Products July 14, 2015

Financial Engines Updates Social Security Tool

The Financial Engines Social Security planner will incorporate new data from the Social Security Administration.
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Independent registered investment adviser (RIA) Financial Engines said in a statement it would incorporate the Social Security Administration’s newly announced Social Security data file in its Financial Engines Social Security planner. The data file program was announced during Monday’s White House Conference on Aging.

The Administration has created an easily transferrable data file for individuals with the information in their monthly Social Security benefit statements. An accompanying guide helps developers understand how to incorporate the data into new software. Tools that use the information could combine it with self-reported information about an individual’s retirement savings in 401(k)-style plans and IRAs to help them understand the amount of resources they will have available, determine how much to save, and figure out when to claim Social Security benefits, among other important financial planning and retirement decisions.

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The integration of the Social Security Administration data with Financial Engines’ Social Security planner, which was unveiled in June 2014, will help users more accurately estimate their expected Social Security benefit amount when planning for retirement. The Social Security planner considers multiple strategies and provides users with a personalized strategy that accounts for multiple income sources and the realistic life expectancies of both spouses in a married household. 

“Social Security will be the largest retirement asset for many Americans, with lifetime earned benefits dwarfing what they have saved in their 401(k)s,” said Kelly O’Donnell, executive vice president of Financial Engines. “Financial Engines helps Americans maximize their Social Security benefits and make the most of their retirement savings and investments to achieve a rewarding retirement.”

Ask the Experts July 14, 2015

(b)lines Ask the Experts – Nondiscrimination Testing Required for 403(b)s

“What types of nondiscrimination tests are required for 403(b) plans? For example, is a top-heavy test required?”
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Michael A. Webb, vice president, Cammack Retirement Group, answers:

Top-heavy testing under Code Section 416, as well as minimum participation testing under 401(a)(26) and average deferral percentage (ADP) testing under 401(k),  are not required for 403(b) plans, but the degree to which other nondiscrimination testing is required will vary by the type of sponsoring entity.                

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For example, 403(b) plans of 3121(w) “steeple” churches or qualified church-controlled organizations (QCCOs) are not subject to ANY nondiscrimination testing. 403(b) plans sponsored by governmental entities are generally exempt from nondiscrimination testing, with the exception of the universal availability requirement under Code section 403(b)(12) as well as the compensation limit under 401(a)(17). However, 403(b) plans sponsored by other entities are generally subject to the following tests:

1)         401(a)(4) testing of contributions and benefits;

2)         401(a)(17) compensation limit;

3)         401(m) average contribution percentage (ACP) testing for matching contributions;

4)         410(b) coverage testing (note non-3121(w) church/QCCO plans must satisfy special pre-Employee Retirement Income Security Act (ERISA) coverage testing under 401(a)(3), and not 410(b) coverage testing); and

5)         403(b)(12) universal availability of elective deferrals.

 

It should be noted that these entities are also subject to the special rules under 401(a)(5). Finally, it should also be noted that a “good faith” standard applies to non-3121(w) church/QCCO plans, since the final regulations are technically not effective for such plans as yet.

Thank you for your question!

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.
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