Q2 2022 Newsletter: Current Trends + Projections Edition for 401(k) Plans

Over the last few years, employees’ mindsets have changed, shifting to wanting more than just a raise every year.

Employees want a total rewards package that includes everything from a retirement plan to financial wellness and more work-life balance flexibility.

Read about the changes coming to the total rewards landscape such as guaranteed income, how to calm inflation concerns and the top total rewards opportunities this year.

Download the Newsletter >>

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

www.alliant401k.com

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice.

Guarantees are based on the claims paying ability of the issuing insurance company. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.

Total Rewards Programs Key to Recruiting & Retaining Top Talent

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.[1] 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%).[2] 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.[3]
  • 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:[4]

  1. 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.
  2. 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.
  3. HR departments implement and execute a rewards system. Employee communication and training is also necessary to measure relevant variables.
  4. 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.

We can help. Retirement plans and what they include are a valued benefit in the total rewards mix for job-seekers and employees alike.  We are dedicated to helping our clients develop plans that fit the needs of the business owner, focus on company goals and help employees feel confident in their financial future.

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

www.alliant401k.com

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

 

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

 

[1] Ameritas. “What Benefits Do Employees Value Most?” April 2021.

[2] Miller, Stephen. “SHRM Benefits Survey Finds Renewed Focus on Employee Well-Being.” SHRM.org. Sept. 2021.

[3] Miller, Stephen. “SHRM Benefits Survey Finds Renewed Focus on Employee Well-Being.” SHRM.org. Sept. 2021.

[4] SHRM.org. “What are total rewards strategies? Can you give me some idea on how to develop a total rewards strategy?” 2022.

Guide to Paying Down Student Loans

 

Help your employees find ways to manage their student debt with:

  • Refinancing options
  • Repayment plans
  • Forgiveness Programs
  • Loan Consolidation

These strategies can ease your employee’s financial headaches so they can focus on being productive in the workplace.

Download the Infographic >>

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

www.alliant401k.com

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

 

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.

Cybersecurity Best Practices for Employees

With trillions of dollars in America’s retirement savings plans, your employee’s hard-earned savings are not immune to cybercriminals. Hackers are getting smarter every day, and all they need to drain an account is a name, SSN, date of birth, address and social media intel.

Take a peek at our easy-to-use checklist of online security tips that can help your participants keep their retirement savings safe from cyberthieves.

Download the Guide

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.

Guide to Understanding DOL Audits

DOL Audits happen, are you prepared?

By taking proactive measures, conducting due diligence and documenting your plan actions, you can help position your 401(k) plan to pass an audit. To help you prepare, here are 8 key steps and a list of fiduciary documents to have on hand.

Get our Guide to Understanding DOL Audits below and share it with your retirement plan committee.

Download the Guide

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

 

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC.  All rights reserved. Proprietary and confidential.  Do not copy or distribute outside original intent.

Cybersecurity Best Practices for Plan Sponsors

Keeping your plan data safe

Cybersecurity is a critical but often overlooked aspect of a plan sponsor’s fiduciary responsibility. In simple terms, cybersecurity means protecting sensitive plan and participant data — and by extension, your participants’ financial well-being and retirement security — against attacks from hackers and cyber criminals.

The Department of Labor has outlined 12 cybersecurity best practices:

  1. Have a formal, well documented cybersecurity program.
  2. Conduct prudent annual risk assessments.
  3. Have a reliable annual third party audit of security controls.
  4. Clearly define and assign information security roles and responsibilities.
  5. Have strong access control procedures.
  6. Ensure that any assets or data stored in a cloud or managed by a third party service provider are subject to appropriate security reviews and independent security assessments.
  7. Conduct periodic cybersecurity awareness training.
  8. Implement and manage a secure system development life cycle (SDLC) program.
  9. Have an effective business resiliency program addressing business continuity, disaster recovery, and incident response.
  10. Encrypt sensitive data, stored and in transit.
  11. Implement strong technical controls in accordance with best security practices.
  12. Appropriately respond to any past cybersecurity incidents.

To help maintain your fiduciary responsibility, here are 11 key questions you should be asking your 401(k) service providers about cybersecurity:[1]

  1. What are your procedures for dealing with cybersecurity threats and protecting participants’ personal information?
  2. Do you conduct periodic risk assessments to identify vulnerabilities to cybersecurity threats and the impact of potential business disruptions?
  3. Do you conduct an annual, independent assessment of your cybersecurity systems and policies?
  4. Can you describe how plan and participant data is encrypted (census upload, enrollment, payroll uploads, transfers and other data exchange policies)?
  5. What are your procedures for notifying us of a system breach?
  6. Does your company carry cybersecurity insurance? If yes, can you provide an overview of the coverage (including all limitations)?
  7. Has your company experienced any security breaches? If yes, explain.
  8. How do you store, retain, and destroy sensitive data?
  9. Does your company outsource any services to a subcontractor? If yes, what controls are in place to protect our company’s sensitive data?
  10. Do you have a privacy and security policy, and does the policy apply to personally identifiable information of retirement plan clients?
  11. Does your business continuity and disaster recovery plan include the recovery of an employer’s data after a breach?

Cybersecurity concerns us all. Whether you are a small business owner or the CEO of a Fortune 100 company, ask your 401(k) service providers these questions and document their responses, because knowing what could cause a data breach is the first step in preventing one.

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

 

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

[1] 401khelpcenter.com “401k Service Providers and Cybersecurity: Questions to Ask.”

How to Prepare for a 401(k) Audit

If the term ”audit” makes you uncomfortable, anxious or even scared, you are not alone. Last year, the Department of Labor (DOL) closed 1,122 civil investigations with 754 (67%), resulting in fees, repayments or corrective actions.[1] The agency collected over $3.12 billion in direct payments to plans, participants and beneficiaries. This represents a whopping 300% increase in just five years.[2]

From this perspective, you might think there is no chance that you’re walking out of an audit unscathed. However, the outlook is a little less bleak when you realize that in the US, there are nearly 722,000 retirement plans and only 1,122 escalated to investigation.

So instead of viewing the DOL as the boogey monster or fearing a 401(k) audit, let’s take a look at the utility behind audits, identify red flags and establish best practices to help demystify the process.

What is a 401(k) Audit?

There are different kinds of retirement plan audits.  Large plans – those with more than 100 participants – must schedule an annual audit with an independent auditing firm.  The independent firm helps the plan sponsor make sure they are adhering to the guidelines and regulations set by the DOL and IRS.  An independent audit can help prevent errors while helping sponsors correct mistakes that left alone could create greater problems or trigger a government audit.  Plan sponsors may have greater concern if they receive an audit request from the DOL or IRS.

What are Audit Red Flags?

Frequently, DOL or IRS audits result from a situation that might be avoided.  Consider these audit red flags and what you can do to minimize their occurrence.

Employee Complaints

Individual complaints from employees are a frequent source of DOL investigations. From a total of 171,863 inquiries from workers, 357 resulted in the opening of new investigations and more than half of all monetary recoveries relate to benefits of terminated vested participants of defined benefit plans.[3] The simple lesson here is that plan sponsors must establish clear protocols for how participants can communicate questions or complaints about their benefits to the plan sponsor before filing complaints with the DOL. Quick and effective responses are critical.

DOL Enforcement Priorities
Examinations may also relate to enforcement priorities launched by the DOL.  As of this publication, the agency “continues to focus its enforcement resources on areas that have the greatest impact on the protection of plan assets and participants’ benefits.”[4]  Recent priorities include plan sponsors’ attention to the cybersecurity policies of their service providers and their tracking of terminated participants.

Delinquent Contributions and other Missteps
Delinquent contributions are pursued as part of an ongoing national priority. These are easy pickings for the DOL and a clear violation of the most basic fiduciary standards. This should be done within the given year’s contribution-eligible time period and at a consistent time each pay to avoid attention from the IRS/DOL.

Plan sponsors are encouraged to review their Form 5500 and other records to spot missed contributions and other trouble points, such as:

  • Inadequate ERISA bond (10% of plan assets or $500,000, whichever is less, unless plan investments include company stock).
  • Assets not held in trust
  • Paying unreasonable compensation to service providers (conduct regular fee benchmarking to avoid this)
  • Paying expenses from the plan that are actually expenses of the employer. (Known as “settlor expenses,” these costs include consulting services regarding plan design or plan termination.)

A Knock at the Door

If you happen to receive a notice from the DOL about an audit or an investigation, your response should be the same:

  • Take a deep breath.
  • Put your team together and choose a qualified primary contact person.
  • Strongly consider engaging ERISA counsel. Expert help may avoid missteps and provide an intermediary for difficult conversations.
  • Consider requesting an extension of time to respond. Many initial deadlines can be short for complex exams. Extensions, if reasonable, are routinely granted.
  • Review all documents prior to production. Be ready to report any issues found.
  • Deliver documents in neat and organized fashion.
  • Prepare employees for interviews. Treat it like a deposition. Caution them to take their time, thoughtfully consider their responses and ask for clarification of any questions they do not understand.
  • Always be truthful and respectful.

 

What Documents are Typically Requested?

The sheer volume of documents requested may at first seem overwhelming, but the requests will be for documents you should have readily available in your files. They include:

  • Plan document, Summary Plan Description (SPD), Summary of Material Modification (SMM)
  • Investment Policy Statement, plan records of fees/expenses
  • Form 5500
  • Participant fee disclosures (404a5), benefit statements and notifications
  • Service provider contracts and fee disclosures (408b2)
  • Participant claims and benefits data
  • ERISA Bond and any fiduciary liability insurance
  • Fiduciary committee charters, committee meeting minutes and other records
  • Documents about your company and organizational charts
  • More recently, cybersecurity practices

 

Stay Prepared

Whether you are subject to a routine audit or a red flag prompts an investigation, it is important to remember that fiduciary vigilance is key. The best preparation is to follow sound operational procedures every day and not fall behind.

 

 

Toll Free: (866) 364-6262 | Fax: (703) 878-9051

 

MANASSAS OFFICE

9161 Liberia Avenue

Suite 100

Manassas, VA 20110

Office: (703) 878-9050

 

RESTON OFFICE

11921 Freedom Drive

Two Fountain Square

Suite 550

Reston, VA 20190

Office: (703) 904-4388

 

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

[1] Department of Labor. “Fact Sheet. EBSA Restores Over $3.1 Billion to Employee Benefit Plans, Participants and Beneficiaries.”  2020.

[2] Ibid.

[3] Ibid.

[4] Employee Benefits Security Administration. “Enforcement.” DOL.gov. Accessed 2021.