Insights for Your Plan 
Presented by Patterson Smith Associates, LLC
Q1  2018
In This Issue
Featured Article

The IRS Benefit Plan Limits highlights key changes that retirement plan sponsors should be aware of, as well as some limitations that remain unchanged from 2017.

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As a 401(k) sponsor or administrator, we hope that you find our simple, easy to understand newsletter as a helpful resource to keep you informed.
Offer Employees a Do-Over with Reenrollment
Who doesn't appreciate a do-over? Getting a second chance to do something better than you did the first time-like a mulligan for your sliced tee shot on the golf course or having another crack at making a first impression-is something that most people would overwhelmingly embrace.

When it comes to investing in a 401(k) plan, many participants could certainly use a do-over. That's where 401(k) reenrollment comes in.

What is reenrollment?
Reenrollment is a process that allows your employees to modify their
existing (and, potentially, unsuitable) 401(k) investment choices into a qualified default investment alternative (QDIA). The QDIA is usually a professionally managed target-date fund (TDF) that automatically invests and allocates participants' assets according to their date of birth and projected retirement date. Plan participants will receive notification that their existing assets, as well as future contributions, will be directed to the QDIA on a specified date,  unless they choose to opt out. (Similar to auto-enrollment, reenrollment opt-out rates are surprisingly low compared with adoption rates.)

Why do your employees need reenrollment?  
Recent research  from J.P. Morgan reveals that employees who choose investments on their own rarely have the expertise or confidence to aptly select the right asset allocation mix and judiciously manage their accounts over time. In short, they need help!

Reenrolling into a TDF removes the guesswork. It also provides an effective means for your employees to achieve a more appropriately diversified portfolio that automatically rebalances on a periodic basis-something that most participants fail to do on their own. And while employees of any age can benefit from reenrollment, older employees may find reenrollment especially beneficial. Specifically, it will help ensure that they guard against too much equity exposure (and a greater risk of market volatility) as their retirement date approaches.

Plan sponsors benefit, too! 
To be sure, reenrollment primarily benefits plan participants. But there are compelling benefits for retirement plan sponsors as well-not the least of which is the potential mitigation of fiduciary risk. Plan sponsors who conduct a reenrollment may enjoy safe harbor protections for assets that are invested in the QDIA. (Remember, prudently selecting a QDIA is, in itself, a fiduciary act.)

In addition, by offering mechanisms such as reenrollment, plan sponsors are equipping their valued employees with impactful strategies for investing their hard-earned retirement assets. This leads to a better participant experience, which in turn fosters improved employee morale.

Wondering what actually happens when you conduct a reenrollment? 
The illustration below represents a typical reenrollment process timeline. Specifics, of course, vary by recordkeeper.

Source: J.P. Morgan Asset Management
5 New Year's Resolutions for Retirement Plan Stewards
The new year is the perfect time for retirement plan sponsors and fiduciaries to reflect on all aspects of their retirement plans. With that in mind, here are five resolutions that will help you promote sound fiduciary, plan, and participant health in 2018 and beyond.

1) Supercharge participant savings rates
Your employees may be saving, but are they saving enough? To help answer this question, analyze current participant balances and participation rates and then compare them with historical participant benchmarks. Do employees understand the critical role that their workplace retirement plan plays in their future financial well-being? If the answer is no, meet with your retirement plan advisor to discuss how a meaningful retirement savings education strategy could enhance your employees' overall financial wellness.

2) Analyze your plan's design
When was the last time you put your plan's design under the microscope? If it's been more than a   year or two, changes may be in order. Does the plan offer auto-features and an incentivizing matching contribution for your employees? Has the design of the plan kept up with the needs of business owners and key stakeholders? Staying current and forward thinking as your company grows is critical to building a plan that works well in the present and the future.
We Can Help
Our firm is ready to provide the ideas, guidance, and strategies necessary for you to prepare for what lies ahead-and to help your employees get on track for retirement. If you would like to review any aspect of your retirement plan, we're here to assist you.
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Securities and Advisory Services Offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Advisor. Fixed insurance products and services offered by Patterson Smith Associates, LLC.