement account that’s allowed only in cases of an immediate and heavy financial need. While hardship withdrawals can provide important financial relief to participants, they must be handled correctly. The IRS provides a specific list of reasons that qualify, including expenses for medical care, the purchase of a primary residence, tuition and education fees, the prevention of foreclosure or eviction, funeral expenses, and certain casualty losses.

When an employee requests a hardship withdrawal, the sponsor must first obtain - and then retain - documentation proving that the participant’s request meets IRS guidelines.

This is an area where “good faith” isn’t enough, relying on verbal confirmations or incomplete paperwork can put the plan out of compliance and draw IRS scrutiny. Make sure every hardship withdrawal is fully documented and audit-ready.

Losing Track of Former Employees

Plan Sponsors are required to maintain contact with former employees who still have account balances. Losing touch with “missing” participants isn’t just inconvenient, it’s a fiduciary issue. The Department of Labor expects plan sponsors to make diligent efforts to locate them, including using certified mail, email, or database searches. Failing to do so can delay distributions, increase administrative costs, and invite DOL scrutiny. Keep contact information current and use periodic outreach campaigns to minimize the risk of missing participants.

The Bottom Line: Keep Your Finger on the Pulse

While Part I of this article series focused on structural foundations, this installation is meant to emphasize the importance of ongoing operational diligence. Plan operations require constant attention and clear communication between payroll, HR, and the plan’s third-party administrator. Most operational errors can be prevented—or quickly corrected—if identified early.

A well-run retirement plan isn’t just about design—it’s about execution, accountability, and attention to detail. By keeping a close eye on daily operations, performing regular compliance checkups, and partnering with experienced plan professionals, you can ensure your plan stays healthy, compliant, and far from “broken.”

Retirement Plan Myth-Busting, Part IV: State-Run Retirement Plans

Wed, 17 Sep 2025 16:31:51 GMT

Retirement plans can often feel like an alphabet soup of acronyms, mandates, and evolving state and federal laws. This series seeks to dispel common myths so employers can make better informed decisions.

In previous articles, we’ve covered multiple myths at once. However, in Part IV, we’ll focus our efforts on one big misconception. Specifically, we’ll be talking about the idea that cookie-cutter, state-run programs such as CalSavers are “just as good” as custom-designed retirement plans, and the misunderstandings that persist about what state-run retirement programs do (and don’t) offer. 

Myth: State-Run Retirement Plans Are Just as Good as Custom-Designed Retirement Plans

Many states have created mandates for employers to either participate in a state-run program (auto-IRAs, state-facilitated Roth IRAs, etc.) or adopt a qualified retirement plan. While the state-run programs help fill coverage gaps, they carry many limitations compared to well-designed, employer-sponsored plans. 

Custom-designed retirement plans, by contrast, allow flexibility, higher contribution limits, tax benefits, and the ability to align benefits with business strategy. 

The Benefits of Custom-Designed Retirement Plans

Custom-designed retirement plans give employers control over plan design, contributions, and investment options in ways that state-run programs simply cannot match. For example, unlike most state-run programs, an employer can decide to offer employer contributions, including: matching contributions, profit-sharing arrangements or even integrate cash balance plan into the mix if they are looking for higher contributions than a standard profit sharing plan can allow. This flexibility allows a business to turn retirement benefits into powerful recruiting and retention tools, not simply serve as a compliance exercise.

In addition, custom-designed plans provide higher contribution limits and more tax planning opportunities. Whereas state-run IRAs are usually capped at standard Roth IRA contribution limits, qualified retirement plans allow much larger contributions -- up to tens (or even hundreds) of thousands of dollars more per participant each year. Employers can also deduct contributions, thus reducing taxable income while helping employees save more effectively for the future. 

Custom-designed retirement plans deliver value on both sides of the equation. Employees gain access to meaningful benefits that support their long-term financial security, while employers strengthen their business through improved retention, engagement, and competitiveness. The following sections highlight the advantages from each perspective:

Benefits for Employees

A custom-designed retirement plan can be tailored to the unique demographics and priorities of a workforce. Younger employees may value features like automatic enrollment and target-date funds, while more experienced staff might prefer broader investment choices or higher employer contributions. Unlike cookie-cutter, state-run options, a custom plan reflects the company’s culture and strategy, resulting in a more meaningful and engaging benefit. With options such as matching contributions, diverse investment menus, and flexible plan design, employees view the plan as more than just another paycheck deduction. The result is improved participation, stronger financial wellness, better retention, and a competitive edge in attracting top talent.

Benefits for Employers

Custom-designed plans give business owners powerful tools for tax planning, wealth accumulation, and succession strategies. Employers can set contribution formulas, profit-sharing options, and even implement cash balance features that allow higher contributions for owners or key employees. These features not only reduce taxable income but can also accelerate retirement savings for owners and executives. Additionally, a tailored plan can align with long-term business objectives, helping owners plan for eventual sale, transfer, or exit while maximizing the financial benefit for themselves and their team. 

Final Thoughts

While state-run retirement programs, such as CalSavers, are important for expanding access to savings, they’re not a substitute for the flexibility and benefits a custom-designed retirement plan can offer.

Employers don’t have to settle for default, one-size-fits-all solutions. With the right guidance, you can create a plan that meets compliance requirements, fits your business needs, and delivers meaningful value to your employees. 

How to "Break" a Retirement Plan: Part I

Fri, 29 Aug 2025 16:20:06 GMT

Welcome to our new series, How to “Break” a Retirement Plan, where we discuss what leads to a retirement plan being categorized as “broken,” ways to fix broken plans, and compliance tips for how to avoid a broken plan in the first place.

Some retirement plans fail in dramatic fashion. Others fail quietly, over years, until one day the sponsor realizes they’re in deep trouble. In many cases, the issues begin with the foundations of the plan itself: the type of plan chosen, how contributions are handled, the payroll processes that support it. If these building blocks aren’t set up correctly from the start, problems can accumulate until they become costly, or even unfixable.

Here are some of the most common structural missteps that can put your plan on the wrong track from day one:

Selecting (or choosing) the Wrong Type of Plan

There are more than 20 different types of retirement plans available, including 401(k) and profit-sharing plans to defined benefit and cash balance plans. While all of them can be powerful tools, they’re not one-size-fits-all, no matter what some big providers would have you believe.

If a business selects the wrong type of plan - say, a traditional 401(k) when a cash balance plan would have better matched the owner’s savings goals - it can create participation challenges, unnecessary costs, or compliance problems down the road. For example, a business with high employee turnover may struggle to meet nondiscrimination requirements in a 401(k), while a plan design that ignores owner-only goals could limit tax savings opportunities.

The takeaway: plan selection should be a strategic decision, not just a box to check.

Uncashed Distribution Checks

When participants leave an employer and request distributions, the plan issues them checks. Sometimes, those checks never get cashed. It may seem like a small nuisance, but uncashed checks create major headaches for the employer:

They leave unresolved participant balances on the books.
They increase administrative burden each year as the plan must track and reissue payments.
They expose the plan sponsor to fiduciary risk if a participant claims they never received their money.

The Department of Labor has made clear that plan fiduciaries are responsible for locating missing participants and ensuring they receive their benefits. Simply letting checks pile up is not an option.

Late Deposit of Employee Contributions

Employee salary deferrals must be deposited into the plan as soon as they can reasonably be segregated from the employer’s assets. For large employers, this is often the same day as payroll . For smaller employers with fewer than 100 participants, the Department of Labor offers a safe harbor of seven business days .

Late deposits, even if unintentional, are considered prohibited transactions. Prohibited transactions are subject to correction, excise taxes, and IRS/DOL scrutiny. Repeated lateness can even trigger an audit.

This is one of the most common ways otherwise healthy retirement plans get flagged for compliance issues. Employers need strong internal processes to ensure contributions are deposited promptly, every time.

Payroll Errors

Payroll is the engine that drives a retirement plan and is accountable for 90% of plan issues. Even small errors here can ripple out into major compliance failures. Examples include:

Failing to apply the correct match formula.
Deducting Roth contributions but depositing them as pre-tax.
Leaving out certain forms of compensation (e.g., bonuses or overtime) when calculating contributions.
Missing deferrals for new hires or rehired employees.
Misclassifying employees as independent contractors

These mistakes don’t just affect one person’s account balance: they can cause the plan to fail nondiscrimination testing or create an operational error that requires costly corrections. Since payroll is often outsourced, miscommunication between payroll providers and plan administrators is a frequent root cause.

The Bottom Line: Build the Right Foundation from the Start

Many retirement plan problems can be traced back to structural missteps such as plan design, contribution handling, and payroll processes. On the surface, these may seem like “back-office” details, but they form the bedrock of a compliant and effective plan.

If you get these basics right from the start, your plan is far more likely to run smoothly for years to come. If you don’t, even the best investment lineup or participant education program won’t save you from costly corrections and potential regulatory trouble.

The good news? With proper guidance from experienced plan administrators, these risks can be identified and resolved early, before they snowball into something unmanageable. Everyone makes mistakes, and the government actually wants you to fix them. Experienced TPAs and ERISA attorneys can guide you through the correction process, typically at a much lower cost than if the government uncovers the mistake on its own.

What You Need to Know About SECURE 2.0 Catch-Up Contribution Changes

Fri, 15 Aug 2025 18:34:32 GMT

Updated December 31, 2025

Retirement plan catch-up contributions allow “older” workers—typically those age 50 and over— to set aside additional funds in their retirement accounts beyond standard annual limits. These extra contributions are an important planning tool for those nearing retirement who want to make up for earlier gaps in saving. Up

The SECURE 2.0 Act, passed in late 2022, made several significant changes to how catch-up contributions work, especially for high earners. While some provisions offer expanded savings opportunities, others introduce new requirements that will impact both employees and employers beginning in 2026. These changes include:

Roth Catch-Up Requirement (Effective 2026)

Originally scheduled to take effect in 2024, the Roth catch-up requirement was delayed to 2026 following concerns about implementation challenges. The IRS formalized this delay through Notice 2023-62 , giving employers and service providers more time to prepare. Starting January 1, 2026, catch-up contributions for certain high earners must be made on a Roth basis —meaning that contributions will be after-tax, as opposed to pre-tax, and qualified withdrawals in retirement will be tax-free, as follows:

Employees who earned more than $150,000 (this figure will change each year, indexed with inflation) in FICA wages from their employer in the prior year will be required to make Roth catch-up contributions .
This rule applies to 401(k), 403(b), and governmental 457(b) plans .
Employees who earned $150,000 or less may continue making catch-up contributions on either a pre-tax or Roth basis, as their plan permits.

This new requirement brings significant administrative complexity:

Payroll systems must track prior-year wages to determine whether an individual meets the Roth threshold.
Plan sponsors may need to amend plan documents to reflect the new rules.
Recordkeepers and TPAs will need to coordinate closely with payroll providers to ensure contributions are correctly categorized and reported.

Optional Enhancements for Higher Catch-Ups

Starting in 2025 , SECURE 2.0 introduced a new catch-up contribution tier for individuals aged 60 to 63 . For this age group, the catch-up limit will increase to the greater of $10,000 or 150% of the standard catch-up amount for that year. For example, if the regular catch-up limit is $7,500, then the enhanced limit for ages 60–63 would be $11,250.

The enhanced limit will be indexed annually for inflation . Like other catch-up contributions, the Roth rule will apply to high earners in this group beginning in 2026.

What Employers and Plan Sponsors Can Do Now

While the Roth requirement doesn’t take effect until 2026, plan sponsors should begin preparing now. Steps include:

Coordinate with recordkeepers, payroll providers, and TPAs to jointly develop wage tracking and Roth designation capabilities.
Communicate early and clearly with participants who may be affected by the Roth requirement.
Review and update plan documents to accommodate required changes and optional enhancements.
Decide whether to offer Roth contributions , if your plan doesn’t already include that feature—since it will become mandatory for certain participants.

What Employees Should Know

Employees, especially those nearing retirement, should pay close attention to these changes:

If you earn more than $145,000 , your catch-up contributions will be Roth-only starting in 2026.
Roth contributions reduce take-home pay today but offer potentially* tax-free income in retirement .
Those subject to the Roth requirement may want to revisit their financial plan to evaluate the long-term tax implications and benefits.

Conclusion

The SECURE 2.0 Act introduces important updates that reshape how catch-up contributions work—particularly for high earners and older employees. While these changes create administrative challenges for plan sponsors, they also open the door to new planning opportunities for participants.

The key to a smooth transition in 2026 is early preparation . Employers should begin working with their service providers now to align systems, educate participants, and ensure their plan is positioned for compliance and success.

*Note: One of the requirements for tax-free withdrawals from a Roth IRA is that the account must have been opened and funded for at least five years. If, at retirement, you do not have an established Roth IRA (opened and funded five years previously) and the money from your Roth 401(k) is rolled into a new Roth IRA, the five year period starts over when the new Roth IRA is created. We recommend contacting your financial and/or tax advisors for information about your specific circumstances.

Retirement Plan Myth-Busting, Part III

Fri, 01 Aug 2025 16:03:08 GMT

Retirement plans can be confusing. Between complex rules, industry jargon, and competing providers, it’s easy for employers to fall into patterns based on assumptions or half-truths. That’s why we created this series: to cut through the noise and help employers make confident, informed decisions.

In this third installment, we’re addressing two persistent myths that often lead employers down the wrong path: the idea that payroll providers are the best place to get your plan, and the belief that robo-firms offer a hassle-free alternative. Spoiler: neither is as simple (nor as beneficial) as they seem.

Myth #1: It’s Easier to Just Get My Retirement Plan from My Payroll Provider

At first glance, this one makes sense. You’re already working with a payroll provider, and they offer a 401(k) solution… why not bundle everything together?

The problem: These plans are usually one-size-fits-all, offering only one, maybe two, types of plans, with limited flexibility and minimal strategic support. Payroll companies may market their bundled offering as “seamless,” but the behind-the-scenes reality is much more complicated.

In most cases, the provider is not a retirement plan expert. Key services like compliance testing, plan design, and government filings may be outsourced to third parties. That means you’re relying on a patchwork of vendors—none of whom are accountable for the full picture.

And it’s not just about service quality: it’s also about risk. When payroll and retirement plan administration are too closely bundled, errors in payroll data can cascade into serious compliance issues. Industry data shows that up to 90% of retirement plan issues stem from payroll-related errors, including incorrect deferral amounts, misclassified employees, and improperly excluded participants.

These errors often go unnoticed until an audit or government filing deadline, by which point the cost of corrections—including penalties, interest, and potential legal exposure—can be substantial. In some cases, even minor payroll mistakes have led to disqualification risks or costly Voluntary Correction Program (VCP) filings with the IRS.

The good news? You can still have seamless payroll integration without sacrificing plan quality. Many independent TPAs (Third Party Administrators), retirement plan consultants, and recordkeepers work with most major payroll providers and can link employee data electronically. You don’t have to trade convenience for quality—you can (and should) have both.

Myth #2: Robo-Firms Are a Reasonable Choice for Plan Administration

We get it. Automation can be attractive. The idea of a set-it-and-forget-it, low-cost retirement plan sounds great—especially for small businesses trying to manage overhead. But that simplicity often comes at a steep cost.

Here’s the reality: Automation rarely means error-free.If things such as compliance deadlines, Form 5500 filings, or annual ADP/ACP testing are missed and your plan falls out of compliance, you could face costly corrections or penalties.

And when something does go wrong? It’s often hard to reach someone and if you do, they are less likely to be someone who’s at all familiar with your plan. That’s a problem when you have questions, concerns, or a need for urgent guidance.

What’s more, robo-plans are typically rigid and generic. There’s little room for customization, strategic design, or proactive tax planning; just a standard plan that may not actually align with your goals.

Final Thoughts

A well-run retirement plan requires more than software and shortcuts—it needs expert oversight. While default options and robo-platforms may seem convenient, they often lead to limited results, missed opportunities, or costly penalties down the line. When challenges arise (and they will), you want a knowledgeable team in your corner—not a chatbot.

Employers don’t have to settle for cookie-cutter solutions from payroll providers or impersonal platforms. With the right partners—dedicated experts who understand your business and your goals—you can build a plan that fits, supports your employees, and steers clear of expensive missteps.

Don’t let myths guide your decisions. Get the expertise you deserve—and a plan that truly works for you.

Case Study: How Plan Design Improved Participation Rates and Compliance

Thu, 24 Jul 2025 19:42:33 GMT

Many companies, especially in the professional services sector—law firms, staffing agencies, engineering and consulting companies, healthcare groups, etc.—are often made up of various employee tiers. For example, in a given company, you might find partners or executives in one segment, professional staff in another, and support staff or hourly workers in yet another.

While this tiered structure works well operationally, it can pose challenges relating to retirement plan compliance. In one recent example, the Primark Benefits team helped a client with over 3,500 employees overcome a complicated compliance issue by strategically changing the plan design, first expanding eligibility and then implementing automatic enrollment. Let’s take a look.

The Compliance Challenge

In the pension industry, retirement plan testing rules exist primarily to ensure plans don’t disproportionately favor Highly Compensated Employees (HCEs) (which for 2025 is defined as most owners and anyone earning more than $160,000). These tests are crucial for maintaining the qualified status of a retirement plan, not to mention avoiding potential penalties or corrective actions.

Two such tests are the coverage test and the Actual Deferral Percentage, or ADP, test. Briefly, the coverage test reviews which employee segment(s) are covered by the plan, while the ADP test reviews employee deferral rates. When an employer includes only some employee segments in their retirement plan while excluding others, the plan has a higher chance of failing these tests, creating an administrative burden and budget headache for the employer.

One of Primark Benefits’ clients is a staffing, or “temp”, agency. The company employs 3,500 people, divided into two distinct groups of workers: temps, who are placed on external client assignments, and internal back-office staff, who average a longer company tenure than the temp population. For years, only the office staff were eligible to participate in the 401(k) plan; temp workers were excluded.

This tiered structure created a persistent plan compliance issue. Because the plan covered only a small portion of the total workforce, advanced analysis and additional testing were required each year to ensure the plan passed the coverage test.

First Recommendation: Expanding Eligibility

To address this, we recommended expanding eligibility to include the temp workers, which the company elected to do two years ago. This was a big win from a coverage standpoint, as including everyone in the plan resolved many of the testing concerns tied to eligibility.

However, it introduced a new issue: while all employees were now eligible to participate, many of the temp workers who are typically not Highly Compensated Employees) chose not to defer, lowering the overall rate of employee contributions among this group. We often see this occur in employee segments that have relatively lower or more intermittent earnings. When it does, the plan is at risk of failing the ADP test. This in turn can result in corrective distributions (refunds) being required to some employees, potentially undermining their retirement savings goals.

Second Recommendation: Add Auto Enrollment

To get ahead of this, our team recommended implementing automatic enrollment, as opposed to requiring employees to actively select enrollment as an option. Nationally, auto-enrollment has increased participation in retirement plans, especially among employee groups that might not otherwise take action. It’s not just a compliance strategy: it’s a way to ensure more employees are saving for retirement, with minimal friction.

Proactive adjustments like auto enrollment are especially valuable in dynamic workforces, such as staffing or seasonal industries, where high turnover and variable hours can otherwise make participation (and therefore maintaining compliance) a persistent challenge.

Early Results and Next Steps

Implementing our recommendations is already paying off. With a full year of auto-enrollment now under the client’s belt, the early data looks promising: Participation rates among newly eligible employees—especially those in traditionally lower-participating groups—have increased sharply, and next year’s ADP test result is projected to improve dramatically. Their actions not only boosted plan compliance; they also support broader retirement readiness across the workforce. That’s a clear success in our book.

Exploring Additional Recommendations

We're also working with the client on a few additional advanced strategies to further support compliance and flexibility:

Potential plan restructuring : We’re exploring the possibility of carving out a subset of employees into a separate retirement plan. When appropriate, this approach can allow for more tailored plan features—such as different eligibility rules, contribution formulas, or vesting schedules—that better align with the needs of each employee group. It can also improve nondiscrimination test results by reducing demographic imbalances that commonly occur in mixed-employee populations.
Non-Qualified Plan options : If HCE refunds remain an issue, a Non-Qualified Deferred Compensation (NQDC) plan could offer a way for those employees to continue deferring income, even if the 401(k) limits are reached. While NQDCs don’t offer the same tax benefits as qualified plans, they still provide value—especially for retaining and rewarding key employees. We’ll discuss this complex topic in a future blog article.

Takeaways

For employers navigating complex workforce structures, staying ahead of nondiscrimination testing isn’t just about passing IRS rules—it’s about delivering a functional, equitable retirement plan that meets business goals and employee needs alike.

This case is a great example of how adjustments to plan design can have a big impact. When done thoughtfully, these changes can increase participation, improve compliance, and create a better retirement plan experience for everyone involved.

The team at Primark Benefits has the track record of success and deep expertise in working with complex plans and delivering unique solutions. Contact us to learn more.

Q2 2025 Newsletter

Fri, 11 Jul 2025 19:37:53 GMT

At Primark Benefits, we’re committed to helping employers and advisors navigate the complexities of retirement plans with clarity and confidence. This quarter, we’ve published a range of new articles designed to inform, debunk misconceptions, and highlight opportunities—especially those that can still make a difference for 2024. Next quarter, we'll be continuing our "Retirement Plan Myths Busting" Series and featuring a new case study showing how smart plan design solved a tricky compliance issue.

Here's What You Need to Know

It’s Not Too Late! Employers Can Still Set Up Retirement Plans and Get Large Tax Deductions for 2024

Mon, 23 Jun 2025 19:31:56 GMT

Recent changes in tax law have expanded the flexibility employers have when it comes to establishing and funding retirement plans. If you haven’t yet set up a retirement plan for 2024, we have good news: it might not be too late!

The April 15 Misconception

Many people believe that April 15 (the official U.S. tax filing deadline) is the last day to contribute to a retirement plan for the prior year. And for traditional and Roth IRA’s, this is true – the contribution deadline coincides with the deadline for your personal tax return. However, this deadline does not apply to the nearly two dozen other types of retirement plans—especially employer-sponsored ones.

Employer-sponsored plans have different tax filing and contribution deadlines. That’s because these plans are tied to a business—not an individual—which means their deadlines often follow the business’s tax calendar. Plans like SEP IRAs, profit sharing plans, and pension plans often have later deadlines—typically the due date of an entity’s tax return, including any extensions. In other words: just because the personal tax deadline has passed doesn’t mean you’re out of luck. Depending on how your business is structured, you may still be able to:

Establish a retirement plan for 2024
Fund the plan
Take a deduction on your 2024 taxes

Your Business Entity Matters

It’s essential to understand your tax filing status. Your tax filing status—not just your entity type—determines which retirement plans you can use, your contribution limits, your deadlines and, inevitably, your options for retroactively setting up and contributing to a retirement plan. So before setting up a plan, make sure you know how your business is taxed.

Profit Sharing Plans

If you want to offer a 401(k) plan, there’s a great workaround:

Adopt a profit sharing plan for 2024,
Fund employer contributions up to the tax filing deadline, including extensions,
And, prospectively, add a 401(k) plan feature to the profit sharing plan.

Profit sharing contributions can be generous—up to 25% of compensation, sometimes totaling as much as $70,000 per participant (depending on plan design and income). In addition, going forward, plan participants will be able to contribute to the 401(k) plan.

As a note, sole proprietors enjoy a unique benefit under the tax code: their “payday” is considered to be the day they file their taxes (including extensions). This means that they can retroactively make a 401(k) deferral election for 2024, right up until the extended tax filing deadline in October 2025.

Defined Benefit Plans: A Powerful Alternative

For business owners and professionals looking to make large, tax-deductible contributions, a defined benefit plan can be a great option. Denefit benefit plans are designed to provide a specific retirement benefit based on age, income, and years of service, and the allowable contributions can be significantly higher than other plan types—often well into the six figures (the exact amounts are actuarially calculated).

Like profit sharing plans, a defined benefit plan can be set up and funded retroactively by the defined benefit funding deadline, typically September 15th. Because they involve long-term funding projections, defined benefit plans require formal actuarial calculations and ongoing administration—but for those seeking major deductions and accelerated retirement savings, they can be well worth the effort.

Why Consider a Retroactive Plan?

There are several good reasons to adopt a plan retroactively:

Immediate tax savings for the prior year
Faster growth of retirement assets
A head start on saving for 2025

Even if you missed the 401(k) deferral deadline, you can still make employer contributions to a SEP IRA, profit sharing plan, or even a defined benefit pension plan—each with its own rules and deadlines.

Don't Forget the Paperwork - and Don’t Wait until the Last Minute!

Even retroactively adopted plans need to be properly documented. It takes time to gather the documents and do all of the necessary work for plan design and creation. You’ll still need:

Plan documents
Trust accounting
Possibly an actuarial valuation (for pension plans)
And yes, potentially a Form 5500 filing (If your plan is adopted after July 31, you may be able to skip the 5500 filing for the first year—but you still need to complete all the required compliance and recordkeeping steps.)

... and, have it all in place and be able to fund the account before the individual funding deadlines.

For example, at Primark Benefits, we have a June 30, 2025, deadline for new, retroactive plans. After that deadline, we work with clients on a case-by-case basis, subject to staff availability and with rush processing fees incurred.

In Conclusion

Don’t assume it’s too late to save for last year. With the right plan design and tax strategy, you may still be able to make meaningful contributions for 2024—even well into 2025.

Not sure what plan is right for your situation? Talk to someone on our team at Primark Benefits. We’ll help you figure out what plans you qualify for, how much you can save, and what deadlines apply to your unique situation.

What the Heck Is a Third-Party Administrator (TPA)? And Why Should I Use One? Part II

Thu, 12 Jun 2025 14:18:58 GMT

When most people think about retirement plans and pensions, what comes to mind are the big-name players: government systems, large corporations, and the financial institutions that support them such as banks, brokers, and investment firms. These organizations tend to be the visible “faces” of retirement savings, managing assets, issuing account statements, and promoting their expertise through marketing and media. But behind the scenes, there’s another essential player who often goes unnoticed: the Third-Party Administrator, or TPA.

In a previous post, we explored how TPAs have emerged to meet vital client needs that large investment firms often overlook, such as tailored plan design, compliance, and personalized service. If you missed that article, click here to read it before diving into today’s topics: The risks of relying solely on asset-driven providers, and why personalized plan administration still matters.

Asset-Driven Plan Administration: Frequent Downsides

Many large retirement plan providers offer “bundled” solutions, where investment management and plan administration are combined under one roof. Often, these solutions rely on an asset-based pricing model, meaning their profitability is tied primarily to the amount of money in the plan. Though this model may only advertise a low-cost participant fee, there are usually additional fees hidden in complex disclosures that quietly reduce participant savings as plan assets grow.

The Importance of Personalized Service

In addition to the hard dollar costs, there are also numerous “soft” costs associated with the asset-driven model. For starters, customer support is frequently outsourced to external call centers, staffed by agents with limited training or authority to solve problems, even simple ones. The result? Frustrating cycles of long wait times, repetitive explanations, and unresolved issues.

Firms specializing in third-party administration, on the other hand, often take a different approach. Industry best practice dictates that when a plan participant or sponsor calls their TPA with a question, they speak directly with someone familiar with their specific plan — not with a “generalist” or a script reader in a distant call center. This kind of direct access reduces time spent tracking down information and enables concerns to be addressed much more quickly and accurately. That type of service shouldn’t be a bonus, it should be the baseline.

The Rise of Robo-Advisors

In addition, at larger institutions, customer service is often relegated to automated systems, where your issue may not even be addressed by a human. This might seem efficient on the surface, but when things go wrong - such as a misplaced trade or mishandled transaction - there’s often no one who can provide a solution. In contrast, TPAs have trained professionals, ideally credentialed with one or more industry-related designations, who understand the intricacies of retirement plans and the steps necessary to fix errors as soon as they arise.

The Future of Retirement Plan Administration

As we look ahead, the role of third-party administrators will continue to evolve. The shift towards automated systems and robo-advisors may be tempting for some companies, but the truth is that these systems can’t replace the human expertise that TPAs provide. When retirement plans are complex or errors arise, it takes knowledgeable professionals to provide the right answers.

In the end, whether you’re an employer, a participant, or part of a plan’s advisory team, choosing the right retirement plan administrator can make all the difference. A TPA is there not just to process paperwork, but to provide the support and expertise necessary to ensure that your retirement plan remains compliant and works for everyone involved. When administration is handled thoughtfully and accurately, everyone — from plan sponsors to investment professionals — can stay focused on long-term outcomes instead of short-term fixes.

In a future post, we’ll discuss the importance of designing a plan tailored to your business.

Retirement Plan Myth-Busting, Part II

Wed, 28 May 2025 20:38:11 GMT

Navigating the numerous retirement plans offered in the marketplace can be confusing, even before considering the many myths surrounding the topic. In our work with clients, we hear about these misconceptions that often steer employers in the wrong direction.

In this second installment of an ongoing “myth-buster” blog series, we address three more of the most common retirement plan myths that we hear. For our first installment, click here .

Myth: “Employees don’t value retirement plans.”

Reality: Not only do employees value them—they often expect them.

Retirement plans have been shown to be a top factor for potential employees when evaluating a job offer. A strong retirement plan can be a powerful tool for employers, helping to attract and retain top talent in a competitive job market.

In addition to supporting recruitment and retention, offering a retirement plan can boost overall employee satisfaction and productivity. Workers who feel secure about their financial futures are often more focused, engaged, and loyal. For many, a well-structured retirement plan is not just a workplace benefit—it’s a critical part of building long-term financial security.

Workplace retirement plans remain the primary source of personal savings for most Americans. Employees often begin to truly appreciate their plans as their account balances grow—and some even become retirement millionaires with consistent saving.

Myth: “I don’t want to have to cover all my employees.”

Reality: Plan design is far more flexible than many people realize. Not every employee needs to be included in a plan from day one, and employee participation can be (and, we believe, should be) structured to align with business goals.

For example, some plans allow for eligibility waiting periods. SEP IRAs can delay inclusion until the fourth year of service. 401(k)s can be designed with eligibility rules based on age and / or length of service — such as requiring employees to be 21 years old and have one full year of service before participating.

Coverage can also be customized based on location, job role, or business unit (provided the plan complies with nondiscrimination regulations). This means you can limit participation to specific employee groups and still maintain a compliant and effective plan.

With the right design, a retirement plan can be both inclusive and strategic, tailored to support your company's structure and goals maximizing benefits for business owners and key employees while also meeting regulatory requirements. For instance, we've helped companies craft plans in which up to 85% of contributions go to leadership, with the remainder allocated in a way that supports broader staff participation and passes all IRS compliance tests.

Myth: “I don’t want to be forced to make contributions.”

Reality: Many retirement plans allow you to offer benefits to your employees without committing to employer contributions.

For example, a Starter 401(k) plan - a simplified 401(k) option introduced for small businesses - requires no employer contributions and is exempt from annual nondiscrimination testing, making it an attractive, low-maintenance solution. Similarly, state-mandated IRA programs, now active in many states, typically require employers to only facilitate payroll deductions for employee contributions; no employer dollars need be involved.

If you do choose to contribute, you can control how much and when. Many traditional 401(k) and profit-sharing plans offer discretionary match or profit-sharing options, meaning you can decide each year based on your company’s performance - whether to contribute and how much. Plus, any contributions you make are generally tax-deductible for the business and can even qualify for tax credits under certain conditions (such as the SECURE Act startup credit for small businesses).

Your chosen Third-Party Administrator (TPA) partner should be knowledgeable enough to design a plan that matches your financial comfort level. Whether that means starting with zero employer contributions or using strategic contributions to reward key staff and optimize tax outcomes, the key is flexibility and control.

Conclusion

Though it can be easy to be misled by myths and misconceptions about retirement plans, as a business owner, it’s important to seek out the right expertise to create a retirement plan that works for you and your employees. A good TPA partner should be able to guide you through the process with the right tools and knowledge to help you make informed decisions.

If you’re ready to break free from myths and find the best retirement plan solution for your business, our team of experts will be waiting.

What the Heck Is a Third-Party Administrator (TPA)? And Why Should I Use One?

Wed, 14 May 2025 14:11:30 GMT

Part I: A Brief History of TPAs

When discussing retirement plans and pensions, many people immediately think of public sector entities and large corporations and the financial institutions that support them, such as banks, brokers, and investment firms. These entities tend to appear as the visible “faces” of retirement savings: managing assets, issuing account statements, even airing commercials touting their investment expertise. But what many folks don’t realize is that there's another key player behind the scenes: an entity called a Third-Party Administrator, or TPA.

In today’s post, we explore the history of the Third-Party Administrator, beginning with the rise of retirement plans in the U.S.

The Origins of Retirement Plans

Following the lead of some public sector entities, in 1875 The American Express Company established the first private pension plan in the United States. In 1899, there were 13 private pension plans in the entire country; by 1919, twenty years later, that number had multiplied 25-fold, to more than 300 private pensions. This reflected the trend of employers offering various incentives to attract and retain quality employees.

Insurance companies and banks played a major role in administering these plans, often entering into contracts directly with employers to provide benefits and manage funding. At that time, these were relatively straightforward arrangements, with two primary parties: the employer, who sponsored the plan, and the financial institution, which provided the product and handled the funds. But as the retirement plan landscape evolved—especially after the passage of laws like ERISA in 1974—things got more complicated.

The Emergence of the TPA

The TPA’s role emerged out of necessity. As regulatory and operational demands increased, it became clear that the two-party system wasn’t enough. Retirement plans and their ongoing management required far more than just an insurance policy or investment account—they needed plan design support, ongoing administration, compliance testing, and employee communications. This gave rise to a specialized entity, the Third-Party Administrator.

With increasing legal requirements, such as annual nondiscrimination testing, contribution limits, Form 5500 filings, and distribution rules, employers needed a partner who understood the intricacies of plan compliance and could keep their plans in good standing. TPAs filled this gap—not only performing essential back-office functions but also serving as consultants, problem-solvers, and strategic advisors.

The Shift from Insurance Companies to Investment Firms

While insurance companies and banks dominated the retirement plan landscape in the early days, beginning in the 1970s and 1980s the focus began to shift. As 401(k) plans surged in popularity, the industry saw a wave of new entrants—investment management firms and mutual fund companies—eager to expand their reach into employer-sponsored plans.

For these firms, the primary driver was assets under management (AUM). The more money they could gather into retirement accounts, the more fees they could collect. Plan administration became a secondary consideration, often treated as a bundled add-on to investment services rather than a dedicated discipline.

This asset-centric approach brought efficiency at scale but also introduced a misalignment. When the focus is on growing AUM rather than optimizing the employer's plan or ensuring employee satisfaction, service and strategic insight often take a back seat.

The Evolving Role of the TPA

In recent years, the role of the TPA has continued to evolve, with growing recognition from key players in the retirement industry, such as brokers, advisors and, particularly, recordkeepers. Recordkeepers are the large firms that focus on account administration, including investment platform access and participant portals. They are increasingly partnering closely with TPAs, building dedicated TPA support teams and offering “open architecture” systems to facilitate better collaboration. Many have gone so far as to recommend or require a TPA for their clients, acknowledging the fact that they themselves are not equipped to navigate the regulatory, design, and compliance aspects of plan administration alone.

A 2023 survey found that nearly 80% of recordkeepers report an active collaboration with TPAs as a key part of their business model, citing better plan outcomes, improved advisor engagement, and more efficient compliance oversight as the top benefits of partnering.1 TPAs are now seen not just as compliance experts, but as strategic partners who help employers navigate plan design, meet fiduciary responsibilities, manage risk, and respond to ever-changing legislation. A strong TPA relationship enhances plan accuracy, reduces fiduciary risk, and improves client satisfaction.

In our next post, we’ll be discussing the downsides of Asset-Driven Pension Administration, the importance of personalized service, and more.

Retirement Plan Myth-Busting, Part I

Thu, 01 May 2025 12:59:04 GMT

In this first installment of an ongoing “myth-buster” blog series, we address three of the most common retirement plan myths that we hear.

Myth #1: “Retirement plans are expensive.”

Reality : It’s important to distinguish between costs and results -- depending on the complexity of the plan and the level of service, the costs associated with starting and maintaining a retirement plan can vary widely. “Cheaper” plans often come at the expense of compliance, knowledge, or service levels.

Plans with more complex designs, such as those that favor certain populations, or that distinguish between various staff types, do often have higher ongoing costs associated with them.

And in addition, in the past four to five years, plans have become more affordable than ever, thanks to multiple tax credits and declining fees, outlined below.

Tax Credits for :

Startup (i.e., new) Plans : When an employer offers a retirement plan for the first time, the federal government offers a tax credit. As of 2025, the credit amount is between $500 and $5,000 per year, depending on a number of factors; the credit may be applied to the first three years of the plan. Knowing that initial cash outflow can be offset by tax deductions and credits helps many companies gain the motivation to start offering this valued employee benefit.
Automatic Enrollment : An additional $500 federal tax credit is available for up to three years for plans that include an automatic enrolment feature. This applies to both existing and startup plans. Plans as small as one person may qualify.
Employee Contributions : Four plan types, including 401(k) and 403(b) plans, are eligible for a tax credit based upon employer contributions, made on behalf of non-highly compensated employees.

Off-loaded fees: As another method of reducing the cost burden to the employer, ongoing administrative and compliance costs can be charged to participants (employees). In fact, about 99% of plan fees nationwide are typically paid from plan investments, not by the employer.

Historically-Low Costs for Investments: Industry-wide, investment fees have dropped dramatically over the last 10–15 years, making plans more cost-effective than ever.

Myth #2: “My company is too small to justify having a retirement plan. ”

Reality : Plans can actually be designed for businesses of any and all sizes, starting as small as one employee and / or owner, with some plans offering specific advantages for smaller businesses. Employers have more flexibility than ever to find a solution that fits their workforce and budget.

Some states, like California and Washington, have begun implementing legislation that requires employers with as few as one employee to offer a retirement savings program. Employers can default to these state-run options, though they often don’t allow for employer contributions and typically have lower contribution limits. Another alternative is to select a plan with more robust options, such as a 401(k), that has advantages for both the employer and employees.

Myth #3: “Administering a plan is burdensome.”

Reality : Though plan administration and compliance can be complicated, outsourcing to specialized third-party providers cuts through the complexity. Expert partners help ensure compliance, streamline operations, and make the overall experience smoother for both the employer and plan participants.

In an upcoming article, we will dig more into the topic of third-party providers.

In conclusion

As a business owner, it’s important to offer benefits that allow you to recruit, retain, reward and retire the best talent possible. At Primark Benefits, we’ve seen that an effective way to do this involves designing a retirement plan that works for both you and your employees, and seeking out the right expertise to support you along the way. When you’re ready to find the best retirement plan solution for your business, our team is ready to help.

Q1 2025 Newsletter

Thu, 10 Apr 2025 19:36:38 GMT

As we wrap up the first quarter of 2025, the team at Primark Benefits has been hard at work for our clients, keeping their retirement plans in compliance.

At the same time, we've also been keeping you informed on the latest retirement plan developments, compliance updates, and strategic best practices. In case you missed any of our recent articles, here’s a quick recap of the topics we covered this quarter—from new SECURE 2.0 provisions to record retention strategies and ROTH account considerations.

Here's What You Need to Know

Understanding ROTH Retirement Accounts: The Hidden Risks

Wed, 19 Mar 2025 12:23:13 GMT

The ROTH Retirement Account, named for Senator William Roth, was introduced as part of the Taxpayer Relief Act of 1997. The main feature of a ROTH account is that contributions are made with post-tax dollars as opposed to pre-tax; this means that any withdrawals, including earnings on the investments, are tax-free in retirement. This advantage can be particularly attractive for those individuals who anticipate being in a higher tax bracket later in life.

However, this needs to be weighed against the uncertainty about whether and for how long this tax status will be truly protected. Can you safely invest in a ROTH account and really expect tax-free withdrawals ten, twenty, or thirty years down the line?

Before we talk through the drawbacks of a ROTH Retirement Account, let’s consider additional aspects that can make a ROTH account attractive. Further potential benefits of a ROTH retirement account include:

No Required Minimum Distributions (RMDs) : Unlike traditional retirement accounts, ROTH retirement accounts do not require mandatory withdrawals at a certain age.
Flexibility : Contributions (though not earnings) to a ROTH IRA account can be withdrawn at any time without penalties, providing liquidity in case of financial emergencies. For workplace retirement accounts (such as ROTH 401(k), 403(b), and 457(b) accounts), one may be able to withdraw contributions upon attaining age 59 ½ or other distributable event such as separation from service.
State Retirement Programs : Many states, such as California and Oregon, have helped lower-income earners build retirement savings by implementing automatic ROTH programs for workers that don’t have access to employer-sponsored plans.

Despite these benefits, ROTH accounts carry significant risks that many fail to consider. The two most commonly known drawbacks of ROTH accounts are Income Limitations and the Five-Year Rule.

Income Limitations : Eligibility for direct ROTH IRA contributions is restricted based on income level. In 2025, the phase-out range starts at $150,000 for single filers and $236,000 for married couples filing jointly. On the other hand, these limitations do NOT apply to workplace retirement Plans such as ROTH 401(k), 403(b), and 457(b) accounts.
Five-Year Rule : To qualify for tax-free withdrawals, the ROTH account must be at least five years old.

However, the biggest risk—and perhaps the reason to avoid ROTH accounts altogether—is congressional risk. Can or will the government change the rules? If so, how? A major downside of ROTH accounts is their vulnerability to future tax law changes. Congress has a long history of shifting tax policies, often to the detriment of retirees. While ROTH withdrawals are currently tax-free, this status is not guaranteed indefinitely. The same government that promises tax-free withdrawals today could decide to tax them tomorrow.

A crucial example of shifting government policy is Social Security. Originally, Social Security benefits were completely untaxed. However, in 1983, Congress introduced taxation on benefits for higher-income retirees, and in 1993, this taxation was expanded. This example illustrates a simple fact: just because something is untaxed today doesn’t mean it will remain that way. ROTH accounts, much like Social Security, could become a target for taxation.

Political Proposals to Tax ROTH Accounts

There is already clear evidence that lawmakers have considered taxing ROTH accounts in various ways. Both President Obama and President Biden proposed budget plans that would have limited the benefits of ROTH accounts or introduced new taxation methods, including restricting contributions for high-income earners and mandating distributions from large ROTH balances (Obama), and restrictions on "mega-ROTH" accounts used by wealthy individuals and prohibiting certain types of conversions (Biden). Over the years, various bills have been introduced in Congress aiming to alter the tax advantages of ROTH accounts. Some proposals have suggested capping the total amount that can be held in a ROTH or implementing new taxes on large balances.

Why This Matters for You

If you are planning to rely on tax-free withdrawals in retirement, keep in mind that the government may change the rules before then. History shows us that tax policies evolve. This uncertainty makes ROTH accounts a risky long-term strategy. Mathematically, a ROTH account is always better if it’s taxed once. However, it’s never better if it’s taxed twice.

We recommend steering clear of these accounts, or at least employing a balanced strategy that prioritizes tax diversification, with the knowledge that you might not have true tax-free withdrawals from your ROTH accounts when the time comes.

Best Practices for Retention of Retirement Plan Records

Wed, 05 Mar 2025 15:33:11 GMT

How Long Do I Need to Keep All of This Paperwork?

Today, we’re going to share our position on what may seem to be a black-and-white (if not also mundane) retirement plan-related topic - that of record retention. It’s one that we’ve been asked about hundreds of times, and understandably so: For one thing, it involves a lot of files, whether hard copy or electronic. Also, the requirements and guidelines from various government agencies can often seem to conflict.

Most importantly, though, it has gotten plenty of well-meaning plan sponsors into some hot water, both financially and legally. There have been numerous instances when it turned out the guidelines weren’t enough to protect employers from costly legal disputes. Read on to find out more.

Government Guidance

Guidance from the Internal Revenue Service (IRS) states that records should be kept until an audit period expires, generally three (3) years after filing a tax return. Seems straightforward enough, right? Yes, except that all qualified[1] retirement plans are also governed by the Department of Labor (DOL), which operates separately from the IRS. Specifically, the DOL’s Employee Retirement Income Security Act (ERISA) mandates that plan records, including Form 5500s, plan documents, and any related supporting data that might be needed to verify the accuracy and completeness of reports, must be retained for a minimum of six (6) years from the date of filing, or essentially seven (7) years.

To complicate things even further, the IRS guidance comes with a caveat: The IRS expects records to be maintained for “as long as necessary”. This means that, during an IRS audit, examiners may request data well beyond the three-year window to ensure accurate benefit calculations, particularly for pension plans, defined benefit plans, and cash balance plans. In fact, the data request can go as far back as the origination date of the Plan.

Beyond these regulatory requirements, Plan Administrators/Employers who maintain a qualified retirement plan must file Form 8955-SSA annually to report any separated (in other words, former) participants that have deferred vested benefits still residing in the employer’s plan. As individuals near retirement age, the government cross-references Form 8955-SSA to determine if any prior employer benefits might be available to them, along with their federal Social Security benefits. Former employees may receive letters from the Social Security Administration, indicating they may have unclaimed funds in a former employer’s plan.

Potential Legal Challenges

Since many years may have lapsed between leaving a company and when they receive these letters, individuals often erroneously pursue these “unclaimed” funds which are actually just previously received distributions.

The result is an influx of calls from past employees to the employer or plan administrator, demanding payments they believe they’re owed but that have actually already been made. This underscores the importance of having complete and accurate records, as these claims can result in potential legal challenges.

When an employer cannot produce payment records beyond the legally required seven years, they may struggle to defend against these types of claims from former employees who insist they never received their retirement benefits payout. Despite a statute of limitations on such claims, there are cases of determined individuals hiring legal counsel, creating costly legal battles and / or settlements for the employer.

What are Best Practices for Employers?

In short, to mitigate risks, we recommend employers:

Retain all benefit payment records indefinitely .
Retain all historical base data that was used to calculate pension benefits indefinitely .
Maintain electronic backups of critical documents.
Ensure Form 8955-SSA filings are accurate and up-to-date.
Verify record retention policies align with both ERISA and IRS requirements.

By following these practices, employers can protect themselves from disputes and ensure compliance with federal regulations. Working with a pension administrator who securely stores all the records for all their clients is one way to build in a safeguard in case your backups fail.

[1] A qualified retirement plan is an employer-sponsored plan that meets Internal Revenue Service (IRS) and U.S. Labor Department requirements and offers certain tax benefits to employees and employers. Examples of qualified retirement plans include traditional pensions, 401(k) plans, and profit-sharing plans.

Super Catch-Up Contributions under Secure 2.0: Enhanced Retirement Savings Opportunities

jrisi@primarkbenefits.com (Jennifer Risi) — Tue, 18 Feb 2025 15:00:01 GMT

Primark Benefits is continually monitoring legislative updates. As such, we are sharing this reminder about the “super catch-up" contributions available under The SECURE 2.0 Act, in effect as of the start of 2025.

The SECURE 2.0 Act has significantly altered retirement savings regulations. Among its many changes, the Act has:

Increased the Required Minimum Distribution (RMD) age,
Expanded access to 401(k) plans for Long-Term Part-Time workers,
Enhanced catch-up contributions for certain older adults.

Traditionally, Congress has set participant deferral limits for retirement savings plans such as 401(k), 403(b), and other employer-sponsored plans. For 2025, the standard deferral limit is $23,500.

Individuals aged 50 and older have been allowed even more, additional catch-up contributions to enhance their retirement savings. In 2025, eligible individuals can contribute an extra $7,500, bringing the total contribution limit for individuals aged 50 and older to $31,000.

“Super Catch-Up" Provision

To further encourage retirement savings, Congress introduced an enhanced, or "super catch-up", provision under Secure 2.0, for individuals 60-63 years old. That limit is the greater of:

$10,000, or
150% of the standard age 50+ catch-up contribution limit.

For 2025, the IRS has set the age 50+ catch-up limit at $7,500. Therefore, for 2025, individuals aged 60 through 63 will be eligible to contribute an extra $11,250 annually, bringing the total contribution limit for those individuals to $34,750.

The introduction of super catch-up contributions under the SECURE 2.0 Act provides an excellent opportunity for older workers to boost their retirement savings. By allowing individuals aged 60-63 to contribute significantly more than their younger counterparts, these provisions help maximize tax-advantaged retirement funds.

Primark Benefits is continually monitoring legislative updates and has a page on our website dedicated to the changes being implemented annually from Secure 2.0.

Automatic Enrollment for Long-Term Part-Time Employees under Secure 2.0

jrisi@primarkbenefits.com (Jennifer Risi) — Wed, 11 Dec 2024 04:42:57 GMT

For most Americans, the primary source of retirement savings comes through workplace plans. Despite perceptions that others may save through brokerage accounts or insurance policies, statistics show workplace plans are the cornerstone of retirement security. Individuals are 15 times more likely to open and fund a 401(k) at work than to set up an IRA independently, with over 56% of American workers participating in a workplace retirement plan.[1] These plans provide a clear path toward financial stability in retirement and reduce reliance on Social Security alone.

Automatic Enrollment: A Proven Success

Automatic enrollment has been an innovation in boosting participation in workplace retirement plans: Employers automatically enroll newly-hired, eligible employees into the company's retirement savings plan, which removes the need for employees to take any action on their own. When they’re required to proactively opt in, only about 40% participate; with auto-enrollment, that jumps to around 85%.[2]

How Automatic Enrollment Works

Employers implementing automatic enrollment can set initial contribution rates to between 3% and 10% of an employee's salary. Contributions automatically increase by 1% annually until they reach a range of 10% to 15%, with the exact rate set by each employer. Employees can opt out or adjust their contribution levels at any time; most choose to remain enrolled, and therefore benefit from consistent savings and compounded growth.

Expanding Access to Long-Term Part-Time Employees

Historically, many retirement plans excluded those employees working fewer than 1,000 hours annually. This left long-term part-time workers without access to workplace savings opportunities. Congress addressed this issue in the SECURE Act of 2019 , requiring employers to allow employees who work at least 500 hours annually for three consecutive years to participate in retirement plans.

The SECURE 2.0 Act further improved this by reducing the eligibility period to two consecutive years. Starting in 2025, employees who meet this threshold will be automatically enrolled in their workplace plan.

It should be noted that employers are not required to make matching contributions or include these employees in certain compliance tests, making the change more manageable for businesses.

The Importance of Retirement Savings

Expanding access to workplace retirement plans, particularly for long-term part-time employees, is essential to improving financial security for all workers. Automatic enrollment has proven effective in increasing participation and helping employees build meaningful savings.

As Stephen Dobrow, President of Primark Benefits said, "In all my years of encouraging people to save for retirement, no one has ever said, ‘I saved too much.’ Expanding access to workplace plans ensures more individuals have the opportunity to save and secure their financial futures."

With Secure and Secure 2.0, long-time part-time employees will now have a greater opportunity to prepare for retirement.

[1] https://pensionrights.org/resource/how-many-american-workers-participate-in-workplace-retirement-plans/#:~:text=Annual%20figures%20from%20the%20Bureau,%2Dtime%2C%20was%2056%20percent.

[2] https://www.asppa-net.org/news/2023/10/power-auto-enrollment-and-auto-escalation-numbers-asppa-annual/

2025 Contribution Limits

Mon, 04 Nov 2024 15:14:39 GMT

The new Retirement Plan Contribution Limits are official!

The following limits are going up for 2025:

Maximum contributions for 401(k), 403(b) and 457 increases to $23,500
Maximum contributions for highly compensated employees increased to $160,000
Maximum contributions for SIMPLE retirement accounts increased to $16,500
Maximum contributions for Defined Contribution Limit increased to $70,000
NEW Super Catch-up for Age 60-63 is $11,250

There are a number of new provisions including the "super catch-up" for ages 60-63. Review the full list of contribution limit changes here .

5 Common Retirement Plan Errors and Tips to Fix

Tue, 22 Oct 2024 13:20:04 GMT

Mistakes happen–Here’s how to correct common 401(k) plan errors.

Navigating the intricate rules and regulations that govern employer-sponsored retirement plans may seem overwhelming at times. Even the most diligent plan sponsors encounter retirement plan errors. In fact, it’s not unusual to discover a plan failure or error, especially after the 401(k) plan testing season is over.

The costly impact of retirement plan errors

Plan sponsor compliance errors can be costly. The Employee Benefits Security Administration (EBSA) restored over $1.4 billion

to employee benefit plans, participants, and beneficiaries in FY 2023.[1] A majority of the investigations resulted from self-reported administrative errors and oversights made by unknowing plan sponsors. It can be stressful to discover retirement plan errors or failures. The good news is that plan sponsors can fix many mistakes themselves, often without fines or penalties.

This guide includes some of the most common retirement plan errors, their remedies, and valuable resources to help 401(k) plan sponsors manage their responsibilities effectively.

Avoid and address costly mistakes

Plan sponsor responsibilities include ensuring the retirement plan complies with regulatory requirements related to the plan’s design and administration. Noncompliance can lead to personal liability, tax penalties, or even disqualification, which means that the plan could lose its tax-deferred status.

Most retirement plan errors are caused by operational or administrative oversight. Fortunately, the IRS and Department of Labor (DOL), the agencies that govern employer-sponsored retirement plans, offer several ways for plan sponsors to self-correct retirement plan errors. A good place to start is the IRS’ 401(k) Plan Fix-It Guide that provides tips on finding, fixing, and avoiding the 12 common mistakes.

Five common 401(k) errors and remedies

Below are five common plan sponsor compliance errors and remedies covered in the guide:

Error: Not updating the plan every few years to reflect changes in the law.

Remedy: Adopt plan amendments for missed law changes. Plan sponsors who miss plan amendment adoption deadlines can use the IRS correction program.

Error: Failing to operate the plan according to the plan document.

Remedy: Apply a correction that puts affected participants in the same position they would have been had the operational oversight not occurred.

Error: Not using the plan’s definition of compensation correctly for all deferrals and allocations.

Remedy: Make corrective contributions, reallocations, or distributions.

Error: 401(k) plan testing failures (ADP and ACP nondiscrimination tests).

Remedy: Make qualified nonelective contributions for non-highly compensated employees.

Error: Employer matching contributions weren’t made to all appropriate employees.

Remedy: Apply a correction that puts employees in the same position they would have been in if matching contributions had been made to all eligible employees according to the plan’s terms

This handy 401(k) plan checklist from the IRS can help remind plan sponsors of their fiduciary responsibilities and keep their plan in compliance. Keep in mind that this list should only serve as a guide—it isn’t a substitute for a complete plan review.

How to correct retirement plan errors

Plan sponsors can fix retirement plan errors using the IRS Employer Plans Compliance Resolution System (EPCRS) . There are three ways to fix mistakes under EPCRS:

Self-Correction Program (SCP)

Plan sponsors can correct certain plan mistakes without notifying the IRS or paying fees.

Voluntary Correction Program (VCP)

Any time before an audit, a plan sponsor may pay a fee and secure IRS approval to fix retirement plan errors.

Audit Closing Agreement Program (Audit CAP)

Plan sponsors can pay a fine and correct mistakes during a plan audit.

New rules under SECURE 2.0

SECURE 2.0 introduced some new rules pertaining to retirement plan errors associated with overpayments to participants or beneficiaries. The law also contains enhancements to the retirement plan error self-correction program under the IRS’s Employee Plans Compliance Resolution System (EPCRS). These provisions went into effect when the law was passed in December of 2022.

Prompt resolution and assistance

Addressing plan errors promptly is critical to fulfilling plan sponsor responsibilities and ensuring that participants’ retirement savings stay on track. By following best practices and taking advantage of available retirement plan error resolution resources, plan sponsors can navigate their operational and administrative responsibilities, avoid costly plan compliance errors, and help improve retirement security for participants.

Review your 401(k) plan regularly to spot errors and avoid costly remedies. We can help you identify and fix retirement plan mistakes while implementing strategies that aim to avoid them in the future.

[1] https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/ebsa-monetary-results

Unlocking Tax Relief and Employee Appreciation: The Power of Profit Sharing

Wed, 09 Oct 2024 03:53:42 GMT

Profit sharing is not just a tool to reduce your company's tax liability; it is also a powerful means of expressing gratitude towards your employees.

Employers often find themselves looking for ways to lower their impending tax bills while simultaneously trying to retain and reward top talent. Is there a strategy that accomplishes both? Absolutely, and it's known as profit sharing. This tax-efficient strategy can serve as a power tool for expressing employee appreciation and has the potential to improve morale, engagement, and loyalty.

The Power of Profit Sharing

When a company makes a profit sharing contribution, it directly reduces its taxable income. This step can result in substantial tax savings, especially for closely-held businesses where the owner is also the largest shareholder such as LLCs, PLLCs, S-Corps, and Sole Proprietors.

Profit sharing is not a one-size-fits-all approach. The amount contributed can vary from year to year, offering flexibility, based on the company's performance. This means that in profitable years, you can choose to contribute more, while during leaner years, you can reduce the amount.

Aligning Profit Sharing with Company Goals

The vesting schedule of the profit sharing contribution is another critical aspect that aligns with company goals. There are three primary types of vesting schedules: immediate, graded, and cliff vesting.

Immediate vesting means the employee owns the employer contributions right away.
Graded vesting gradually increases the employee’s ownership of employer contributions over a set number of years, such as 20% vesting per year for five years.
Cliff vesting allows the employee to gain complete ownership after a specific period of service, like 0% in year 1 and 2, then 100% after 3 years.

Thoughtfully selecting the vesting schedule should encourage employees to stay with the company longer, reducing turnover, and boosting organizational stability. However, vesting schedules are dictated by your plan document. Consult with your TPA for specifics. Additionally, a retirement plan advisor can be instrumental in these discussions, helping to navigate the complexities of vesting schedules, and align them with your company's objectives.

What if an Employee Leaves Early?

A common concern is what happens if an employee leaves before they are fully vested. The unvested portion of the employer contributions goes into a forfeiture account. These funds can be recycled to pay for future employer contributions and/or plan expenses, without creating additional tax liabilities for the employer.

This mechanism ensures that your company does not lose out if an employee decides to leave early. Instead, these funds can be utilized to further enhance the retirement benefits of your remaining employees.

Looking Ahead

If your current vesting schedule doesn't resonate with your company's goals, it's worth discussing and potentially revising later in the year. By planning ahead, you can ensure that next year's profit sharing contributions are structured to optimally meet your company's objectives and your employees' needs. A retirement plan advisor can play a key role in these forward-looking conversations, providing strategic insights.

A Winning Combination

Just like the classic combination of peanut butter and jelly, profit sharing contributions present a unique opportunity for companies to lower their tax liabilities while simultaneously expressing appreciation for their employees. It serves as a reminder that when the company succeeds, everyone shares in the success. This powerful message can significantly contribute to building a loyal, engaged, and motivated workforce.

As a 401(k) plan fiduciary, your actions can profoundly impact your employees' financial futures. By exploring and implementing strategies like profit sharing, you can play a pivotal role in boosting their retirement readiness while simultaneously working toward your company's financial and strategic goals. A retirement plan advisor can provide valuable guidance on profit sharing strategies.

Retirement Plan Review: From Participation Rates to SECURE 2.0

Fri, 04 Oct 2024 13:14:53 GMT

Gain actionable insights for optimizing efficiency and compliance through strategic plan analysis.

It’s no secret that when you conduct a retirement plan review, you have a chance to understand the data and trends, which can help your plan be efficient and compliant. To set your plan up for success and see if changes are needed, it's important to make the most of this analysis. Here are some key components to focus on.

Your plan’s current participation rate

One piece of the plan health puzzle is your current 401(k)’s participation rate as it is a key signal of the retirement plan’s effectiveness. When paying attention to these metrics, you may gain insights into the level of employee engagement and identify opportunities, especially when you consider the possibilities of implementing automatic features, while making other plan design changes and thinking about how employees engage with their 401(k)s.

Aim for 90% or greater

Deferral rate statistics

Equally significant are your retirement plan data trends, especially deferral rates, which are crucial for optimizing the financial well-being of plan participants. Understanding deferral rate data helps you know if employees are making informed decisions about their contributions. It also reveals opportunities for more effective education and communication. Much like participation rates, deferral rates can highlight opportunities for plan design modifications.

Aim for 10% or greater

Effective asset allocation and potential for re-enrollment

Effective asset allocation is another key statistic that plays a pivotal role in the performance of retirement portfolios. By evaluating the asset allocations across participating employees, you can identify opportunities to align strategies with investment goals, risk tolerance profiles, and market conditions. Analyzing the asset allocation data can reveal opportunities like re-enrollment, which can be a valuable endeavor long-term.

Aim for 90% or greater

Re-enrollment allows employees to reselect their investment options or be enrolled in a Qualified Default Investment Alternative (QDIA). This process offers participating employees a fresh chance to look at how they are allocated and consider a more suitable investment strategy.

Auto-enrollment and auto-escalation

Auto-enrollment can be a great streamlining tool to help savers achieve retirement readiness and increase participation in your plan, especially if encouraging employees to take positive actions has traditionally been a challenge. Aside from other benefits to the employee population, auto-enrollment can be an effective tool to improve recruitment and retention, unlock tax credits, and help with compliance testing.

Auto-escalation is an effective feature that incrementally raises plan contributions over time (e.g., increasing by 1% annually up to a maximum of 15% annual deferral). This approach not only has the potential to lower payroll taxes but also, akin to auto-enrollment, facilitates employee retention by overcoming the usual roadblocks of getting employees to take positive action.

SECURE 2.0 2025 amendments

SECURE 2.0 legislation and the amendments going into effect in 2025 are shining a brighter spotlight on the already-prevalent auto features. Your retirement plan review is a good time to discuss options and consider implementation. The regulatory implications of the 2025 SECURE 2.0 amendments are significant. Mandated automatic enrollment is bound to have an effect on plan health, as will the ability of part-time employees to qualify for participation after 500 hours in two years as opposed to the previous three. For more SECURE 2.0 updates, contact us to discuss your plan.

Important deadlines

If you are considering making plan design changes, it is crucial to discuss implementation dates and deadlines. Keep in mind that amending your plan and communicating changes to participants takes a proactive approach. For example, take the deadline of October 1 to establish a new Safe Harbor 401(k). Note that the plan must have deferrals for at least three months to be considered Safe Harbor for the current year. On the other hand, a 2025 Safe Harbor implementation requires that a 30-day notice to employees goes out by December 1st.

The retirement plan review is your time

Reviewing your retirement plan data empowers you to make informed decisions and adjustments for the coming year, thereby fostering confidence in your plan’s health. By evaluating current metrics and seizing opportunities, you can enhance efficiency, boost employee participation and satisfaction, and help future-proof your offering.

Automatic Features to Help Boost Participation and Savings Rates

Thu, 26 Sep 2024 15:01:27 GMT

The use of automatic features in 401(k) plans has continued to climb in popularity over the past decade. In fact, auto features such as automatic enrollment and auto escalation are considered best practices in 401(k) plan design as ways to help boost participation and employee savings rates.[1]

Many large 401(k) retirement plans offer auto features. However, small business plan sponsors have been slower to adopt them as part of their 401(k) plan design. If your company’s retirement plan design doesn’t currently include auto features, and/or if you’re thinking about implementing them, then keep reading.

Small Plans Playing Catch Up

The majority of retirement plans (60%) use automatic enrollment. However, there is a noteworthy disparity between the usage of auto enrollment in large versus small 401(k) plans. Nearly three-quarters (73%) of large plans (those with assets of $200 million or more) use automatic enrollment as compared to 63% of smaller plans (those with assets of less than $200 million).[1]

Simply stated, auto enrollment occurs when an employee reaches the plan’s edibility requirements and is then automatically enrolled in the company’s retirement plan.

Likewise, the uptake of auto escalation — a plan feature that automatically increases participants’ contributions each year up to a specified limit — is more prevalent in large than in small plans. Seventy-six percent of large plans use auto escalation versus just 55% of small plans. Among plans with auto escalation, the majority increase participant deferrals by 1% per year.[1]

When an employee starts saving earlier (auto enrollment) and is regularly nudged to save more (auto escalation), these two plan design features can have a substantial impact on that employee’s future retirement savings. Plan sponsors have the power to implement ideas that encourage better retirement savings.

The Impact of Auto Features

Automatic enrollment can significantly improve plan participation. According to a recent survey from the Defined Contribution Institutional Investment Association (DCIIA), before the implementation of automatic enrollment, only 11% of plans had participation rates over 90%. Post-implementation, the percentage of plans with more than 90% participation increased more than fourfold to 46%. [1]

In addition, since automatic enrollment increases plan participation, it also improves the likelihood of a plan passing nondiscrimination testing.

What’s more, automatic enrollment improves savings rates, and adding auto escalation can further boosts the impact. In plans with neither automatic enrollment or auto escalation, only 44% have savings rates above 10% (includes both employee deferrals and employer matching contributions). In plans that implement automatic enrollment only, the percentage of participants with savings rates above 10% increases to 67%. Where plan sponsors have implemented both automatic enrollment and auto escalation, that percentage rises to 70%![2]

Financial experts recommend that workers save 15% of their pay each year to achieve a comfortable retirement.[3] According to DCIIA, a combination of automatic enrollment and auto escalation is helping more 401(k) plan participants hit that goal, thus increasing their chances of being better prepared for retirement.

Getting Smaller Employers on Board

Despite the stated positive impacts of auto features on retirement readiness, some employers have chosen not to adopt them for a variety of reasons. One concern is the fear of employee pushback, including worries that employees will complain.[4]

However, many real case and research studies have found that these concerns are largely unfounded. Opt-out rates for both automatic enrollment and auto escalation are negligible, suggesting that even if employees have initial concerns about the implementation of these plan design features, they generally do not act (i.e., opt out).[5]

There is no one-size-fits-all retirement plan design. However, if your plan goals include boosting participation, increasing employee deferrals, passing nondiscrimination testing, and improving overall retirement readiness, CONTACT US to learn more about automatic enrollment and auto escalation. The implementation of auto features in your company’s 401(k) plan may be a solution worth exploring.

[1] “Plan Sponsor Survey - Cdn.ymaws.com.” Www.DCIIA.org, Defined Contribution Institutional Investment Association, Apr. 2020.

[2] DCIIA Fourth Biennial Plan Sponsor Survey “Auto Features Continue to Grow in Popularity.” December 2017.*

[3] “How Much Money Should I Save Each Year for Retirement?” Fidelity, Fidelity, 31 July 2021.

[4] “Plan Sponsor Survey - Cdn.ymaws.com.” Www.DCIIA.org, Defined Contribution Institutional Investment Association, Apr. 2020.

[5] DCIIA Fourth Biennial Plan Sponsor Survey “Auto Features Continue to Grow in Popularity.” December 2017.*

*More recent data may alter this assessment.

5 Ways Business Owners Can Optimize Retirement Savings

Thu, 19 Sep 2024 13:05:58 GMT

Key strategies to help employers maximize savings and minimize taxes.

As a business owner, you have the ability to pull certain levers to increase retirement savings while controlling tax consequences. By understanding how different qualified plans can deploy savings and tax strategies, you can optimize cash flow for your retirement future.

$23,000 Retirement Savings and Tax Strategies

A Safe Harbor 401(k) is a type of retirement plan that allows employers to max out their annual salary deferral. As the owner, you can defer up to $23,000 in salary in either:

Pre-tax 401(k). Take the income tax deduction today and push the taxes to the future.

PRO TIP: If your marginal tax bracket is near a threshold that could affect other tax liabilities, take the salary deduction to stay below the cut off.

Roth contribution. Pay the taxes now. Your account grows tax-free; and when you access your account in retirement, it is also tax-free. Of course, the 401(k) plan would need to allow for a Roth contribution.

PRO TIP: Having access to tax-free money in retirement allows you to adjust your taxable income up and down based on your future needs.

For people over 50 years old, you can also add a “catch-up” contribution of $7,500 annually to your account.

To get these benefits, employers are required to make a contribution for employees. Generally speaking, a Safe Harbor contribution costs the employer between 3 – 4% of gross eligible salaries. From a tax planning perspective, employer contributions are deductible on the company’s federal income tax return.

For employers that want to max out their own 401(k) annual deferral and avoid certain plan design tests and provide an incentive for employees, a Safe Harbor 401(k) Plan may be right for you.

$69,000 Retirement Savings and Tax Strategies

For owners looking to save around $69,000 per year, there is a 401(k) Cross Tested / New Comparability Plan option. This calculation method combines the 401(k) with a profit share. Profit sharing employer contributions are generally tax deductible.

What makes these plans unique is that business owners can select certain groups of employees to participate in the profit sharing portion of the plan, but the plan will need to be tested so the benefits do not discriminate in favor of highly-compensated employees.

Employers can set when and how much to contribute to these plans, which can be changed annually. Contributions limits are the lesser of 100% of compensation or $69,000 for 2024. Advanced plan design is necessary, and these plans typically cost more to administer.

Taxed Now, Flexibility Later

If the ability to adjust your taxable income sounds interesting, then a Roth Conversion may be worth exploring.

With respect to 401(k) plans, it is the transfer of funds from a traditional pre-tax 401(k) into a Roth 401(k). Account owners pay tax on the money they convert and are eligible to make tax-free withdrawals from the account in the future. From a tax planning perspective, this approach requires taxes to be paid up-front versus when you retire. This can be helpful if you expect to be in a higher tax bracket at retirement.

PRO TIP: If your taxable income is between marginal tax brackets, consider converting the amount that reaches the upper limit. This strategy doesn’t trigger a higher tax bracket and may help with future tax planning.

From an estate planning perspective, Roth IRAs are not subject to required minimum distributions.

$220,000 Retirement Savings and Tax Planning

Looking for large tax deductions and rapid retirement plan savings? A Cash Balance plan may be an option. The pre-tax account is an above-the-line tax deduction.

Cash Balance plans are best for owners who:

Have a steady and consistent revenue
Already contribute 5% or more towards employee retirement benefits
Are comfortable with advanced plan design

Keep in mind, the investment risks are borne solely by the employer, so it’s very important that you understand the details of a Cash Balance plan before implementing one.

Triple Tax Savings

For employers offering a high-deductible health plan, you can also setup a Health Savings Account (HSA). These accounts are funded with pre-tax dollars, the account grows tax-free and the money is income tax-free (when spent on qualifying medical expenses).

For 2024, the HSA limit for is $8,300 for families and $4,150 for individuals. HSA dollars can be invested in the stock market, which means they could grow over time. Therefore, if you start saving through your HSA as part of a retirement planning strategy, you could have access to another bucket of tax-free money for medical expenses. When the average American’s health care costs are $300,000, wouldn’t it be nice if the money was triple tax-free?

Worth a Conversation

With so many different retirement savings options available for business owners, it’s important to work with a qualified financial advisor. We can help you set up the right plan(s), discuss tax planning strategies and help you find the best option to optimize your retirement savings.

Exploring In-Plan Retirement Income Solutions

jrisi@primarkbenefits.com (Jennifer Risi) — Thu, 12 Sep 2024 03:01:05 GMT

To help prevent potential retirement delays, consider retirement income solutions to boost participants’ confidence in their future financial security.

Both employers and employees have a growing interest in in-plan retirement income solutions. With 66% of participants concerned about creating an income stream in retirement, this shows a signification interest in retirement planning tools that can convert savings into lifetime income.

Offering in-plan retirement income solutions is one way to help participants plan for financial stability in retirement in order to retire on time. Why focus on in- plan retirement income solutions, and why now? Here’s what you need to know.

The growing need for retirement income

With the decline of pension plans and the rise of DC plans like 401(k)s, the responsibility to create retirement security has shifted from employers to employees.

However, for many participants, saving is a challenge. If they manage to save enough for retirement, participants aren’t confident in converting their assets to a steady stream of retirement income they won’t outlive. Eighty-seven (87%) of participants expressed a desire for an in-plan retirement income solution to help them achieve their goals. Moreover, today’s workforce is aging, requiring solutions that help provide a sustainable retirement income for as long as they live.

In an effort to boost retirement income success, there is an opportunity to support participants with income planning for the decumulation stage. Education is critical to improving retirement readiness: participants need to understand how retirement income solutions work and how to use them appropriately. Employers can leverage plan features like in-plan retirement income solutions to make their retirement benefits more competitive, increase employee engagement, and retain valuable talent. Few organizations currently offer this option, making it an opportunity to stand out as an employer of choice.

Plan design plays a pivotal role

Thoughtful plan design can significantly impact participants’ retirement income. Features such as default deferral rates, employer matching contributions, and professionally managed investment solutions all play a pivotal role:

— Default deferral rates often steer participant contributions. Many plans automatically enroll employees at the deferral rate of 3% of their salary, but most employees choose to “set it and forget it” and never increase their contributions beyond that amount. Plans with higher default deferral rate and auto-escalation, where contributions are increased at set intervals until a preset maximum is reached, promote saving more over time. This approach potentially boosts their retirement income.

— Matching contributions can substantially boost participants’ retirement savings. Encourage participants to contribute at least enough to receive the full employer match and maximize this benefit.

— Professionally managed investment solutions alleviate the burden of establishing a personal asset allocation strategy, constructing a portfolio of equities and fixed income, and then monitoring and updating it on an ongoing basis. The most common 401(k) default investment solutions are target date funds and managed accounts.

In-plan income considerations

Several retirement income solutions and investment strategies are designed to provide consistent, stable income for retirees. Some common approaches include:

— Target date funds (TDFs) with in-plan guaranteed income: An in-plan solution is designed to deliver automatic guaranteed

retirement income. TDFs may be appropriate as a Qualified Default Investment Alternative (QDIA).

— Managed accounts: These solutions offer professional investment selection and management with the potential for growth and income. Managed accounts provide efficient opportunities that can be customized for specific investor circumstances and allocated to guaranteed income solutions at an appropriate age.

— Fixed income: Securities such as bonds offer a steady income stream with potentially competitive yields, liquidity, and flexibility.

Participant withdrawal strategies

Plan designs that allow flexible distribution strategies can help improve financial stability as participants transition from the accumulation to the withdrawal stage. These include systematic withdrawals that create an automated income stream, technology- driven withdrawal solutions that adapt retirement income based on retirees’ needs and preferences, and guaranteed income solutions.

In-plan income solutions are an opportunity to boost engagement, enhance retention, and improve overall retirement readiness. For your next steps, consider reviewing your current plan design through a retirement income lens.

Crafting an Effective and Competitive 401(k)

Wed, 04 Sep 2024 14:35:07 GMT

Balance cost and competitiveness without compromise.

In today’s competitive business landscape, your 401(k) plan can be more than just another line item on an expense report—it can be a key to unlocking higher employee satisfaction and retention.

That said, optimizing your retirement plan doesn’t require a choice between cost savings and competitive benefits. With the right strategies, you can elevate your 401(k) plan from a financial obligation to a powerful tool for fostering a motivated, loyal workforce. Here are ways to help achieve a balanced, effective 401(k) design that benefits both your employees and your bottom line.

Plan design that pays

To offer a competitive retirement benefit that boosts retention and incentivizes employees to save for retirement, have you considered auto-enrollment and auto-escalation?

Auto enrollment and auto escalation lower the barriers to saving, increasing participation by 85% (auto-enrollment) and potentially boosting savings rates by at least 1% of salary per year until a 10-15% cap is reached (auto-escalation). Also, beginning January 1, 2025, all new plans will be required to include auto-enrollment and auto-escalation.*

If your plan doesn’t offer auto-enrollment, there is an employer tax credit of $500 for the first three years. Increasing the initial default deferral rate can also help improve readiness and encourage on-time retirements.

Benchmarking may help to reduce plan fees

Benchmarking—regularly comparing your retirement plan to your industry peers—is more than your fiduciary responsibility. It’s an essential best practice to ensure that your plan fees are competitive and in line with industry standards. Benchmarking is the process of evaluating plan fees, investment options and costs, and service providers toward ensuring your 401(k) plan:

Vesting schedules encourage retention, help with cash flow

If you offer a company match, the vesting schedule can encourage employee retention and help you manage long-term cash flow more effectively. If an employee leaves or is terminated before becoming 100% vested, the plan retains the unvested portion, and those dollars can be used to offset future employer contributions and/or be used to pay for plan expenses.

Vesting schedules vary—here are the most common:

Employer contributions: consider the alternatives

An employer match is only one type of incentive contribution. Instead, you might choose to grant company equity or offer profit sharing. These alternative strategies enable you to incentivize employees while providing flexibility to vary contributions from year to year based on business performance and economic conditions.

Embracing effective strategies

Crafting an effective plan design strategy can help you streamline costs while providing a competitive retirement benefit. Now may be a good time to review your current 401(k) plan with a focus on flexibility and cost-efficiency.

Benefit Insights Newsletter - Summer 2024

Wed, 28 Aug 2024 04:17:57 GMT

We are excited to deliver the Summer 2024 Newsletter.

In this edition, we discuss:

Effective Communication with Participants
Participant Notices: A Quick Overview
Mastering the Art of Distributing Participant Notices
Plan Ahead for 2025 Long-Term, Part-Time (LTPT) Employees
Upcoming Compliance Deadlines for Calendar-Year Plans

4th Quarter Compliance Reminders

Wed, 28 Aug 2024 03:54:52 GMT

As we approach the end of 2024, there are plenty of important deadlines to be mindful of. Staying on top of these deadlines contributes to the ongoing compliance of your plan and provides a seamless experience for your employees.

New SECURE Act 2.0 | Long-term part-time employees

Starting in the 2025 plan year, the SECURE Act 2.0 lets part-time employees who've worked at least 500 hours for two consecutive years join the company's 401(k) plan. Here's a quick guide for employers:

January 1, 2025: Part-time employees who work 500 hours/year for 2 consecutive years are eligible to participate in the company’s 401(k) plan.
Check your records: Look at your employee data to see who'll be eligible.
Talk to them: Once you know who's eligible, tell them about their new 401(k) options.

Doing this early helps get your part-time employees smoothly onboard with their new benefits.

Q4 Compliance Highlights*

October 15

If on extension, filing deadline for the Form 5500
If on extension, filing deadline for individual and/or corporate tax returns and final contribution deadline for deductibility
Adopting a retroactive amendment to correct minimum coverage or nondiscrimination requirements (IRC Sections 410(b) & 401(a)(4))

December 1

Sending annual 401(k) and safe harbor match notice*
Sending annual Qualified Default Investment Alternative (QDIA) notice*
Sending annual automatic contribution arrangement notice (ACA)*
It's important to send these notices at least 30 days (and not more than 90 days) before the beginning of each plan year.

December 15

If on extension, deadline for distributing SAR to participants*

December 31

Processing corrective distributions for failed ADP/ACP test to avoid the 10% excise tax
Correcting a failed ADP/ACP test with qualified nonelective contributions (QNECs)
Converting existing 401(k) plan to safe harbor non-elective design for current plan year
Amendment to remove or convert to safe harbor status for next plan year
Amending plan for discretionary changes implemented during plan year (certain exceptions apply)
RMDs due under IRC Section 401(a)(9) to avoid penalties

What's Going On in Washington?

Wed, 28 Aug 2024 03:51:33 GMT

Exploring current ERISA and DOL areas of interest

In a significant move by the Department of Labor (DOL), new regulations are being rolled out that may impact your ERISA compliance and retirement plan administration. Learn how these changes could influence your retirement plan, discover Washington's initiatives, and prepare your company effectively.

Retirement Security Rule effective date stayed indefinitely

On July 25 and 26, 2024, two different federal courts in Texas ruled that the DOL likely overstepped its authority in redefining what is considered fiduciary investment advice under ERISA and the Internal Revenue Code. The new DOL regulation, the “Retirement Security Rule,” was to be effective September 23, 2024, and was meant to replace the DOL’s five-part test that has been in place since 1975. The courts stayed the effective date indefinitely while the lawsuits play out. The lawsuits against the DOL were brought by insurance professionals who strongly opposed being held to a fiduciary standard in dealing with plan sponsors and also with plan participants when they would rollover their assets from plans to IRAs.

The two Texas courts found that the Retirement Security Rule and its package of prohibited transaction exemptions violated the Administrative Procedures Act as well as a 2018 5th Circuit opinion that invalidated the DOL’s previous attempt to redefine investment advice. Specifically, the courts found that for investment advice to be governed by ERISA’s fiduciary duties, there needs to be an expectation of trust and confidence between the investment professional and the client. The DOL’s new rule, in violation of this standard, would have brought one-time sales transactions under a fiduciary standard, a consequence the courts found to be improper.

From here, the DOL is likely to appeal the rulings. The November presidential elections will be consequential as to whether any DOL appeal will be allowed. And even if it is allowed, the DOL faces an uphill battle in front of the 5th Circuit and the US Supreme Court, if they would agree to hear this dispute. In the meantime, the 1975 five-part test for fiduciary investment advice remains the law of the land.

IRS Notice 2024-02

Dubbed the “Grab Bag” notice, the IRS released a Q&A style notice to provide additional guidance on 12 of the 90 new provisions added by SECURE 2.0 of 2022.

Notable provisions affecting section 401(k) and section 403(b) retirement plans include:

expanding automatic enrollment and auto-escalation features
credit for small employer startup costs
de minimis financial incentives for contributing to a plan
terminally ill distributions exception
changes in accrual rule compliance for cash balance plans
treatment of employer matching or nonelective contributions as Roth contributions

Notice 2024-02 clarifies the requirements for each provision, including the effective date, limitations, and exceptions.

ERISA class actions - Group Health Plans

Fiduciary governance for health and welfare benefit plans has not always been a focus of plan sponsors, despite ERISA's fiduciary standards applying equally. However, a recent court case, known as the Lewandowski v. Johnson & Johnson case, highlights alleged breaches of fiduciary duties for high fees paid to service providers.

To provide fee transparency, the Consolidated Appropriations Act of 2021 amended ERISA to require certain service providers to disclose fees to employer-sponsored group health plans, similar to retirement plans. Though the Lewandowski case is still early, it reminds employers to review their ERISA duties and ensure strong processes and procedures.

Cybersecurity

Cybersecurity remains a top priority for DOL. In a recent speech at the National Association of Plan Advisors summit, Employee Benefits Security Administration’s (EBSA) Assistant Secretary, Lisa Gomez emphasized the need for better protection of retirement plan data. Safeguarding assets and participant information is a fiduciary duty under ERISA, requiring compliance with the "prudent expert" standard. This includes staying updated on cybersecurity practices, training personnel, and monitoring operations. EBSA’s guidance, "Cybersecurity Program Best Practices," highlights the importance of addressing cybersecurity risks in plan administration.

The landscape of retirement plan regulation and ERISA compliance is undergoing significant changes. These updates aim to enhance fiduciary responsibilities, expand exemptions, and clarify requirements affecting retirement plans. While these changes bring forth new challenges, they also offer opportunities for plan sponsors to work alongside a trusted retirement plan advisor to improve and ensure the security and efficacy of retirement savings.

This is a special edition written by The Wagner Law Group .

Established in 1996, the attorneys at The Wagner Law Group provide boutique-style services in ERISA, PBGC, employment law, and more for clients nationwide. www.wagnerlawgroup.com

This article is intended for general informational purposes only, and it does not constitute legal, tax, or investment advice from The Wagner Law Group.

SECURE 2.0 Update: Looking Ahead

Wed, 28 Aug 2024 03:46:58 GMT

Some provisions of SECURE 2.0 have already taken effect, and more will become effective soon. For plan sponsors, preparation is the key. Starting early allows for a thorough consideration of how SECURE 2.0 provisions may impact enrollment, contributions, and other aspects of your 401(k) plan. This will help you align your plan with regulatory requirements while continuing to meet both employer and employee needs.

Here are a few of the provisions that could affect your plan:

Long-term part-time worker eligibility

Effective January 1, 2025, employees who have at least 500 hours of service each year for two consecutive years are eligible to participate in the plan. This adjustment signifies a shift from last year's eligibility criteria, which required three consecutive years of service, thereby reducing the length of service needed for part-time employees to qualify for the employer's retirement plan. Given the complexities involved in implementing this provision, some plans are evaluating the advantages and disadvantages of granting immediate eligibility to all employees.

Automatic enrollment and escalation

New 401(k) or 403(b) plans established after December 29, 2022, must automatically enroll eligible employees, beginning with the first plan year starting January 1, 2025, at a contribution rate between 3% and 10%. The plan must include automatic escalation at a pace of 1% a year until contributions reach 10% to 15%.

This regulation has implications for company mergers and acquisitions that involve multiple retirement plans, as well as those that join multi-employer plans.

If your plan does not currently include automatic enrollment, you may be eligible for a $500 tax credit for the first three years it is adopted.

Super catch-up contributions

Most plan sponsors currently offer employees aged 50 or older the opportunity to make catch-up contributions, which has been set at $7,500 for 2024. A significant update arriving in 2025 is the introduction of super catch-up contributions under SECURE 2.0 legislation. This provision allows plan sponsors the option to enable employees who reach the ages of 60, 61, 62, or 63 within a particular year to make enhanced catch-up contributions. The limit is determined as the greater of:

$10,000, or
150% of the age 50 catch-up contribution limit for 2024.

For successful implementation, plans and recordkeepers are required to precisely track participants' ages, apply the appropriate contribution limits, and communicate clearly about this option to eligible participants.

Roth matching and non-elective contributions

Since 2022, plan sponsors have been presented with the opportunity to allow participants to choose how they receive employer matching or non-elective contributions: as traditional pre-tax contributions or fully vested Roth contributions. This option is designed to give participants enhanced control over the tax treatment of their retirement savings, potentially offering the benefit of tax diversification.

Initially, there was hesitancy among plan sponsors to embrace this provision due to uncertainties surrounding taxation, reporting, and administrative processes. However, recent IRS guidance has clarified several of these issues. In light of the new information, plan sponsors might now want to reevaluate whether incorporating this option aligns with their overall plan objectives.

Force-out provisions and auto portability

The Safe Harbor IRA, a well-established provision, has recently captured significant attention. This provision enables plan sponsors to remove small account balances ranging from $1,000 to $7,000. By taking this step, employers can decrease the number of small, inactive accounts, thus reducing administrative tasks and possibly sidestepping stricter reporting obligations.

Another noteworthy development is the launch of the auto-portability network. This innovative network streamlines the transfer of small account balances when employees switch jobs, promoting the continuous growth of retirement savings, and reducing the likelihood of early withdrawals. These enhancements not only make plan management more straightforward, but they also bolster employees' efforts to build a more robust retirement nest egg.

Student loan payments matching

Employers are allowed to make matching contributions to a retirement plan based on an employee’s qualified student loan payments. Essentially, if an employee is paying off a student loan and therefore not contributing to their retirement plan, the employer can still make a match to the plan as if these were retirement plan contributions. This provision aims to help employees saddled with student debt to save for retirement.

This is by no means an exhaustive list. Other key topics deserve consideration, including SIMPLE IRA conversions, incentives for participation, a “Lost and Found” database, new exceptions for early withdrawals, RMDs, and emergency savings accounts linked to retirement plans.

Get ahead of the curve

Together we can proactively explore how SECURE 2.0 provisions might impact your plan, allowing us to plan strategically and you to be well-prepared. If you have any questions, please get in touch.

7 Questions to Help Optimize Your 401(k) Plan

Wed, 28 Aug 2024 03:38:04 GMT

Let’s explore some of the critical elements of workplace retirement plans.

Our goal is to equip you with the knowledge you need to evaluate your current 401(k) plan with clarity and confidence, helping you make the best choices for your business and employees. We'll guide you through pro tips for identifying a healthy plan, discuss recent legislative changes, and introduce fresh innovations.

Whether you are evaluating your current plan or just curious about how to improve your retirement plan experience, we're here to help.

1. Do any aspects of your company's retirement plan cause frustration?

When frustration arises, pause and reflect on the cause. Employers often have trouble logging into recordkeeper portals, uploading payroll information, downloading census data, and finding the form to make investment changes, or they struggle with over-contributions. Whatever the issue, take a step back to look for a partner that can offer straightforward, easy-to-understand options, and timely resources to address any challenges.

2. Are you with the right 401(k) recordkeeper?

Start by assessing your needs versus what your recordkeeper offers. Consider employee demographics and technology alignment. For example, if your workforce is mostly older employees, have you considered in-plan income solutions or other retirement planning withdrawal ideas? Or, if your workforce trends younger, do you have a 401(k) student loan matching provision and are you working with a partner that can support it? Other factors to consider include the menu of investment options, fees, customer support, financial wellness resources, and digital capabilities. If there's a mismatch in any of these areas, it might be time for a change.

3. If you are considering RFP, what questions should you ask?

Here are a few must-asks:

How do you support the ongoing education of our employees regarding their retirement planning?
What technology and tools do you offer to make plan management easier for both employers and employees?
Can you detail your fee structure transparently?
Describe your investment options and how they cater to our diverse employee needs.
How do you ensure compliance with the latest regulations and laws?

4. How can you create a better employee experience?

Focus on communication, education, and support. Ensure that your service providers offer ongoing employee education, user-friendly digital platforms, and responsive customer service. Also, regularly solicit feedback from your employees to identify areas for improvement. Here’s a quick question to get started: when was your last employee education meeting?

5. If your current plan feels outdated, what innovative features should you consider?

Start by evaluating your current plan’s design. Here are few enhancements you may want to consider, some of which are now standard requirements under the SECURE Act:

Auto enrollment | Get everyone saving for retirement. (Mandatory for new plans established after December 29, 2022, under SECURE 2.0).
Auto escalation | Help participants reach savings goals. (Mandatory for new plans established after December 29, 2022, under SECURE 2.0).
Re-enrollment | Rebalance participants accounts onto an appropriate glidepath.
Backsweeping | Engage participants who haven’t joined.
Guaranteed income solutions | Think about how older employees will replace their paycheck.
Financial wellness | Give access to quality financial education.
Profit sharing | Reward loyal employees.
Roth contributions | Offer more ways to save.
Safe Harbor IRA Force-out | Remove former employees from the plan.
Student loan matching | Support college borrowers to save for retirement.

6. How can we encourage more active participation and savings?

Engagement starts with education. Provide regular workshops, one-on-one consultations, and clear, concise materials about the benefits of participating.

Another very effective strategy is implementing automatic enrollment, which has a significant, direct impact on plan participation. To make this feature even more effective, consider setting the automatic enrollment savings rate between 8% and 10%. This higher starting point can help employees build substantial savings more quickly, without requiring them to take initial action to opt into the plan or select their contribution rate.

7. How can a plan consultant add value to our retirement plan and employee experience?

A skilled plan consultant brings appreciated benefits to both employers and employees. For employers, we can simplify the complex world of retirement plans by providing experienced guidance on plan design, compliance, and investment selection. We help ensure that your plan aligns with your business goals and employee needs, potentially leading to higher participation rates and overall satisfaction. For employees, we can be a resource for financial education and personalized investment advice, helping them make informed decisions about their retirement savings.

By lighting the path between the plan provider and participants, we can enhance the overall plan experience toward making it more efficient, compliant, and beneficial for all parties involved.

Remember, the goal of a 401(k) plan is not just to offer a retirement saving vehicle but to provide a path toward financial security. By asking the right questions and prioritizing the needs of your team, you can create a more rewarding and engaging retirement plan experience for everyone involved.

5 Tax Strategies for Business Owners

Thu, 06 Jun 2024 15:27:50 GMT

For business owners, striking a balance between operating costs and profit is the cornerstone of success.

Operating costs include everyday expenses like salaries, rent and supplies. Profit, on the other hand, is what remains after all these operating costs have been paid. It's the reward for the risks taken and the value created by your business. Often, savvy business owners will look to tax strategies to help find the sweet spot, where operating costs are managed efficiently while maximizing profit.

By utilizing tax-friendly strategies, owners can reduce their tax liability, effectively boosting profits without increasing sales or cutting costs. Let's delve into some of these strategies and explore how they could potentially bolster your business's financial health, reduce taxes and help you save for retirement.

5 Tax Strategies to Consider

1. Max Out 401(k) Contributions

Maximizing contributions to your 401(k) account reduces taxable income. If you are not maxing out your 401(k) plan each year, you're missing out on a significant tax advantage. The IRS adjusts the contribution limit annually with an extra boost of catch-up contributions. [1]

2. Profit Sharing Contributions

A profit sharing plan allows employers to make contributions to retirement savings accounts based on the company's profits. This incentivizes employees and provides tax benefits for the business.

Example

Murphy’s Motors is a small business with two owners, both aged 57, and a diverse team of 20 employees. Murphy’s Motors had a profitable year and wants to fund $110,000 into the profit sharing plan. After talking with their Third-Party Administrator (TPA), the owners learn they can allocate $43,500 into one of the owner’s accounts, $43,500 into the other owner’s and $23,000 into eligible employees’ accounts.

3. Cash Balance Plan

These are types of defined benefit retirement plans. They offer an advantage to business owners by allowing them to contribute substantially larger annual amounts in comparison to other retirement plans, such as 401(k)s.

Example

The owners of Murphy's Motors are eager to accelerate their retirement savings. They each anticipate compensation of $250,000 for the current year. After maximizing their 401(k), catch-up and profit sharing contributions, they aim to each contribute and deduct an additional $100,000 toward their retirement savings. Upon consulting with their TPA, they discover that to achieve their combined savings goal of $200,000, they will need to contribute $50,000 toward their employees' retirement plans. This results in a substantial $250,000 tax deduction for their business.

4. Health Savings Account (HSA)

An HSA is a tax-advantaged medical savings account for individuals enrolled in a high-deductible health plan (HDHP). Contributions to an HSA reduce taxable income. The funds grow tax-free and withdrawals for qualified medical expenses are tax-free. HSA contribution limits vary, they are dependent on coverage and age. [2]

5. Hiring Family Members

While this may sound odd, hiring family members can be an effective tax strategy for business owners. By employing family members, you can transfer income from a higher to a lower tax bracket, potentially reducing your overall tax liability. The wages paid for legitimate work are deductible business expenses.

Example

Consider Joan Murphy, co-owner of Murphy's Motors. She employs her teenage son, Alex, for daily operations at the shop. Alex's wages are now a deductible business expense. If his earnings stay under the standard deduction of $13,850, they remain tax-free. Consult your tax professional for detailed advice.

Every business is unique, with its own specific challenges, opportunities and goals. That's why we're here to help you explore these potential strategies, understand their implications and implement the ones that are right for you.

[1] Internal Revenue Service. “Retirement Topics - 401(k) and Profit-Sharing Plan Contribution Limits.”

[2] Internal Revenue Service. “Health Savings Accounts and Other Tax-Favored Health Plans.“

401(k) Plan Design for an Age Diverse Workforce

jrisi@primarkbenefits.com (Jennifer Risi) — Wed, 22 May 2024 12:41:22 GMT

Navigating retirement preparedness across generations

Discover insights into 401(k) plan design for a multigenerational workforce. Find out ways to boost retirement readiness and deal with issues unique to each generation. Understand the best methods of retirement saving from Baby Boomers to Gen Z.

Download the Guide Here.

Boosting Retirement Confidence for Near-Retirees

Thu, 16 May 2024 06:12:33 GMT

Employees late in their careers need information that helps smooth the transition into retirement.

We are entering the “Great Retirement” era, where tens of thousands are hitting retirement age daily. By 2030, the entire baby boomer generation will be 65 or older. These hard working and resilient employees were the first to experience the shift from guaranteed pension plans to defined contribution plans such as 401(k)s. With retirement in sight, near-retirees are a key target audience for financial wellness programs.

Older employees are likely to experience heightened financial stress and anxiety as they transition from work into retirement. The bad news is that financial stress can have a corrosive effect in the workplace. The good news is that near-retirees are likely to be open to, and may actively seek, information that helps transform retirement uncertainty into retirement confidence.

The information can be delivered in a variety of ways, including through education programs and communications strategies. Having a professional offer individual financial advice or coaching can make it easier for employees to apply what they’ve learned. As you consider how best to convey the value of your workplace benefits, here are four topics that should resonate with near-retirees.

Saving in the Home Stretch

It’s good to start with the basics, reminding employees that they have opportunities to set aside tax-advantaged savings in traditional and/or Roth workplace retirement plan accounts. If your plan permits them, discuss the value of catch-up contributions.

Plan participants who are 50 or older can save more with catch-up contributions. The IRS adjusts this each year ; but for 2024, the limit is $7,500.
The SECURE Act allows a new level of catch-up contribution in 2025. Participants aged 60 to 63 can make catch-up contributions equal to the greater of $10,000, adjusted annually for inflation or 150% of the 2024 catch-up contribution amount (indexed for inflation).
In 2026, catch-up contributions made by participants earning $145,000 or more annually must be Roth contributions.

The Incredible Versatility of HSAs

Healthcare costs can be a big financial burden for older workers. However, relatively few employees have confidently saved for healthcare expenses, even those who participate in qualifying high-deductible healthcare plans (HDHP) paired with health savings accounts (HSAs). It’s a missed opportunity.

HSAs give employees another tax-advantaged way to save and invest for retirement. HSAs offer a triple-tax advantage.

Eligible employees contribute pre-tax dollars
Any investment earnings grow tax deferred
Withdrawals used for qualified medical expenses are tax-free

Of note, after age 65, HSA savings can be withdrawn for any purpose without a penalty (although distributions used for non-medical purposes may be taxable). The funds can be used to reimburse premiums for some Medicare costs, as well as healthcare costs not covered by Medicare. Typically, eligible employees can continue to make HSA contributions until they apply for Medicare or Social Security.

A Primer on Social Security and Medicare Benefits

Almost half of employees want employers to educate them about Social Security and Medicare benefits.[1] Employers can provide programs that offer insights on how to optimize Social Security benefits and make Medicare decisions, or they can hire a knowledgeable professional to provide individual counseling.

Either way, it’s important to manage expectations of Social Security. The most recent Trustees Report estimated that Social Security Trust Fund reserves will be depleted in 2034. Unless Congress acts, benefits may be reduced by 20% in the future.[2] Since Social Security benefits are one of the few guaranteed income options available, it may be beneficial to discuss other guaranteed income options as well.

The Advantages of Account Consolidation

It is not uncommon for adults to have held 12 or more jobs throughout the course of their careers. If they left assets behind in former employers’ workplace retirement plans, account consolidation could help clarify how much they’ve saved and how their savings are invested. In addition, if your workplace retirement plan allows roll-ins, account consolidation could potentially lift average plan balances and lower plan expenses.

The Future is Bright

Near-retirees are receptive to education and communications about saving for the future. Employers who offer programs that help smooth the transition from work to retirement often realize benefits, including greater employee loyalty and improved productivity. If you would like more information, please get in touch.

[1] Bank of America. “2023 Workplace Benefits Report.” Aug 2023.

[2] Social Security Administration. “Status of the Social Security and Medicare Programs.” 2023 .

Overcoming Mid-Career Retirement Savings Hurdles

Mon, 15 Apr 2024 13:58:05 GMT

Practical tips for Gen X and Millennial workers to save for retirement

Life in the middle can be a pickle—just ask any mid-career employee. They're often caught between a rock and a hard place, or, more accurately, a kid's college fund and an aging parent's medical bills. Add to that the rising cost of living, and you've got a perfect storm for financial stress.

Money and Happiness

Did you know that 59% of Americans think money can buy happiness? With the magic number being $1.2 million. Interesting though, for a significant portion of your workforce, financial happiness is tied to timely bill payments (67%), being debt-free (65%), and maintaining a healthy work-life balance (44%), thus highlighting the connection between financial security and happiness.[1]

Of note, 73% agreed that a solid financial plan leads to greater happiness.1 Here are some ways you can help your mid-career employees through life challenges and assist them in pursuing their retirement savings goals.

Confirm Retirement Savings are on Track

Mid-career employees still have time on their side. By encouraging them to review their retirement contributions and plugging their information into a financial calculator, it could make the difference between retirement stress or retirement success.

1 - 5% deferral | Potentially insufficient to replace future income needs
6 - 8% deferral | Better but below recommendations
10 - 15% deferral | Recommended by industry experts

Leverage Financial Wellness Platforms

We live in a digital age where there's an app for everything, even financial wellness. By offering access to these platforms, you can empower your employees to take control of their finances. These platforms often include features like budgeting tools, financial health scores, and savings goal trackers. Adding these financial wellness apps to your employee benefits may greatly improve job satisfaction, retain employees longer, and increase workplace productivity.

Consider Family Caregiver Support Programs

Research shows that 56% of employees consider themselves caregivers.[2] Many mid-career employees are part of this “sandwich generation,” simultaneously raising children and caring for aging parents. Offering family caregiver support programs can help reduce this burden. This could be as simple as flexible work hours to accommodate morning drop-offs and afternoon pick-ups for children. It could also include more comprehensive support like resources for affordable care, aging-in-place, legal advice, and/or help with financial planning.

Because Education Isn’t Cheap

For employees who have children, one of the significant financial burdens for mid-career employees is saving for education. By offering information and access to 529 plans—tax-advantaged savings plans designed to encourage saving for future education costs—you can help reduce this stress.

However, a word of caution: as much as parents value their children's education, it's important to remember that while loans are available for college, the same cannot be said for retirement. So, encourage your employees to save for themselves first.

Emergency Savings, Withdrawals, and Loans

The SECURE Act 2.0 has introduced two new employee options aimed at enhancing financial flexibility:

Payroll deducted emergency savings or “sidecar” emergency savings accounts: Non-highly compensated employees can contribute up to 3% of wages into a capped $2,500 Roth-like account. Excess contributions spill over into their Roth 401(k). Notably, the first four yearly withdrawals from this emergency savings account are free.
Penalty-free emergency withdrawals: Another provision allows any participant to make a one-time, non-loan withdrawal of up to $1,000 from their retirement savings for emergencies, without the usual 10% tax penalty. The process requires minimal paperwork and can optionally be repaid within three years. Because this is not a loan and requires minimal paperwork, it could save busy HR professionals and 401(k) administrators time and streamline the distribution processes.

While it's advisable to leave retirement savings untouched, life happens. Providing options for loans or hardship withdrawals from retirement accounts can be a lifeline for employees facing financial difficulties. However, it's crucial to educate employees about the potential impact on their retirement savings to help them make informed decisions.

Leveraging Empathy

Empathy is key when helping your mid-career employees overcome these hurdles. Establish a relationship with a specialized retirement plan advisor to help understand their unique challenges. Listen to their concerns and provide them with the tools and resources needed to achieve their retirement savings goals. Remember, a financially secure employee is likely to be more engaged, productive, and loyal—factors that can significantly contribute to your company's success.

[1] Empower. “Financial Happiness.” Jan 2024.

[2] Bank of America. “2023 Workplace Benefits Report.” Aug 2023.

Hacked! Is Your Retirement Plan at Risk for a Cyber Attack?

Mon, 15 Apr 2024 04:13:49 GMT

Cyber-crime is on the rise worldwide. As a result, growing numbers of organizations are taking critical steps to protect their valuable electronic data from hackers and other cyber criminals — a process known as cybersecurity. It’s serious business, and a trend retirement plan sponsors and committees should pay attention to.

“Cyber-crime is the greatest threat to every company in the world,” said IBM’s chair, president and CEO Ginni Rometty. Billionaire investor and businessman Warren Buffett echoed that sentiment, claiming that “cyber-attacks are a bigger threat to humanity than nuclear weapons.” In short, cyber-crime is extremely dangerous, and many businesses are vulnerable to cyber-attacks — some without even knowing it.

Why Is Cybersecurity Important?

Thanks largely to the proliferation of high-profile cyber-attacks and data breaches that have hit organizations over the years, Gartner Group calculated an estimated worldwide cybersecurity spending of $150.4 billion in 2021. Moreover, information security research firm and publisher Cybersecurity Ventures predicts that, by 2025, cybercrime will cost the world $10.5 trillion annually. A single successful cyber-attack can cost an organization millions of dollars. Clearly, the costs related to cybersecurity threats are significant.

Cybersecurity and Your 401(k) Plan

Beyond the expenses related to a potential cyber-attack, there are a number of reasons why retirement plan sponsors and committees should focus on specific cybersecurity efforts to protect their plan assets and information. For starters, if you think your plan isn’t a target, think again. It’s not a matter of if, but when your plan gets hacked.

Here’s why: Recently, cyber attackers have begun to set their sights on plan sponsors themselves rather than their recordkeepers and custodians because they know that the former typically lack the sophisticated cybersecurity defenses of their vendors.

Cyber criminals also know that defined contribution (DC) plan sponsors and their vendors manage large amounts of money, and in so doing, collect highly sensitive personal data from plan participants and their beneficiaries. This includes names, address, birthdates and Social Security numbers. This information is extremely valuable to hackers because most of it is permanently associated with an individual and can’t be changed or cancelled like a credit card or bank account information.

Enrollment data such as account balance, direct deposit and compensation/payroll information is also at risk, and therefore, potentially vulnerable to a cyber-attack if not properly handled and protected by plan sponsors and their third-party vendors. Therefore, it’s critical for sponsors to address cybersecurity within their own organizations, as well with vendors such as recordkeepers, trustees, TPAs and investment advice providers, which receive personal data from the plan.

Some examples of cyber threats to retirement plans might include fraudulent distribution or loan requests, or ransomware attacks and phishing techniques where a hacker might obtain log-in credentials (i.e., through a stolen laptop or mobile device storing personal data and passwords) to access participants’ account information online.

What Is My Responsibility?

While retirement plan information is protected under specific regulations, there are no comprehensive laws that protect plan sponsors and service providers against cyber threats, like there are for group health plans (i.e., the Health Insurance Portability and Accountability Act, or HIPAA). Nonetheless, plan sponsors must act in a fiduciary capacity under the best interest clauses of the Employee Retirement Security Income Act (ERISA), the law that governs retirement plans. In addition, sponsors must adhere to the data privacy requirements for electronic notices. The following graphic breaks down the regulatory guidelines for plan sponsors’ fiduciary duties related to cybersecurity and electronic distribution of plan information:

Regulations and Cybersecurity*

Fiduciary Obligations

The selection and monitoring of service providers is a fiduciary act
The decision makers must act prudently and solely in the interest of the plan participants and beneficiaries
Plan fiduciaries are liable for failing to prudently select and monitor service providers
This may include prudence in selecting and monitoring service providers to ensure they maintain adequate cybersecurity practices and protocols

ERISA and electronic distribution of plan information

If plan notices are disseminated electronically, the plan sponsor (and not the service provider) is required to protect the confidentiality of personal data
Similarly, plan sponsors are required to take measures to ensure websites with plan information are secured to protect the confidentiality of personal information

*Source: Callan

Several states also have laws governing the protection of employees’ social security numbers and employers’ responsibilities to notify employees in the event of a security breach. However, these laws are designed to regulate the employer rather than the plan sponsor, so ERISA would likely take precedence in a retirement plan-related cyber-attack.

What Can I Do to Protect Plan Assets and Information?

Most organizations take a reactive approach to cyber-attacks, addressing them only after an incident has occurred. However, that can be expensive, complicated and mostly ineffective.

Plan sponsors have an opportunity to proactively address and manage cybersecurity risks using a variety of tactics to improve their ability to prevent, detect and respond to cyber-attacks.

First off, assume that your company’s retirement plan will be attacked. When setting up defenses against cyber threats, consider addressing the following questions:

What is our internal risk?
Where does our data go and how is it transmitted and stored (e.g., to third parties, or maintained on a server or in the cloud)?
Have we done appropriate due diligence on our vendors, and any partners with whom they may share data?
What is our organization’s definition of a “breach”?
What is our vendors’ definition of a “breach,” and what would prompt them to disclose that to us?
How do we monitor our internal processes and procedures, and that of our external partners, on an ongoing basis?
Do contracts and agreements cover indemnification, notification procedures (i.e., does the vendor have to notify us when it discovers a breach, or only after the breach has been contained) and remediation?
What is our process for when we experience a breach?

In addition, plan sponsors should:

Implement a specific process for addressing and fixing cybersecurity concerns, which would include, for example, identifying potential security gaps in how they share information with third party vendors.
Make sure they have appropriate cyber liability insurance coverage to help mitigate damages from potential attacks, and that they understand what the policy covers. Ideally, the coverage should be as broad as possible.
Consider hiring an outside cybersecurity firm with retirement plan experience to conduct periodic audits and ensure participants’ data is secure.
Thoroughly vet external service providers and negotiate to put responsibility on the vendor for correcting damages from a cyber-attack on a plan.
Put processes and stop gaps in place to restrict access to plan systems, applications, data and other sensitive information.
Develop a cybersecurity risk management strategy specific to their retirement plan, which addresses the sponsor’s response to a breach (including appropriate notices and remediation methods).

Moreover, sponsors should also encourage plan participants to:

Regularly check accounts for unauthorized activity.
Protect passwords and login information. Participants should choose strong passwords, change them regularly and avoid accessing retirement savings accounts using shared computers or open Wi-Fi networks.
Protect laptops and other devices with encryption.
Participants should be instructed to read plan-issued materials and keep their contact information up to date. Accurate contact information ensures they can be contacted as soon as possible in the event of a data breach so they can take immediate action.
Consider consolidating retirement sav ings when changing jobs. Fewer open retirement saving accounts means reduced odds of exposure to a data breach.

Cyber threats are evolving and becoming more sophisticated every year. As such, plan sponsors must do their best to try to stay one step ahead of hackers by heightening their cybersecurity defenses to protect the personal information of participants and their beneficiaries.

Retirement plan fiduciaries can take proactive steps to help secure sensitive retirement plan data. The challenge for many is knowing where to start. We hope this article provided several key steps plan sponsors and retirement committees can take to boost their cybersecurity protections and fortify their plans against insidious cyber-attacks.

[1]Morgan, Steve. “Top 5 Cybersecurity Facts, Figures and Statistics for 2018.” Jan. 2018.

[2]Oyedele, Akin. “BUFFETT: This is the number one problem with mankind.” May 2017.

[3]STAMFORD, Conn. “Gartner Forecasts Worldwide Security and Risk Management Spending to Exceed $150 Billion in 2021.” May 2021.

[Morgan, Steve. “Cybercrime To Cost The World $10.5 Trillion Annually By 2025.” 13, Nov. 2020.

Total Rewards Programs Key to Recruiting & Retaining Top Talent

Mon, 15 Apr 2024 03:54:09 GMT

Total rewards programs are a vital part of workplace culture, employee performance and securing top talent. Learn how program enhancements can help meet the demands of a changing workplace and workforce.

Plan sponsors are often faced with a balancing act of what benefits to offer versus what employees actually value the most. To develop the best program, many look to a total rewards approach, which provides a holistic look at compensation plus the “hidden paycheck” of benefits and wellness and/or education programs to empower employees.

5 Main Components

The main components of a total rewards program generally include the following:

Compensation: Normally the base pay received by an employee is often the entry point for the overall employment package. This can be the baseline of how an employee sees their worth and value at the company. Compensation, along with regular pay raises, help an organization motivate employees and improve business productivity and effectiveness.

Benefits: The term “benefits” covers a wide range of perks available to employees. Some are considered bedrock benefits, while others fringe. But to boil it down, benefits are essential for recruiting and retention efforts. In fact, nearly 7 out of 10 employees say their benefits package is the reason they stay at their job. Your benefits package should reflect the specific needs of your company and may include some of these most popular options:
Insurance Benefits: Medical Insurance, Dental/Vision Insurance, Telehealth, Mental Health Support
Financial Benefits: Retirement Plan, Financial Wellness, Student Loan Repayment, Emergency Savings Fund
Paid Time Off: Sick Leave, Flex/Vacation Time, Parental Leave

Work-life Balance: The effect of the COVID-19 pandemic on employers and employees was deeply felt, and yet, it highlighted the need for work-life benefits to become flexible and evolve. Several work-life features were ranked as extremely or very important by employees, including flexible work schedules (83%), leave of absence options (83%) and family-friendly work environments (76%). The pandemic caused many employers to revisit and revise their employee benefits last year and expand them to support employees who needed more remote work options, flexibility to care for family members and more ways to protect their physical and mental health. Employer ingenuity to address these needs further shows a commitment to their employees’ overall well-being.

Learning and Development: While educational training sessions can take employees away from their primary work, the intellectual capital gained from the practice are plentiful. Not only can these sessions contribute to employee morale and knowledge, but they also help to enhance efficiencies in one’s job, which can result in improvements to the company’s bottom line.

Performance and Recognition: Appreciation of employees’ actions can be monetary but also go beyond their paychecks. Recognition can increase employee self-worth and productivity, while it also highlights their value within a team as well as the company.

Total Rewards in 4 Steps

There are four primary steps to develop and maintain a total rewards program according to SHRM, the human resources non-profit:

Assessment of current benefits and compensation system to determine program effectiveness can involve surveying employees to gain opinions on pay, benefits and opportunities for growth and development, as well as examining current policies and practices. A summary of recommendations and solutions should be the desired outcome.
The design of the total rewards program should involve senior management to identify and analyze various reward strategies, while determining what would work best in their workplace.
HR departments implement and execute a rewards system. Employee communication and training is also necessary to measure relevant variables.
Total rewards program effectiveness must be regularly evaluated with the results communicated to company decision makers. Based on these reviews, modifications can be proposed and implemented.

Build It and They Will Come

Total rewards programs are critical for the workplace culture, employee performance and overall recruiting of top talent. And, as the workforce changes or becomes even more competitive, it’s important to evaluate, adjust and enhance your employee benefit package to remain competitive and continue to recruit and engage top talent.

This is where we can help. We are dedicated to helping our clients develop benefit plans that fit the needs of the business owner, focus on company goals and help employees feel confident in their financial future.

Helping Early-Career Employees Navigate the Saving Maze

Mon, 15 Apr 2024 03:54:07 GMT

Ways to boost financial confidence and loyalty for Gen Z employees

Have you ever found yourself pondering the classic "If only I could rewind the clock and share some pearls of wisdom with my younger self" scenario? As an employer, you have the chance to share this knowledge with your employees, especially when it comes to saving for the future.

The Impact of Early-Career Saving Hurdles

While everyone encounters challenges, certain obstacles tend to affect individuals early on in their careers more than their senior counterparts. Factors such as inflation, the cost of living, student loans, and impulsive 401(k) cash outs can significantly influence their financial well-being.

Gen Z employees, aged 18-24, emphasize that their overall well-being significantly influences their productivity. Many hold high expectations of their employers, expecting them to take responsibility for their financial wellness, provide retirement income, and offer guidance on investing in their 401(k) plans.

Let’s explore some of the challenges faced by employees in their early careers and discuss practical solutions we can help implement to empower them.

Combating the Burden of Education Debt

Now that the student loan freeze has ended, some individuals are encountering this issue for the first time, while others are readjusting. The weight of education debt can hinder the employee’s ability to contribute to their retirement savings, delaying their progress toward financial independence. Under the new rules in SECURE 2.0, employers can match contributions to retirement plans based on employees' student loan payments. This benefits individuals with student loans who might have refrained from contributing to a retirement plan, thereby missing out on employer matches and potential long-term savings. This simplified approach removes the complexity associated with previous non-elective contribution programs, which were subject to strict design and compliance requirements.

Saving in the Face of Inflation

Additional forces such as high cost of living and inflation serve as barriers to retirement savings, but younger employees seem to have the desire to save.

To encourage saving, the IRS provides a special tax credit, offering low- and moderate-income earners an additional incentive to save for retirement. If employees qualify for the Retirement Savings Contributions Credit, or Saver’s Credit, they might reduce their tax bill by up to $1,000 ($2,000 for a married couple filing jointly).

The Gift of Time in the Market

With time on their side, even small savings increments will have time to compound. This is where automatic plan design can be a very powerful tool to nudge savings.

Auto-enrollment ensures that employees are automatically enrolled in the 401(k) plan. This enhances participation while maintaining flexibility, as employees have the option to opt out at any time.
Auto-escalation gradually increases employees' contribution rates over time, typically by 1 – 2% per year. This feature not only instills a savings habit but also helps employees grow their retirement savings without requiring active involvement.
Preventing cash outs is another way to keep employees invested. This can be done by limiting loans at the plan level. Additionally, it is an opportunity to educate employees on their roll-in and rollover options when joining or leaving the company.

Encourage younger employees to save, keep saving, and roll over their 401(k) assets, no matter how small. This habit will help them develop a continuous savings pattern which can set them up for a financially secure future.

Increasing Financial Literacy

Because many employees look to their employers for help with financial wellness, an opportunity exists to make an impact. By offering employee education resources or one-to-one meetings, we can help employees build financial confidence. This empowers them to make smart choices, affording them a feeling of control over their financial future.

Elevate Savings

Addressing the early-career savings hurdles requires a multifaceted approach. Employers who invest in their employees' financial well-being not only contribute to a more secure retirement but also foster a workforce that is engaged, focused, and motivated. By exploring these solutions, companies can play a vital role in empowering their employees to overcome financial challenges, which can set the stage for a prosperous and secure future.

primark-benefits

It’s Not Too Late: Employers Can Still Set Up Retirement Plans and Unlock Significant Tax Savings for 2025

Q1 2026 Newsletter

What We're Seeing

﻿ Across Retirement Plans:

2026 Compliance Calendar

2026 Annual Limits Reminder

Seasonal Workforces and Retirement Plans: What Wineries Need To Know

Retirement Plan Design Challenges Facing Architecture and Design Firms

Hidden Risks of Low-Quality Retirement Plan Services – Part I: Complexity and Operational Risk

How Your Business Entity Type Can Actually Affect Your Retirement Plan

Why Payroll Platforms Weren’t Built to Be Retirement Plan Administrators

It’s Not Just You: 2026 Feels More Complicated for Retirement Plans, because It IS More Complicated!

Why Do So Many Non-profits Have the Wrong Type of Retirement Plan?

There are an estimated two million non-profit organizations in the U.S. This includes public charities, private foundations, and other types of organizations, such as schools and religious institutions. These entities operate under different tax laws and structures than for-profit companies do.

Q4 2025 Newsletter

What We're Seeing

﻿ Across Retirement Plans:

2026 Compliance Calendar

2026 Annual Limits Reminder

2026 Retirement Plan Limits

The Roth Catch-Up Trap

How to “Break” a Retirement Plan, Part III: What the IRS Finds Most Often

Q3 2025 Newsletter

Here's What You Need to Know

How to "Break" a Retirement Plan: Part II

Retirement Plan Myth-Busting, Part IV: State-Run Retirement Plans

How to "Break" a Retirement Plan: Part I

Welcome to our new series, How to “Break” a Retirement Plan, where we discuss what leads to a retirement plan being categorized as “broken,” ways to fix broken plans, and compliance tips for how to avoid a broken plan in the first place.

What You Need to Know About SECURE 2.0 Catch-Up Contribution Changes

Updated December 31, 2025

Retirement Plan Myth-Busting, Part III

Case Study: How Plan Design Improved Participation Rates and Compliance

Q2 2025 Newsletter

Here's What You Need to Know

It’s Not Too Late! Employers Can Still Set Up Retirement Plans and Get Large Tax Deductions for 2024

Recent changes in tax law have expanded the flexibility employers have when it comes to establishing and funding retirement plans. If you haven’t yet set up a retirement plan for 2024, we have good news: it might not be too late!

What the Heck Is a Third-Party Administrator (TPA)? And Why Should I Use One? Part II

Retirement Plan Myth-Busting, Part II

What the Heck Is a Third-Party Administrator (TPA)? And Why Should I Use One?

Retirement Plan Myth-Busting, Part I

Q1 2025 Newsletter

Here's What You Need to Know

Understanding ROTH Retirement Accounts: The Hidden Risks

Best Practices for Retention of Retirement Plan Records

Super Catch-Up Contributions under Secure 2.0: Enhanced Retirement Savings Opportunities

Primark Benefits is continually monitoring legislative updates. As such, we are sharing this reminder about the “super catch-up" contributions available under The SECURE 2.0 Act, in effect as of the start of 2025.

Automatic Enrollment for Long-Term Part-Time Employees under Secure 2.0

2025 Contribution Limits

The new Retirement Plan Contribution Limits are official!

5 Common Retirement Plan Errors and Tips to Fix

Mistakes happen–Here’s how to correct common 401(k) plan errors.

Unlocking Tax Relief and Employee Appreciation: The Power of Profit Sharing

Profit sharing is not just a tool to reduce your company's tax liability; it is also a powerful means of expressing gratitude towards your employees.

Retirement Plan Review: From Participation Rates to SECURE 2.0

Automatic Features to Help Boost Participation and Savings Rates

Small Plans Playing Catch Up

The Impact of Auto Features

Getting Smaller Employers on Board

5 Ways Business Owners Can Optimize Retirement Savings

Key strategies to help employers maximize savings and minimize taxes.

Exploring In-Plan Retirement Income Solutions

To help prevent potential retirement delays, consider retirement income solutions to boost participants’ confidence in their future financial security.

Crafting an Effective and Competitive 401(k)

Balance cost and competitiveness without compromise.

Benefit Insights Newsletter - Summer 2024

We are excited to deliver the Summer 2024 Newsletter.

4th Quarter Compliance Reminders

As we approach the end of 2024, there are plenty of important deadlines to be mindful of. Staying on top of these deadlines contributes to the ongoing compliance of your plan and provides a seamless experience for your employees.

What's Going On in Washington?

Exploring current ERISA and DOL areas of interest

SECURE 2.0 Update: Looking Ahead

7 Questions to Help Optimize Your 401(k) Plan

Let’s explore some of the critical elements of workplace retirement plans.

5 Tax Strategies for Business Owners

For business owners, striking a balance between operating costs and profit is the cornerstone of success.

401(k) Plan Design for an Age Diverse Workforce

Navigating retirement preparedness across generations

Boosting Retirement Confidence for Near-Retirees

Employees late in their careers need information that helps smooth the transition into retirement.

Across Retirement Plans:

Across Retirement Plans: