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Retirement

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Market Commentary from Ashley Vice, CFA, CFP

Last year, Barron’s magazine asked ten top strategists to predict where the S&P 500 would end 2020. Their range was 3,000 to 3,700. The final number was 3,756 for a year-over-year return of 16.3%—much better than expected. Had the strategists possessed foreknowledge that a global pandemic would shut down the services economy and send unemployment numbers to the highest level since the Great Depression, I doubt we would’ve seen a single year-end target with a 3-handle. But as of this writing, most markets are at or near all-time highs. That’s because the worst pandemic in the last hundred years was met...

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IRS Releases 2021 Retirement Contribution Limits

Many Employee Contribution Limits Remain Unchanged The IRS has announced the cost-of-living adjustments for 2021 that affect amounts employees can contribute to 401(k) plans and IRAs. The following amounts remain unchanged for 2021: The employee contribution limit for 401(k) plans will remain $19,500. The catch-up contribution limit for employees aged 50 and over also remains unchanged at $6,500. The employee contribution limit for IRAs will remain $6,000. The catch-up contribution limit for employees aged 50 and over also remains unchanged, at $1,000. The employee contribution limit for SIMPLE IRAs and SIMPLE 401(k) plans will remain $13,500. Click here for more information. ...

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Market Commentary from Ashley Vice, CFA, CFP

2020 is making it harder to talk about “markets” as if they are a common entity and not thousands of individual companies facing dramatically different challenges and opportunities. I could say that “the market” is up through the third quarter, but that would be a poor description of the year so far. What has really happened is that a handful of very large tech-oriented US stocks have had a great year while the other 99% of publicly-traded companies around the world have had a year ranging from unexceptional to awful. The dispersion of returns between the best and worst sectors, sizes...

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Plan Sponsor Guide: Understanding 401(k) Loans

Although not required by law, many 401(k) plans offer a loan provision as a way for plan participants to access money prior to retirement.  The thinking is that more employees will contribute to the plan if they know they can tap into their savings should they incur an unexpected expense while working; conversely, if employees can only access their savings at retirement, employees may decide not to contribute at all. Rates & Loan Amounts The loan rate is determined by the plan (i.e., the plan sponsor or plan fiduciaries) and is usually equal to prime rate plus 1%.  Plans will often set...

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What is 401(K) Benchmarking and Why Should You Do It?

Simply stated, benchmarking is the process of reviewing and evaluating your company retirement plan. It involves taking a look at what you are offering your employees today and deciding if it’s appropriate or needs some updating. There are four main areas to focus on when assessing your retirement plan: Plan Design Service Providers Funds Fees Each aspect of your plan requires a slightly different set of questions and documented responses. To go into detail about each section, we will break this into a two-part series, beginning with Plan Design and Service Providers; but don’t worry, we will discuss Funds and Fees...

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The Link Between Employee Productivity, Health, and Financial Stress

If you think financial wellness programs are a fad, think again. The industry consensus is that financial wellness not only produces results for employees, but it positively influences company bottom lines. That’s good news for a number of reasons, especially for the juggernaut of financial stress in the workplace during these uncertain and unprecedented times. A recent study found that nearly 60% of respondents listed financial matters as the top cause of stress. Additionally, they found that 35% of employees report that issues with personal finances have been a distraction at work.[1] Causes of financial stress vary by generation but include not having...

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In Recovery? Market Commentary from Ashley Vice, CFA, CFP

9 minute read Here’s what 2020 has thrown at us so far: a global pandemic, economic depression, tens of millions unemployed, zero-percent interest rates, unprecedented monetary and fiscal stimulus, an explosion in the debt and deficit, and social unrest in the form of riots and protests. And there’s a presidential election in four months. Meanwhile the S&P 500 is essentially flat for the year. The question I get most often is “how can the markets be this strong with all that’s going on? It seems disconnected from reality.” I understand the sentiment but there’s good reason for the resilience. Widely-followed indices like the S&P...

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DOL Finalizes New Method for Electronic Delivery of Retirement Plan Disclosures

On May 21, 2020, the U.S. Department of Labor (DOL) published a final rule that will allow plan administrators to post retirement plan disclosures online or deliver them to employees by e-mail, as a default, to comply with their statutory duty to furnish documents under ERISA. This new safe harbor permits the following two optional methods for electronic delivery: Website posting—Plan administrators may post covered documents on a website, if appropriate notification of internet availability is furnished to the electronic addresses of covered individuals. E-mail delivery—Alternatively, plan administrators may send covered documents directly to the electronic addresses of covered individuals, with the documents...

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Coping with Market Volatility: Understand How Your Biases Can Affect Investment Decisions

When it comes to your finances, "go with your gut" might not be the wisest adage to follow. In fact, it may work against you, particularly in periods of market turbulence. Before jumping to conclusions about your finances, consider what biases may be at work beneath your conscious radar. Recency bias refers to the tendency for recent events to have a stronger influence on your decisions than more distant events. For example, when the market was in the midst of an 11-year bull run, you may have increased your investments in equities, hoping to take advantage of any further gains. By...

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CARES Act: Retirement Plan Relief Provisions

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. This $2 trillion emergency relief package represents a bipartisan effort to assist both individuals and businesses in the ongoing coronavirus pandemic and accompanying economic crisis. The CARES Act provisions for retirement plan relief for individuals under federal tax law are discussed here. For those seeking access to their retirement funds, these include special provisions for coronavirus-related distributions and loans. For those seeking to preserve their retirement funds, certain required minimum distributions from retirement funds have been suspended. Coronavirus-related distributions A 10% penalty tax generally applies to...

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