Products September 24, 2018

E*TRADE Launches Planning Center for Equity Compensation Plan Participants

According to E*TRADE, the tool aims to help participants understand how proper utilization of proceeds can meet financial goals, among other things.

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E*TRADE Financial Corporate Services has launched their Planning Center, a digital dashboard allowing equity compensation plan participants to factor those benefits into their financial strategies.

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According to E*TRADE, the tool aims to help participants plan future events relative to their stock plan; recognize possible tax implications concerning their benefits; understand how proper utilization of proceeds can meet financial goals; and comprehend education fitted for the stock plan awards received from their company.  

The recent feature comes at a time where plan participants are implementing equity compensation plans as a savings vehicle for retirement. According to E*TRADE’s 2016 Corporate Services Annual Participant Survey, over half of equity compensation plan participants were preparing to use stock plans for retirement savings. Additionally, the company said employers recommended participants utilize these options for diversification and future reserves.

“Too often, stock plan participants see their equity compensation as a bonus to help meet short-term goals, and one that is distinct from their long-term financial wellness,” says Scott Whatley, president of E*TRADE Corporate Services. “With the Planning Center, we aim to help participants learn how their stock plan benefits fit into their larger financial picture and how they can make a meaningful difference in achieving some of life’s biggest financial goals.”

Compliance September 24, 2018

IRS Modifies Safe Harbor Explanations for Rollovers

The modifications take into consideration changes related to qualified plan loan offsets and other statutory changes.

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The Internal Revenue Service (IRS) has issued Notice 2018-74 modifying two safe harbor explanations, previously in Notice 2014-74, for recipients of eligible rollover distributions from retirement plans.

 

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Amended safe harbor explanations in Notice 2014-74 were issued following the IRS’ new guidance for allocating pre-tax and after-tax amounts among distributions that are made to multiple destinations from a qualified plan.

 

The new modifications take into consideration changes related to qualified plan loan offsets and other statutory changes.

 

Prior to the passage of the Tax Cuts and Jobs Act on December 22, 2017, when a participant with an outstanding loan from their defined contribution (DC) plan terminated employment, the participant had up to 60 days to repay the loan. The new law now extends that repayment period to the date the participant’s federal income tax is due for the year in which the plan loan offset occurred.

 

The notice describes other statutory changes affecting rollovers, including guidance issued on self-certification of eligibility for a waiver of the deadline for completing a rollover.

 

The notice contains two appendices.  Appendix A contains two model safe harbor explanations: one for distributions that are not from a designated Roth account, and a second for distributions from a designated Roth account.  Appendix B provides instructions on how to amend the safe harbor explanations contained in Notice 2014-74 to reflect the revisions included in the modified safe harbor explanations in Appendix A.

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