Products October 8, 2019

Pentegra, ADP Partner to Provide 3(16) Services to Plan Sponsors

The solution will provide ADP 401(k) clients with the ability to outsource key retirement plan administrative duties.

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Pentegra, a provider of retirement plan and fiduciary outsourcing solutions to organizations nationwide, announced its enterprise partnership with ADP Retirement Services to offer 3(16) Fiduciary Solutions to complement ADP’s retirement recordkeeping services.

The new solution helps businesses of all sizes reduce administrative responsibilities, simplify retirement plan complexities and minimize risk. The solution will provide ADP 401(k) clients with the ability to outsource key retirement plan administrative duties.

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Pentegra President and CEO John Pinto says, “Employers are fiduciaries, legally responsible for running their plan. Most plan mistakes involve administration—and these mistakes have very real, legal consequences. By combining our fiduciary solution with ADP’s recordkeeping platform, we can make offering a retirement plan less burdensome for the business owner by transferring the responsibility to Pentegra.  We feel strongly that no matter the plan size, whether $1 million or $50 million, we can help them reduce risk and provide better outcomes.”

Kristin Andreski, general manager of ADP Retirement Services, says, “We leverage innovation to help drive plan efficiency and improve outcomes for participants, while providing plan sponsors with access to solutions that reduce administrative risk and save them valuable time. We believe that our relationship with Pentegra truly helps accomplish those objectives.”

Over the past several years, many third-party administrators (TPAs) have marketed themselves as willing to be 3(16) fiduciary plan administrators for plan sponsors. According to Kasey Price, head of institutional sales for FuturePlan at Ascensus in Augusta, Georgia, a 3(16) plan administrator takes on fiduciary responsibility for the administrative tasks for an Employee Retirement Income Security Act (ERISA) plan.

According to Price, TPAs that assume the role of a 3(16) administrator take on all administrative tasks in accordance with the plan document. “Tasks would also include determining participant eligibility, issuing all required notices to participants and regulators, and calculating matching contributions,” she says.

The hiring of a 3(16) administrator can aid the plan sponsor by freeing up time to focus on company business. According to Price, the biggest value in hiring a 3(16) administrator is that it keeps plan transactions clean.
Break from the Grind October 8, 2019

Children’s Allowance Increasing Faster than American Wages

While Americans say the most important purpose of providing an allowance to children is to teach them about the value of money and financial responsibility, a survey found allowance money is rarely saved.
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Children are raking in an average of $30 a week in allowance, enough to save around $1,500 in a year, according to a survey by the American Institute of Certified Public Accountants (AICPA).

The average monthly ‘salary’ among allowance earners is $120, as reported by their parents. The average hours of chores a week required by parents to earn an allowance has gone down slightly (5.1 hours in 2019 vs. 5.3 hours in 2016). The hourly pay rate for children who have to work for their allowance has increased 38%, rising from an average of $4.43 in 2016 to $6.11 in 2019. Across the same time span, the average hourly pay rate for all Americans increased by 10.5% ($25.43 in 2016 vs. $28.11 in 2019) according to the Bureau of Labor Statistics.

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And, some children do not have to work for their allowance. The AICPA found that two-thirds of parents give their child an allowance or spending money for which the child is not required to work. Four out of five (80%) parents who provide an allowance would be quick to point out that their kids are not getting a free ride, as they expect their children to work (e.g., completing chores) at least one hour a week.

Three-quarters of Americans say the most important purpose of providing an allowance to children is to teach them about the value of money and financial responsibility. However, the survey found, allowance money is rarely saved. Parents say most of their kids’ allowance is spent on outings with friends (45%), digital devices or downloads (37%), or toys (33%). 

The vast majority of parents (92%) believe it is very important for their child to understand how to effectively manage their money, and many appear to be putting in the work to develop those money management skills. Half of parents (49%) say they take time to teach their child about money at least once a week, including one-third (34%) who say the lessons/conversations occur multiple times a week.

Yet, only 3% of parents say their children primarily save their allowance.

These are among the findings of a telephone survey of 1,002 U.S. adults conducted by The Harris Poll on behalf of the AICPA. The organization provides tips for teaching children financial responsibility using an allowance.

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