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Internal Revenue Code section 414(v) defines eligibility criteria for catch-up contributions.

A catch-up contribution is an elective deferral made by a participant at age 50 or older. It is only available if the participant’s contribution exceeds anyone of three conditions.  See Determination of Applicable limit below.

For 2018, the limitation on catch-up contributions is $6000 for 401(k) and 403(b) plans and $3000 for a SIMPLE 401(k) and SIMPLE IRA.

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BEI strives to keep our client’s plans “plain vanilla” and we take this approach because when retirement plans become too complex, there are increased government regulations, and thus more oversight.  Advanced plan design also drives up the cost of maintenance and this will become a “cost - to - benefit” comparison. However, we are finding adding some chocolate swirl, in certain situations, can be worth the hassle.

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We often get the question…” What does a TPA do”.  That can be a involved conversation. The short answer is ….we keep you out of trouble with the government. The following is a laundry list of what the IRS is finding wrong with employer retirement plans. Utilizing BEI as your TPA can avoid these issues. 

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Targeting people’s urge to procrastinate is key to boosting savings under automatic enrollment, while addressing financial literacy works best for opt-in plans. This is the conclusion of a February 2018 survey done by the TIAA Institute.

In our last article “Digital Nudging” we talked about engaging employees with emails to prompt enrollment.  The TIAA Institute survey below compared automatic enrollment (opt-out) to traditional voluntary sign up (opt-in). 

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In a recent paper authored by behavioral economist Shlomo Benartzi, he looked at the impact of an email to get employees enrolled in their employer’s retirement plan. 

He did a study in conjunction with the White House Social and Behavioral Science Team, also known as the Nudge Unit, a name left over from the Obama administration. 

Their findings were that a well drafted email nearly doubled the program enrollment rate compared to the control group.

The email used simple nudges, such as providing actionable steps for enrolling in the savings program and giving people clear examples of how small contributions can lead to large account balances.

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