Products November 3, 2021

GSAM and Ascensus Announce New Retirement Plan Offering

The solution for small and midsized businesses that want to offer a 401(k) or 403(b) plan features digital advice and a financial wellness platform for employees.

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Goldman Sachs Asset Management (GSAM) and Ascensus have announced the launch of the Goldman Sachs Workplace Retirement Solution, which provides an integrated 401(k) or Employee Retirement Income Security Act (ERISA) 403(b) retirement program to support the needs of small and midsized businesses.

The collaboration between Goldman Sachs Asset Management and Ascensus enables small and midsized businesses to gain access to asset management, retirement expertise and guidance for employees via a technology platform. The firms say the new program provides a turnkey solution that is flexible, cost-effective and simple to use. It also offers a personalized benefits experience that can help small businesses further differentiate themselves.

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The solution gives businesses and retirement plan advisers access to:

  • Goldman Sachs Managed Advice, a digital advisory service focused on improving retirement readiness;
  • A digital financial wellness solution to provide employees a more holistic view of their finances;
  • An open-architecture recordkeeping platform to support plan investment preferences;
  • Streamlined plan administration for sponsors using Ascensus’ tech-enabled platform; and
  • Transparent and competitive recordkeeping pricing with flexible service models to support plan sponsor needs.

“With access to this new offering, businesses can provide greater retirement planning support to their employees at various stages of life and career,” says Julian Salisbury, global head of GSAM. “Through the collaboration, Goldman Sachs Asset Management and Ascensus will offer an integrated retirement solution with streamlined plan administration.”

Compliance November 2, 2021

IRS Issue Snapshot Reflects Changes to Hardship Withdrawal Rules

Though the document addresses changes for 401(k) plans, all but one of them applies to 403(b) plans as well.

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The rules for participant hardship withdrawals from 401(k) and 403(b) plans have changed since the passage of the Bipartisan Budget Act of 2018 and subsequent IRS regulations, and the agency has updated its “Issue Snapshot – Hardship Distributions from 401(k) Plans” to reflect those changes.

The bill called for the secretary of the Treasury to amend regulations to delete the six-month prohibition on contributions to a retirement plan following a hardship withdrawal. The bill also extended the allowance of hardship withdrawals to include contributions to a profit-sharing or stock bonus plan, qualified nonelective contributions (QNECs) and qualified matching contributions (QMACs); earnings on the contributions are now allowed.

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In addition, the bill says, “A distribution shall not be treated as failing to be made upon the hardship of an employee solely because the employee does not take any available loan under the plan.” These rules say they amend Section 401(k) of the Internal Revenue Code (IRC) and subsections under that. They are effective for plan years beginning after December 31, 2018.

However, the IRS regulations following passage of the bill clarified that “income attributable to Section 403(b) elective deferrals continues to be ineligible for distribution on account of hardship.”

The elimination of the requirement to take a loan before requesting a hardship is optional for plan sponsors; they can still require participants to take any available loans under the plan first. In addition, 401(k) plan sponsors may limit the type of contributions available for hardship distributions and whether earnings on those contributions are included.

However, the removal of the six-month suspension of elective deferrals is mandatory for hardship distributions made on or after January 1, 2020; plan sponsors cannot elect to retain this provision after that date.

The IRS Issue Snapshot includes changes to the safe harbor list of expenses for which distributions are deemed to be made on account of an immediate and heavy financial need. The safe harbor list is modified by:

  • adding “primary beneficiary under the plan” as an individual for whom qualifying medical, educational and funeral expenses may be incurred;
  • adding that damage to a principal residence that would qualify for a casualty deduction under IRC Section 165 does not have to be in a federally declared disaster area; and
  • adding a new type of expense to the list, relating to expenses incurred as a result of certain disasters.

In addition, the IRS regulations eliminated the rules under which the determination of whether a distribution is necessary to satisfy a financial need is based on all the relevant facts and circumstances and provided one general standard for determining whether a distribution is necessary.

“Issue Snapshot – Hardship Distributions from 401(k) Plans” is available here.

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