Vestwell Partners With Namely to Provide a Seamless Digital Retirement Platform With Payroll Integration

Collaboration provides companies with a user-friendly, integrated digital retirement experience

NEW YORK, NY, April 12, 2018 – Vestwell, a digital retirement platform, announced today that it is partnering with Namely, a leading HR platform for mid-sized companies, to provide an all-in-one retirement experience for plan sponsors and their employees.

Vestwell’s retirement offering will now integrate into Namely’s platform. Through single sign on, users will gain access to key benefits and retirement information, all in one place. More importantly, the new offering provides payroll integration, thus removing the significant administrative burden from plan sponsors of providing ongoing payroll information and updated election deferrals.

“At Vestwell, our key objective is to modernize how retirement plans are offered and administered, and our partnership with Namely does just that,” said Aaron Schumm, founder and CEO, Vestwell. “By coupling Vestwell’s turnkey retirement solution with Namely’s humanized and savvy HR system, we’re able to create a more harmonious experience for the plan sponsor and their participants.”

Namely clients interested in Vestwell’s services for their retirement offering will benefit from a simplified payroll integration, fast and easy onboarding, transparent pricing, and streamlined administration.

“At Namely, we’re focused on providing mid-sized companies with best-in-class technology for all of their HR needs,” said Michael Manne, VP Sales, Namely. “We’re excited to partner with Vestwell to provide our clients with a like-minded, advanced technology solution that seamlessly integrates into our HR platform.”

About Vestwell Holdings, Inc.

Vestwell is a digital platform that makes it easier to offer and administer 401(k) plans. Vestwell removes traditional friction points through a seamless plan design, automated onboarding, streamlined administration, and flexible investment strategies, all at competitive pricing. By acting as a single point of contact, Vestwell has modernized the retirement offering while keeping the plan sponsor’s and plan participant’s best interests in mind. Learn more at Vestwell.com and on Twitter @Vestwell.

About Namely

Namely is the first HR platform that employees actually love to use. Namely’s powerful, easy-to-use technology allows companies to handle all of their HR, payroll, time management, and benefits in one place. Coupled with dedicated account support, every Namely client gets the software and service they need to deliver great HR and a strong, engaged company culture.

Namely is used by over 1,000 clients with over 175,000 employees globally. Headquartered in New York City, the company has raised $157.8 MM from leading investors, including Altimeter Capital, Scale Capital, Sequoia Capital, Matrix Partners, and True Ventures. For more information, visit www.Namely.com.

Your Clients’ Plan Audit Qs, Answered

 

If your plan sponsors aren’t already, they should be preparing their year-end report. The penalties for failing to conduct an audit can be substantial. Issues can surface during the audit that may be easier and less expensive to correct now versus down the road.

For plans with 100 or more eligible participants at the start of the plan year, the annual report must include an audit report issued by an independent qualified public account stating whether the plan’s financial statements conform with generally accepted accounting principles. An audit should comfort participants, knowing their plan’s operating processes are in good order.

We’ve put together some common questions and answers to help your plan sponsor understand the audit rules – and so you can ensure your clients are taking them seriously.

IS THE PLAN EXEMPT FROM THE AUDIT REQUIREMENTS?  

Governmental plans, church plans, and certain 403(b) plans that qualify under safe harbor are exempt from the audit requirements.

HOW DOES A PLAN SPONSOR FIND AN AUDITOR?

ERISA requires that the auditor be independent. and Sponsors should utilize a firm that is separate from the employer’s accounting firm and does not do any other business with the company or any of its directors or owners.

HOW IS THE NUMBER OF ELIGIBLE PARTICIPANTS CALCULATED?

The eligibility rules can be complicated.  In general, plans with 80 to 120 participants at the beginning of the current plan year may choose to complete the current annual report using the same “large plan” or “small plan” category used for the previous year. If the Plan previously filed as a “small plan” last year, it may wish to again for the following plan year.

WHAT DOCUMENTS DO PLAN SPONSORS NEED TO PROVIDE?

Every audit is different, but the auditor will likely need to review records relating to participant enrollment, plan contributions and distributions, auto-enrollment, and payroll files. Sponsors may need to provide records relating to tax compliance, related party transactions, and the Plan’s benefits committee (if it has one).

HOW LONG WILL THE AUDIT TAKE?

Sponsors should begin the audit process at least 90 days before the Form 5500 deadline to allow enough time to gather documents, follow up on open items, prepare financial statements, and wrap up.

HOW MUCH WILL THE AUDIT COST?

An auditor may charge $2,500 – $10,000, or more, depending on the size and complexity of the plan.

Yes, Plan Sponsors are Still Fiduciaries

 

You may be confused by the recent news about the DOL Fiduciary Rule: Was the rule declared invalid? Will the SEC move ahead with its own Fiduciary Rule?  Will the Supreme Court issue a decision? Your confusion is appropriate as the status and future of the DOL Fiduciary Rule is still in flight. However, one constant remains and that is the Plan Sponsor’s fiduciary duty to the Plan and its participants.

ERISA and the DOL

The DOL’s Fiduciary Rule was finalized in 2016 and was supposed to go into effect at the start of 2018.

This rule was designed to eliminate financial advisor conflicts of interest when dealing with client retirement accounts. While it had provisions relating to 401(k) plans, it’s important to remember that any delay or even the possible nullification of the rule does not impact the fiduciary duties of a 401(k) plan sponsor.

Any financial advisor who works with plan sponsors can help ensure that their clients are aware of this.

A sponsor’s fiduciary role

 ERISA cites five standards of fiduciary care on sponsors of retirement plans. These boil down to the fact that a plan sponsor must make all decisions with the best interests of the plan participants in mind.

One key standard that has received attention in recent years is the responsibility to keep expenses low for plan participants.

While there is no firm standard for this, this issue has been the basis of a number of lawsuits against plan sponsors. Most of these suits have been brought against large employers, however, in recent years, even smaller plans have not been immune.

Reach out to clients now

 Periods of market volatility signal good opportunities to reach out to your current and prospective clients.

Start by confirming that their current plans are low cost and perform relative to their asset class peers. Find out:

  • Are all fees and expenses transparent, both those that are paid from the participant’s accounts and those paid by the sponsor?
  • Is there a process in place to select, monitor, and (when needed) replace investment choices?

Ideally, your client has an Investment Policy Statement in place for the plan. A solid, consistent, and documented investment process is a great way to demonstrate that the sponsor is acting in a responsible fiduciary capacity.

Beyond just meeting their fiduciary obligations, savvy plan sponsors want to provide the best possible retirement vehicle for their employees (and themselves) to ensure that employees can retire on time.

Advisors are also fiduciaries

 As an advisor you have two options as a fiduciary.

A 3(21) fiduciary serves as a co-fiduciary with the plan sponsor making all final decisions as to the plan’s investments and other decisions including the selection of service providers.

A 3(38) fiduciary has the discretion to make all investment and provider decisions; this is delegated to the advisor by the sponsor.

XY Planning Network Announces 3rd Annual Advisor FinTech Competition

The nomination window for the XY Planning Network 3rd annual Advisor FinTech Competition is now open! Crafted to support startup advisor tech firms, Vestwell is proud to have been named as 2017’s winner. Our founder and CEO, Aaron Schumm, noted the impact saying “The rapid growth stemming from this partnership is a clear testament of how XYPN is a champion for their partners – and it is an honor for Vestwell to be a part of their vision to serve the industry.” Learn more about the upcoming competition here.

 

 

Vestwell Announces Four Strategic Appointments – Marking a Significant Breakthrough in the Company’s Growth

 

NEW YORK, NY, March 13, 2018Vestwell, a digital retirement platform, today announced the appointments of two new board members who will provide strategic counsel on areas including best practices, innovative ideas, and the firm’s trajectory. Drew Lawton joins the firm’s Advisory Board and John Moody joins the Board of Directors. Additionally, the firm has hired Benjamin Thomason as executive vice president of sales and John Skovron as chief technical officer (CTO). These strategic appointments support Vestwell’s dedication to enhancing their technology, supporting clients, and making retirement plans simpler and more accessible.

John Moody, founder and former president of Matrix, will leverage his knowledge as an operator and his position as an industry guru to enhance Vestwell’s value proposition by serving on the Board of Directors. John’s firsthand experience in building scale around a growing business makes him well suited to help Vestwell increase market share.

Drew Lawton, former CEO of New York Life and Pyramis – Fidelity’s retirement vertical, has recently joined Vestwell’s Advisory Board. As a former operator on the institutional side, Drew’s extensive wealth of knowledge in the financial services space will help steer the company to new strategic heights.

“Both John and Drew bring imposing knowledge from their careers in financial services and their insight will advance Vestwell’s mission to help advisors more seamlessly offer retirement plan services to their clients,” said Schumm. “I welcome them to Vestwell and look forward to hearing their valuable perspectives as Vestwell continues to poise for new growth.”

To support ongoing growth including the expansion of offerings and services, Vestwell has brought on two senior hires in Benjamin Thomason and John Skovron.

Benjamin Thomason joins Vestwell as executive vice president of sales from Goldman Sachs where he was responsible for developing institutional partnerships for Honest Dollar. With over 15 years of financial services industry experience, Benjamin will lead Vestwell’s sales and service operations with a focus on expanding the firm’s advisor relationships, building new strategic institutional relationships, and maintaining world-class customer service.

John Skovron previously served as senior vice president platform engineering at Integral Ad Science focusing on high throughput data collection, big data processing, software testing and release engineering, and technical and network operations. As the new CTO at Vestwell – and backed by over 30 years’ experience – John will serve as an invaluable asset as he drives Vestwell’s technological advancements.

“Vestwell continues to thrive due in large part to the many talented individuals that have come together,” said Vestwell CEO Aaron Schumm. “We are excited to have Ben and John join our team and reinforce our strategic game plan. They both bring abounding competence to their roles, and as we aim to expand our business model, their expertise will significantly augment our services and offerings.”

For more information about Vestwell, please visit: http://www.vestwell.com/.

About Vestwell Holdings, Inc.

Vestwell Advisors, LLC is a SEC registered investment advisor, a wholly owned subsidiary of Vestwell Holdings, Inc., specializing in 401(k), 403(b) and other defined contribution and benefit retirement investment management services. Built by an experienced team led by CEO Aaron Schumm, Vestwell can assume 3(38) or 3(21) investment management and ERISA3(16) fiduciary responsibility on the behalf of advisors and their plan sponsor clients. Learn more at Vestwell.com and on Twitter @Vestwell.

This is not an offer, solicitation, or advice to buy or sell securities in jurisdictions where Vestwell Advisors is not registered. An investor should consider investment objectives, risks and expenses before investing. More information is available within Vestwell Advisors’ ADV.  There are risks involved with investing. Investors should consider all of their assets, income and investments. Portfolios are subject to change. All opinions and results included in this publication constitute Vestwell Advisors’ judgment as of the date of this publication and are subject to change without notice.

Media Contacts:

Jessica Torchia

917-636-4804

Jessica.Torchia@ficommpartners.com

Why Business Owners Should Consider Cash Balance Plans

 

 

Cash balance pension plans aren’t new, but they are gaining in popularity.

Companies that offer their employees a cash balance plan may benefit from cost-savings over a traditional pension plan, as well as significant tax savings versus a 401(k) or other defined contribution plan.

What is a cash balance plan?

A cash balance plan is a type of pension plan where an employer credits an employee participant’s account with a set percentage of his or her annual salary, plus an interest credit. This interest credit is typically tied to the interest rate of an outside index, such as the one-year U.S. Treasury Bill rate.

Cash balance plans are defined benefit (DB) plans, which means that employees are guaranteed a specific “defined” amount upon retirement.

Like any DB plan, a cash balance plan is subject to pension funding requirements and the company is ultimately responsible for ensuring the plan is funded.

These pensions typically start paying out around age 65, but could be as early as 55 depending on the company. Note that employees don’t invest any of their own money in the plan, and they typically have no input into the investing choices.

But unlike DB plans, cash balance plans do offer transparency; participants can actually keep track of their account balances.

Cash balance plans also differ from traditional pension plans because they offer the benefit of portability. If an employee leaves the company prior to retiring, the balance is portable and can be rolled over to an IRA, if desired.

Why a cash balance plan?

Each year, a company makes contributions of a specified amount of earnings to each employee participant’s account. Employers who offer cash balance plans typically contribute 5-8% annually, which is generally higher than DB plan contributions.

These levels increase for older workers: The annual contribution limit for a 55-year-old is more than $160,000, and more than $220,000 for a 65-year-old.

Contributions are made by the company, and are a tax-deductible business expense. This means that business owners, professionals, and partners who themselves want to contribute amounts in excess of $50,000 annually, say for their own retirement, can do so easily.

Good candidates for cash balance plans

As with any pension plan, companies with stable cash flow and decent earnings are good candidates for offering cash balance plans. These organizations will generally be in a better position to fund plans over the long-term.

Companies that have regularly contributed annually to employee plans should also consider offering such plans.

As mentioned, business owners and professionals who got a later start on retirement savings can use cash balance plans as a means to rapidly accelerate savings, making up the time to eventually reach the lifetime maximum of $2.6 million per account.

Keep in mind that the large contribution limits for older business owners and professionals offer the reciprocal benefit of a potentially significant tax deduction.

Finally, a cash balance plan can also be used in combination with a 401(k) plan to help maximize their retirement savings.

Converting to a cash balance plan

For all of the advantages of a cash balance plan, note that companies converting their traditional DB plan to a cash balance plan usually leave their employees with a lower benefit than before, due to the higher contribution requirements.

Contributing to such accounts each year instead of a fixed payout based on employees’ years of service is a potentially big cost savings to the employer.

Cash balance plans may be the perfect client solution

A cash balance plan is a great option to add to your toolkit of retirement solutions offerings; such plans may offer significant tax and cost savings when compared to other employee retirement benefit plans.

Be sure to discuss the pros and cons on this type of plan with any business owner or professional clients who are looking to ramp up their retirement plan contributions.

 

All contribution limits discussed herein are believed to be current at the time of writing, however, Vestwell Holdings, Inc. and its affiliates do not offer tax advice and this information is offered for educational purposes only.

Giving a Plan Checkup Now Can Mean Big Savings Later for Clients

Many plan sponsors are (or should be) starting to think about their Form 5500 filing and annual compliance testing. That means it is also a great time for advisors to help clients conduct a “plan checkup.” A good checkup can reduce future costs, administrative headaches, and fiduciary liability. Here are some steps to help you start the process with your plan sponsors.

  1. Make sure Their current plans are compliant

Ensure your sponsors have reviewed all plan documents and communications with their participants within the past 12 months. Changes in a business may produce unexpected and unnoticed changes in a plan’s operation, so it’s important to review plan language and features. Consider including the service providers who regularly work with each plan to help spot issues that may have been overlooked. Some questions to ask when meeting with your client for a review include:

Have you had any mergers, acquisitions, or changes in ownership in the past plan year? Structural changes to their organization will warrant updated plan documents and need to be communicated to your retirement service providers.

Are you a part of a Control Group or an Affiliated Service Organization? A controlled group and affiliated service organization are categories used to describe businesses that are related in some way, usually by family ownership. Knowing whether your client falls into one of these groups or if the employer owns multiple business with different retirement plans can have an important effect on the way a sponsor’s plan is set up for their employees.

Do you have a Fidelity Bond? ERISA requires that every fiduciary of an employee benefit plan and every person who handles plan funds be bonded, so ensure your client’s plan is compliant to avoid penalties. These bonds cover the plan from loss of assets due to fraud or dishonesty. The fidelity bond is required to protect the participants and beneficiaries from dishonest acts of a fiduciary who handles the plan assets. The fidelity bond must be at no less than 10% of plan assets with a minimum of $1,000 and a maximum of $500,000.

How are you tracking the accuracy of administrative tasks? Administrative mistakes are common and easy to make, but the sooner the plan sponsor finds them, the easier and less costly they are to fix.  Some common errors are late payrolls, loan issues, and improperly communicating with terminated  employees who have account balances.

  1. Consider plan changes that will better suit your clients

Your clients are the experts on their businesses—but you’re the expert on their plans. As your check in with your plan sponsors, revisit the features of their plans to see what needs to be changed to better suit their goals.

How is enrollment set up? A retirement plan isn’t doing employees any good if they aren’t participating in it. If auto-enroll isn’t set up, speak with your client about its benefits. Without this feature, plan participation averages  63% for 401(k) plans yet jumps to 90% when auto enroll is enacted. Another way to potentially increase employee contributions? Consider adding auto escalation to automatically increase their contributions year over year.

Do the investment offerings still suit the company? Revisit the investment options the plan currently has and how they are being used. Employees’ goals and risk tolerance may have changed over time.

Have you compared costs? Your service provider’s fees should be reasonable. Consider conducting a benchmarking exercise or issuing a request for proposal from multiple service providers to compare their fees. If you’re looking to dig into a 408b(2) disclosure and don’t know where to begin, we can help.

3. Stay in contactyour clients will appreciate it

After checking in with your plan sponsors, take the next step and meet with their employees as well.  Schedule a time each year to educate participants on the basics of a 401(k) and how they can take advantage of this important savings tool. Here are some key points to cover:

What is the difference between a 401(k) and an IRA?

  • What is the impact of investing now?
  • Should I change my investment selections year over year?
  • How do I navigate my account?
  • How do rollovers works?
  • How do beneficiaries work?

All it takes is a few simple questions to ensure that your plans are correct, your platform includes the best features, and your participants are getting properly educated. Your clients will be impressed with the thoughtfulness you put into their plan and thankful that they have an expert to lean on.

Riskalyze Retirement Solutions Goes Live at T3 Advisor Conference

Riskalyze Retirement Solutions, the industry’s first end-to-end digital 401(k) experience built around the RiskNumber® is now live!

Riskalyze Retirement Solutions is a digital platform designed to make it easy and profitable for advisors to propose, onboard and serve 401(k) plans. Powered by Vestwell, the joint product eases every step of the 401(k) plan process, from proposal to execution, all while utilizing the Risk Number to ensure plan participants achieve the proper asset allocation. Read more here.

Newly Proposed Bills May Help Your Plan Sponsors

 

Tax reform isn’t the only newsworthy event affecting the benefits industry–several bills were introduced in Congress at the end of 2017 that could dramatically impact certain kinds of retirement plans. While these new proposals have an uncertain future, they all signal Congressional interest in improving retirement security. Here are some common trends news that you may see affecting your retirement plans soon.

Increase access to multiple employer plans (MEPs)

The Small Businesses Add Value for Employees Act (SAVE Act, HR 4637) removes the “common bond” requirement, thereby making it easier for small businesses to pool together, regardless of industry, and offer retirement plans to their employees while alleviating some burdens of plan administration.

The Retirement Security Act of 2017 (SB 1383) offers employers a tax credit and protects employees from losing their tax benefiits if one employer in a MEP fails to meet the participation criteria. Similarly, the Auto401k Act (HR 4523) provides relief from the “one bad apple” rule of MEPs so that all participating employers are not penalized when one employer violates the qualification rules.

Incentivize small businesses to offer retirement benefits

Through tax credits and other incentives, Congress is attempting to make retirement plans more accessible and promoting lifetime income solutions.The Retirement Plan Simplification and Enhancement Act (RPSEA; HR 4524) would increase the current automatic enrollment safe harbor cap and encourage employers to defer more than the automatic deferral floor of 3% of salary in the first year. It would also exempt retirement savings below $250,000 from complicated required minimum distribution rules and make it easier to take advantage of the saver’s credit. The SAVE Act increases the limit on elective deferrals under a simple IRA and permitting employers to make non-elective contributions for their employees of up to 10% of pay.

Reduce administrative burdens for plan sponsors

Congress is also addressing some of the lesser-known, but equally painful administrative burdens of sponsoring retirement plans. Access to a Secure Retirement Act (HR 4604) corrects some of the confusing regulations that often stop employers from including a guaranteed lifetime income product in their benefits package.

The Receiving Electronic Statements to Improve Retiree Earnings Act (RETIRE Act HR 4610) allows plan sponsors to use electronic delivery as the default distribution method for retirement plan notices and documents. A companion Senate bill is expected soon and the timing coincides with an effort by the Employee Benefits Security Administration’s project to address electronic delivery.

Staying on top of these bills can help eliminate the often confusing world of government. As Congress continues to takes steps to help plan sponsors, we will keep you updated on the way new legislation is affecting your clients. That way, as client questions come about surrounding what they hear in the news – their trusted advisor has the answers.

The (Often) Hidden Costs Behind Retirement Plans

 

The number one reason for DC plan sponsors to change their investment manager or recordkeeper is high fees.1 Unfortunately, it is very difficult for sponsors to accurately assess fees because they are typically confusing, hidden, and convoluted (often intentionally). This provides a great opportunity for Advisors to add additional value by guiding their plan sponsors through fee comparisons.

While fees have different names throughout the industry, there are standard services that will typically fall into one of three categories: (1) plan administration and recordkeeping, (2) fund expenses, and (3) ancillary transactional fees. This simple framework will help us compare fees and assist clients with making better decisions about plan vendors.2

1. Plan Administration Fees

There are a LOT of players when it comes to managing a 401(k) plan. As a result, they can account for a heifty portion of retirement plan fees. Here are some service provider fees to look for:

Non-Fiduciary

  • Recordkeeper The recordkeeper tracks basic plan information. They record who can participate in the plan, the flow of money, and the investments participants make.
  • Third Party Administrator (TPA) This service provider serves as a balance between the plan sponsor and the compliance guidelines set forth by the DOL and IRS. They do this by running compliance testing, produce the 5500, preparing plan documents and benefits statements, and tracking general activities carried out by participants.
  • Custodian The Custodian is the institution that holds the retirement assets.

Fiduciary

  • 3(38)/3(21) Investment Advisor  These services are for the investment fiduciary liability that a plan may outsource to or share with an advisor or service provider.
  • 3(16) Plan Administrator This is a fiduciary that helps execute the day to day tasks of plan administration, including distributing participant notices and disclosures and filling year end compliance documents. They have an added fiduciary responsibility to keep the plan compliant.
  • Advisor  This includes plan sponsor consulting, participant education and investment expertise.
  • Trustee This service provider directs movement of assets in a plan.

2. Fund Expenses

Fund Expenses are costs associated with the underlying investment products offered by a plan; there may be any combination of Mutual Funds, Exchange Traded Funds (ETFs), or Collective Investment Trusts (CITs) found in a retirement plan. Fund expenses may like the most obvious fees, yet funds can hide fees charged by other services providers to a plan sponsor and participants. Here are some common expenses you may find wrapped inside a tradition fund expense:

  • Trading Fees charged by fund management company to buy or sell an investment instrument.
  • Fund Management Fees charged to manage a fund; usually paid periodically as percentage of assets under management.
  • Fund Administration Cost for day-to-day administration of a fund.
  • Revenue Sharing A charge that may be included as a  portion of overall fund expenses, paid out to a service provider, typically disclosed as 12b-1, or Sub-TA fees
  • Guaranteed Income Products Similar to an annuity, guaranteed income products offer a minimum level of income for life.  However, these products can charge additional fees that are not required to be disclosed on the participant fee disclosure and early redemption fees if the participant exits the program early.

3. Ancillary Fees

These are one-time fees for individual transactions that a participant may or may not choose to carry out. Below are some common activities that may result in a  charge to the participant.

  • Loans These are fees related to taking a loan against the assets in a 401(k).  They are often substantial and may be ongoing for the maintenance of loan repayments.
  • Rollover Some plans may charge participants to move assets out of a previous 401(k) and into a new one.
  • Domestic Retirement Order (QDRO) A QDRO fee pertains to the allocation of assets in a retirement or pension following a divorce or legal separation.
  • Distribution A participant may request a distribution from certain plans due to termination of service or an applicable in-service provision in the plan document.

The complexity of retirement plans requires a lot of services – and they can add up. That’s why it is so important to help plan sponsors understand what they are paying for and why. Staying on top of fees helps keep participants from over paying and gives plan sponsors an extra level of trust with their trusted advisor.

 

1 Moore, Rebecca. “Investment Manager and Recordkeeper Changes Driven by Fees.”PLANSPONSOR, 26 July 2017, www.plansponsor.com/investment-manager-and-recordkeeper-changes-driven-by-fees/.

2 Does not include all possible fees; Fees listed may or may not be included based on individual plans.