Data and Research March 26, 2025

Academics Receive Awards for Research Advancing Financial Planning

The academics recognized by the Financial Planning Association conducted research about spending trends in retirement and the distinction between financial stress and anxiety.

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The Financial Planning Association and the “Journal of Financial Planning” announced that three academic researchers have earned the 2024 Best Research Award for their contributions to advancing financial planning practitioners and the profession.

The 2024 winners, announced earlier this month, are David Blanchett, portfolio manager and head of retirement research at PGIM DC Solutions; Kristy Archuleta, professor at University of Georgia Financial Planning; and Timothy Todd, dean of Liberty University School of Law.

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Blanchett was recognized together with Michael Finke, professor of wealth management at The American College of Financial Services, for their work about retirement consumption optimization.

Their research entitled “Retirees Spend Lifetime Income, Not Savings” demonstrated how retirees are more willing to spend from lifetime income than other potential funding sources like capital income, labor income, qualified savings and nonqualified savings. The report suggested that allocating savings to lifetime income can give households a “license to spend” in retirement.

Archuleta and Todd were recognized for their work describing conceptual frameworks to help planners distinguish between financial stress and financial anxiety. Their presentation, “Let’s Talk About Financial Stress and Anxiety: Is There a Difference?” explained how financial stress and anxiety are important to financial planners’ ability to assess their clients’ needs.

“Each year, FPA takes great pride in showcasing groundbreaking research at our Annual Conference and within the ‘Journal of Financial Planning,’ which enriches the knowledge base of our profession,” said 2025 FPA President Paul Brahim, in a statement. “The exceptional researchers we honor have produced innovative studies that empower practitioners to stay at the forefront of the profession and enable them to meet their clients’ needs effectively.”

Following a call for papers last spring, the researchers were invited to present their work at the FPA Annual Conference 2024 in Columbus, Ohio from September 18 to 20, 2024.

Presenters at the FPA Annual Conference were selected from submissions during the call for papers, and Best Research winners were selected from among the presenters for their work’s contribution to the profession.

Ask the Experts March 25, 2025

How Can Plan Sponsors Correct 2024 402(g) Excess Deferrals?

Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations.

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Q: It’s that time of year again! Can you update your column on how to correct 402(g) excess deferrals for 2024 excesses?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: Absolutely! For those who might not be aware of a 402(g) excess deferral, it occurs when a participant’s total elective deferrals exceed the annual limit for retirement plans in a calendar year. For 2024, that limit was $23,000 ($30,500 if the participant was age 50 or older as of December 31, 2024). (There are some additional expansions of the limit for certain 403(b) and 457(b) plan participants, but these are the limits for most participants.) For example, if a 51-year-old participant deferred $34,500 in 2024, the participant would have an excess deferral of $4,000 ($34,500-$30,500).

The first step to correcting a 402(g) excess deferral is notifying the plan’s recordkeeper of the amount of the excess deferral. The recordkeeper will then calculate the earnings attributable to the excess and issue a distribution to the participant in the amount of the excess, plus earnings (or less losses, if any). For 2024, since the recordkeeper must distribute the excess deferral (and any earnings accrued) no later than April 15, 2025 (i.e., the individual’s tax filing deadline in the year following the year of deferral), you should notify the recordkeeper immediately of the excess deferral. It is important that NO adjustments be made to the participant’s 2024 Form W-2 (i.e., the entire amount of the deferral, including the excess, should be reflected in Box 12 of the W-2).

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You should also inform the participant immediately of the excess deferral amount, as the participant will need to add the amount of the excess deferral to their 2024 Form 1040 or 1040-SR tax return. Similar rules apply to the participant’s state income tax filing, except for states that do not recognize an income tax exclusion for deferrals in the first place (e.g., New Jersey, where ALL 403(b) deferrals—but not 401(k) deferrals—are taxable as income).

The income attributable to the excess deferral will be taxable in the year of distribution (2025 in this case). (If a loss—rather than income—is attributed to the excess deferral, it is also reported on the participant’s Form 1040/1040-SR for 2025, but there is a special reporting procedure.) You should note that if the distribution occurs after April 15, 2026, the excess deferral is taxable in the year of the deferral and the year distributed. The earnings are taxable only in the year distributed. As such, it is important to make timely distributions.

As for the official reporting of the transaction to the IRS, the plan must report corrective distributions of excess deferrals (including earnings) on Form 1099-R. For excess deferrals and earnings distributed between January 1 and April 15, 2025, the recordkeeper will generally issue two 1099-R reporting forms in early 2026: one for the principal amount of the excess deferral (already declared by the participant as income in 2024) and one for the earnings attributable to the excess deferral (which the participant would report as income on their 2025 Form 1040/1040-SR tax return). However, if a loss is incurred on the excess deferral, only one Form 1099-R will be issued. 1099-Rs are for IRS reporting purposes only and are NOT attached to tax returns. Notably, the excess deferrals and income are not eligible for rollover.

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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