Quarterly Insight, Q1 2020

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Economic Outlook at a Glance (Q1) – Walking a tightrope.

This quarter’s themes: Economy in 2020: Stable growth with political noise. Fixed income: Low and stable rates. U.S. equities: Earnings hold the key. International equities: Hard to ignore in 2020. Read attached document for more information. (source: JPMorgan Quarterly Perspectives)

Legislative News and Updates

The “SECURE” Act has passed: The Setting Every Community Up for Retirement Enhancement Act, commonly known as the“SECURE Act” has PASSED! The provisions of this Act were included in the U.S. Congress Fiscal Year 2020 Consolidated Domestic and International Assistance Package. The Act was signed into law on December 20, 2019. Provisions include:

  • Increase in age for required beginning date for mandatory distributions from 70 1⁄2 to 72
  • Increase auto escalation safe harbor cap from 10% to 15%
  • The annual safe harbor notice is no longer required for plans using the non-elective contribution approach.
  • Increase the late filing penalties for Form 5500 to $250 per day, not to exceed $150,000
  • Allow for penalty-free withdrawals from retirement plans for expenses related to the birth of a child or for expenses related to an adoption (effective for distributions made after December 31, 2019)

Read more here.

Important Deadlines:

  • January 31st is the deadline for sending Form 1099-R to participants who received distributions during the previous year.
  • February 14th is the deadline for participant-directed defined contribution (DC) plans to provide participants with the quarterly benefit/disclosure statement and statement of plan fees and expenses actually charged to individual plan accounts during last quarter of 2019. (Due 45 days after the end of the quarter).

Note: Not all mentioned above are required for each retirement program. Ask your Alliant Retirement Consultant today which ones apply to your Plan. Click here for the 2020 ERISA Plan Compliance Calendar.

Industry Insider Tips – Avoid Pitfalls in Plan Administration

Ensuring a Clean Recordkeeper Conversion

There are steps retirement plan sponsors can take before converting to a new recordkeeper to minimize any “clean up”afterwards; however, there is always follow up to do. It’s important to do a complete data, participant record and plan provision check-up post-conversion. Read more here.

What do your employees really want?

Emergency savings and wellness. A recent report from Cerulli, “U.S. Retirement End-Investor 2019: Driving ParticipantOutcomes With Financial Wellness Programs,” says participants’ primary sources of financial stress are healthcare expenses, cited by 30.5%, insufficient retirement savings (25.7%), monthly bills (10.7%), inadequate emergency savings (10.6%), credit card debt (8.4%), and student loan debt (4.7%). By including the right elements in a financial wellness program, employers can help employees squirrel away more emergency and retirement savings. Click here to get tips on evolving your financial wellness program in 2020.

UP/DOWN – The S&P 500 has been up 40 of the last 50 years, i.e., 1970-2019, gaining an average of +10.6% per year (total return). The stock index has produced an average annual gain of +18.1% (total return) during the 40 “up” years while losing an average of 14.8% (total return) during the 10 “down” years (source: BTN Research).

THEIR FOOTPRINT HERE – There are 172 Chinese companies listed on major US stock exchanges (source: U.S.- China Economic and Security Review Commission.

ALL THE OTHER STUFFAdministrative costs make up 34% of total US health care expenditures (i.e., expenses not related to direct patient care) including medical billing, the scheduling of appointments, and hiring of an office staff (source: Annals of Internal Medicine).

Sarah Keibler, Retirement Plan Representative at 1420 5th Ave Ste 1500, Seattle WA 98101 Sarah.Keibler@alliant.com (206) 204-9176. Advisory Services offered through Alliant Retirement Consulting, a federally Registered Investment Advisor. This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements and you should consult your attorney or tax advisor for guidance on your specific situation. Due to volatility within the markets mentioned, opinions are subject to change with or without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guarantee. Past performance does not guarantee future results The S&P 500 index is a group of the 500 largest U.S. stocks, weighted by market capitalization. The index is widely considered to be the best indicator of how large U.S. stocks are performing. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take in to account the effects of inflation and the fees and expenses associated with investing.