Compliance February 7, 2020

SECURE Act Demands Updates to Rollover Notices

For example, language should be inserted to reflect that the age for taking required minimum distributions (RMDs) has been increased to 72.

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As part of its continuing effort to aid industry compliance with the Setting Every Community Up for Retirement Enhancement (SECURE) Act, the SPARK Institute is making available a redraft of its model 402(f) notice.

Under the laws governing tax-qualified retirement plans, the 402(f) notice is required to be given to participants to help them understand their rollover options. Passed late last year, the SECURE Act made a number of changes to federal tax laws that affect the information on the 402(f) notice. 

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“We were strong supporters of the SECURE Act, which accomplished a number of key SPARK Institute priorities,” says Tim Rouse, SPARK Institute executive director. “Although the law will require a lot of work, and many of the provisions went into effect almost immediately, we have already rolled up our sleeves to assist the industry and retirement savers.” 

As Rouse explains, retirement plans are required to provide a “rollover notice,” also called a “402(f) notice” or “special tax notice,” whenever a participant in a plan takes a distribution that can be rolled over. The notice explains the options available to the individual, and the tax consequences of not rolling over the distribution into another qualified plan or individual retirement account (IRA). 

The suggested edits, developed by SPARK Institute’s government relations committee, are available on SPARK’s website. The revised document has not been approved by the IRS, but has been sent to regulators as part of the SPARK Institute’s ongoing efforts to provide input as the Department of the Treasury, IRS and the Department of Labor (DOL) develop regulations and guidance under the SECURE Act.

The revised model rollover notice stretches to nearly 20 pages, but only a few edits have been made. In several places, language has been inserted to reflect that the age for taking required minimum distributions (RMDs) has been increased to 72. The revised document also includes newly inserted language explaining in various places that no excise tax will be assessed on payments of up to $5,000 made to an individual from a defined contribution (DC) plan within one year after the birth or adoption of a child.

Products February 7, 2020

EvoShare, intellicents Partner on Cash Back for Retirement Savings Program

The myCents program turns a portion of money spent at partnered local and online stores into additional contributions toward 401(k) or 403(b) plans, IRAs or Roth IRAs, and 529 College Savings Plans.

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EvoShare, a microsavings oriented FinTech startup based in Berkeley, California, and intellicents, a national independent financial services firm headquartered in Albert Lea, Minnesota, have partnered to launch “myCents, because every cent counts.”

According to the firms, the partnership will provide employers with an entirely new engine for financial wellness, one that automatically puts more money in employees’ pockets; increases plan participation and contributions; and does it all without requiring employees to change their spending habits.

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EvoShare’s proprietary system powering myCents turns up to 30% of every dollar spent at over 10,000 partnered local and online stores into additional contributions toward financial savings accounts such as a 401(k) or 403(b) plan, IRA or Roth IRA, and 529 College Savings Plan.

intellicents’ mission with myCents is to make saving for retirement a daily habit. “We are very excited about this,” says Grant Arends, president of intellicents. “Who would’ve thought that shopping online at Macy’s, Target, Walmart, ebay and over 1,300 other online retailers could result in more retirement income for the American worker? Or that going out to eat at a local restaurant with your kids could give you a contribution into their college savings fund for the future? Thanks to our partnership with EvoShare, myCents will be a great value-add that we can bring to our clients as part of our overall financial wellness initiative.”

Last year, EvoShare announced a partnership with Money Intelligence, a 401(k) platform provider located in Santa Clara, California, to allow participants on the Money Intelligence platform to apply their cash-back dollars toward their 401(k) plan.

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