“The speed of your success is limited only by your dedication and what you're willing to sacrifice”
-- Nathan W. Morris
As I gear up for another year of celebrating our nation's independence with friends and family I am reminded that many of my favorite 4th of July activities mirror those that I envision myself enjoying in retirement. I have yet to meet an American who doesn't have detailed plans for how they want to spend their retirement years.
401(k) Plan participation "is as strong as ever"
More than 94.6 million Americans rely on a 401(k) or other employer sponsored DC (defined contribution) plan to help them save for retirement.
The recently released 401(k) fast facts sheet published by the American Benefits Council in July of 2017 includes several key data points highlighting the value of the 401(k) savings plan as tool for Americans to leverage as they work toward financial security in their golden years:
- 87.6% of eligible employees have a balance in their 401(k) plan and 81.9% contributed their own money to the plan
- The average 12-month savings rate reached a record high of $10,200 in Q4 of 2016
- Participation rates for employees earning $20,000 to $40,000 per year have increased to 59% (versus only 47% four years ago)
- 91% of U.S. households surveyed have a favorable opinion 401(k) Plans and 83% believe providing retirement savings incentives should be a national priority
Early this year Oregon released updates on the state mandated employee benefits program phasing in for private sector business owners over the next 24 months. The date that employers must either register with OregonSaves, or file a certificate of exemption verifying they provide an alternative qualified retirement savings plan, is dictated by the size of the employer's workforce as outlined below:
- 100 or more employees - November 15, 2017
- 10 to 99 employees - May 15, 2018
- 5 to 9 employees - November 15, 2018
- 4 or fewer employees - May 15, 2019
The trend for additional states to implement required employee retirement savings programs is anticipated to continue due to ongoing concerns about retirement readiness of the private sector workforces, as well as in response to employees demanding retirement benefit programs.
Above & Beyond Retirement fully supports the push for employees to have access to a work place retirement savings account; company sponsored employee benefit programs, like the flexible and powerful 401(k) Plan, have an established record of success. Whether the "state mandated" options will be equally beneficial for many employers remains to be seen as these programs are rolled out.
Other states that are working toward implementing some form of required employee retirement benefit programs include: California, Connecticut, Illinois, and Maryland. There are approximately 16 other states that have introduced legislation in the recent past that may also come to fruition soon.
Above & Beyond Retirement highly recommends that all employers who do not currently offer a deferred compensation retirement benefit to employees consult a qualified retirement planning service provider or independent TPA to compare the pros and cons of implementing a qualified plan versus a state program. Contact Above & Beyond Retirement today for a FREE Qualified Plan cost and benefit review.
The 2017 retirement plan contribution limits have been released with cost of living adjustments. This year we are seeing an adjustment of some limits, but not others.
- The employee deferral limits for 2017 remain unchanged at $18,000 with $6,000 catch up available for those age 50 and older.
- The maximum annual additions limit, including employee deferrals combined with employer contributions, has been bumped up to $54,000 for 2017 (compared to $53,000 for years 2016 / 2015).
- The maximum allowable compensation for retirement testing and allocation purposes has also been increased to $270,000 (compared to $265,000 for 2016 /2015).
A handy 7 year comparison chart can be found at: 401khelpcenter.com
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