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October 2020

New Dollar Limits Applicable to Qualified Plans Released

The IRS issued new dollar limitations that are applicable to qualified retirement plans for plan years beginning in 2021 (except for the 401(k) deferral limit and Catch-Up Contribution limit, which apply on a calendar year basis). Some of the most commonly noted limitations are as follows: The limit on contributions by employees who participate in 401(k)s, 403(b)s, most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $19,500. The catch-up contribution limit for employees age 50 and older who participate in these plans remains unchanged at $6,500. The limitation for defined contribution (DC) plans under Section 415(c)(1)(A) (annual additions) has been increased for 2021 to $58,000 from $57,000. The limitation used in the definition of “highly compensated employee” under Section 414(q)(1)(B) remains unchanged at $130,000. The limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $230,000.   Details on these and other retirement-related cost-of-living adjustments for 2021 can be found here, and are in IRS Notice 2020-79.

Avoiding ERISA Lawsuits Isn’t Hard

Proposed class action lawsuits by retirement plan participants against their own employers are on track for a fivefold increase between last year and this year, according to a Bloomberg Law analysis. Sixty-five class action suits have been filed so far in 2020 and many of these suits are for excessive fees and/or the use of overpriced share classes. Several employers have been sued multiple times (e.g. Quest Diagnostics, Cerner Corp, Omnicom Group). Startlingly, some of the employers are large money management and plan recordkeeping firms (e.g. INVESCO, Goldman Sachs, BlackRock, Mutual of Omaha, Fidelity – multiple times). Talk about a fox guarding the hen house!Moreover, these lawsuits are being brought against smaller plans (e.g. Greystar Management Services - $188M plan) and to other participant driven plans like 403(b)s (e.g. Mercy Health, University of Miami). After all, ERISA and the duty to pay only reasonable fees applies equally to qualified plans of all sizes and flavors. Sure, many of these lawsuits can be explained by the fact that the case law is maturing (providing a blue print for action) and that participants are more knowledgeable and attuned to fees now that the expense curtain has been pulled back somewhat. Today, there

NWPS Hires Shanley Johndrow as Vice President of Client Services

July 13, 2020 - SEATTLE, WA. (BUSINESS WIRE)—NWPS announced today that Shanley Johndrow has been hired as Vice President of Client Services for the Mill Creek, WA office. Johndrow will be responsible for developing and leading a team of dedicated retirement plan professionals who work directly with plan sponsors, advisors and attorneys to provide high touch, consultative, reliable service. Johndrow joins NWPS with more than 30 years of retirement plan experience with Standard Retirement Services and predecessor companies. Most recently Johndrow served as AVP, Plan Services for The Standard. “I am excited to welcome Shanley to the team,” said Tim Wulfekuhle, President and CEO of NWPS. “She adds leadership depth to our Mill Creek Office and management team as a whole and brings a wealth of retirement plan, customer relations and management experience to her role at NWPS. Johndrow holds a B.S. in Business Administration from University of Washington and is FINRA licensed.   About NWPS NWPS was founded in 1994 to provide high-quality service to retirement plan sponsors and advisors. Specifically, we provide comprehensive retirement plan administration, recordkeeping, compliance and participant services. We also provide consulting, employee communication and actuarial services to the sponsors of retirement, health and welfare, and financial security programs. For

NWPS COVID-19 Update

First and foremost, our thoughts and prayers are with the individuals and families most affected by the COVID-19 outbreak, and our profound gratitude goes out to the medical first responders and the every-day, hard-working Americans who are delivering our food, stocking the shelves and manning the gas stations. At NWPS, we take our responsibilities to our clients, plan participants, and staff very seriously. During this COVID-19 pandemic, our top priority is keeping everyone on our team healthy so they can continue to perform their jobs while doing our civic duty to help slow the pace of infection. With that in mind, we have implemented a plan that ensures, from your perspective and the perspective of your plan participants, it will be business as usual, and we are committed to keeping the quality of our services and our responsiveness at the level you expect from us. Rest assured that contributions are being processed, phones are being answered and distribution checks are being sent. Because of our careful planning, we are confident we have the infrastructure and processes in place to be successful. We will keep you posted as new events develop, but in the meantime, don’t hesitate to reach out to us if

The Value of Participant Data

In the tech world, there is an old saying: “if the product is free, you’re not the customer; you’re the product.”  Turns out this was first presented as a concept regarding the relationship between TV networks and viewers way back in 1973.  It’s as true now as it was then! What does this have to do with retirement plans you might ask.  Well, in several recent ERISA lawsuits the use of participant data by a plan’s provider to cross-sell other products and services has been raised as an ERISA violation both by the plan sponsor and by the providers.  To wit: “Even worse,” the lawsuit states, “Shell defendants allowed the Fidelity defendants to use plan participants’ highly confidential data, including Social Security numbers, financial assets, investment choices and years of investment history to aggressively market lucrative non-plan retail financial products and services, which enriched Fidelity defendants at the expense of participants’ retirement security.” We thought it would be interesting to consider the enterprise value of participant data by making some comparisons with the tech and social media giants.  In 2015 a tech blog published these numbers (market capitalization/monthly average user count).  We calculated the 2020 numbers (with some difficulty!). Value of a User 2015 2020 Facebook $158 $246 Google $182 $500 Alibaba $621 $850 Amazon $733 $3,500 What the table

NWPS Perspective: The SECURE Act

Here is NWPS' memo to clients and advisor partners summarizing The SECURE Act and What It Means to Your Plan.  Here are a few key takeaways for those focused on retirement plans: Increases the required minimum distribution (RMD) age for retirement accounts to 72 (up from 70½) Allows long-term, part-time workers to participate in 401(k) plans Offers more options for lifetime income strategies Permits parents to withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses   Please contact your NWPS consultant or [email protected] if you have any questions.