Products October 9, 2017

Tool Estimates Retirement Health Care Expenses

Financial Engines has launched a College Expense Planner and a Retirement Healthcare Expense Planner.

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Independent investment adviser Financial Engines has launched a College Expense Planner and a Retirement Healthcare Expense Planner. Both utilize empirical forecasting methodologies to offer actionable information.

The Financial Engines Retirement Healthcare Expense Planner enables users to estimate what they might need to pay for Medicare premiums and out-of-pocket health care expenses once they stop working. The planner leverages Financial Engines’ partnership with HealthView, a provider of health care cost-projection software. With the planner, users receive a location-specific estimate for how much they can expect to pay for health care services in retirement. That estimate can then be integrated into their overall retirement income goal.

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The Financial Engines College Expense Planner helps develop a saving and investing strategy to pay for college. It helps people estimate how much they will need to save for their children’s college expenses and gives them a sense of where they stand today in relation to their savings targets. The planner incorporates third-party tuition cost growth estimates for public and private colleges and a variety of portfolio forecasting options to estimate the savings users could have when their children are ready for college.

“Our new digital planners address key areas where people need help navigating unfamiliar systems, so they can develop smart saving and investment strategies,” explains Karen White, vice president of consumer products at Financial Engines. “By offering accessible, easy-to-use tools on topics that cause a lot of stress and uncertainty, we’re inviting more people into the financial planning conversation and are helping them connect the choices they make today with the options they’ll have tomorrow.”

The launch of the planners is a part of Financial Engines’ continued commitment to deliver holistic financial wellness solutions through digital tools, multi-channel communications and advisor interactions.

“These two new digital planners represent a reimagining of how we can help 401(k) participants achieve their goals,” says White. “Building on many years of success driving better retirement outcomes, we’re developing additional innovative digital tools to provide personalized help with the big and small financial challenges that can sometimes eclipse long-term planning. By engaging people throughout their journey, we can help them balance the now with the next, empowering them to make choices with confidence.”

Compliance October 9, 2017

Congress Adds to Relief for Hurricane Victims

The act, signed into law last week, allows tax-penalty-free withdrawals and larger loan amounts from retirement accounts than current statutory limits.

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Congress has passed legislation allowing participants in qualified defined contribution (DC) plans, including individual retirement accounts (IRAs), to get a distribution of up to $100,000, in aggregate, across all accounts and avoid tax penalties.

 

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According to the bill, individuals who receive such distributions are allowed to pay them back within a three-year period, and the repayments are treated as rollovers to qualified employer-sponsored DC plans. Distributions are not subject to the 20% mandatory federal tax requirement or the 10% early withdrawal tax requirement. Participants may choose to pay all taxes on the distributions at once or spread the distributions as income for tax purposes over a three-year period.

 

A qualified hurricane distribution includes distributions taken after August 23 and before January 1, 2019, for victims of Hurricane Harvey. They include distributions taken after September 4 and before January 1, 2019, for victims of Hurricane Irma, and distributions taken after September 16 and prior to January 1, 2019, for victims of Hurricane Maria. The plan sponsor must decide if it will allow qualified hurricane distributions, and a plan amendment may be required.

 

The bill also increased the amount that qualified persons may take as a loan from their retirement plan accounts to $100,000, and the limit of 50% of the participant’s account balance does not apply. In addition, the start of loan repayments may be deferred for one year, and the maximum five-year loan amortization period for non-mortgage loans may be extended for one year.

 

Text of the bill is here.

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