iWork: The Next-Gen Workforce
End of the Year Checklist
Times can get tough for people. With the onset of Hurricane Harvey having decimated parts of the Gulf Coast and Hurricane Irma following its destructive lead, we are reminded that at any point we may find ourselves in hardship. Companies make layoffs, natural disasters occur, emergencies… well, emerge. With nowhere else to turn, some will look to their 401k for their own disaster relief. A withdrawal in the form of a "hardship distribution" is one of the tools that participants may use in this situation. This year the IRS released new examination guidelines for documenting hardships. Their intent is to clarify the documentation process of proving the existence of a hardship and verifying that the amount withdrawn did not exceed the actual financial need.
There has been much upheaval in the retirement world as of late and it centers around the new fiduciary rule. The New Fiduciary Rule means that many investment professionals that weren't previously considered fiduciaries will now have to take on that role. So, why is that such a bad thing? Well, it's not per se, but the implications of how this may change the way the investors and their companies function may leave them frustrated and tentative towards some future business. But before we get too bent out of shape, let's break it down and see what we're truly looking at.
Participant Loans: Benefit or Detriment?
Retirement Plan Maintenance
Every plan sponsor has a fiduciary responsibility to account for all funds in a retirement plan—including uncashed distribution checks. Do you know what your responsibilities are when a check goes uncashed or a plan participant falls off the grid? Is there a point at which you are no longer liable?
Although it's certainly true that not enough Americans are saving for retirement, it's also true that the many millions who are saving do so through an employer-sponsored defined benefit 401(k) plan. And as you may well know, 401(k) plans tend to generate a considerable amount of financial activity. The mobility of today's workforce means employees often request distributions when they move from one employer to another. Rollovers are common, too, as are hardship withdrawals.