For Plan Sponsors
Simplify with Online Enrollment
Looking to reduce your administrative burden? Consider a change to online enrollment. Participants can enroll in the plan and make changes directly online, effectively reducing the intermediary role of the employer. Contact your Relationship Manager to find out more.
Trust Point Now Offers Cash Balance Retirement Plans
What is a cash balance plan? A cash balance plan is a ‘hybrid’ retirement plan option. It is a defined-benefit plan with elements that closely resemble a 401(k). For business owners with the goal of maximizing tax-deferred retirement savings, a cash-balance plan is often an excellent solution.
In a cash-balance plan, the plan sponsor guarantees the principal and interest on the cash balance plan. Participants don’t invest their own funds, and they don’t choose the investments. Instead of the plan benefit being calculated based on years of service and average salary, cash balance plans accumulate pay credits (as a percent of pay) and interest credits based on the balance.
These credits are specified in the plan document making it a defined-benefit plan, allowing for the big tax deduction opportunities. The tax-deductible contribution in a cash balance plan can exceed the 401(k) plan maximum by a sizable amount.
A cash-balance plan is an excellent solution for employers that:
- Are ready to set aside (and deduct) significantly more money.
- Are looking for options to catch up their retirement savings.
- Want to retain a link between their contributions and benefits.
- Are highly profitable (under a cash-balance plan, employers must be able to sustain consistent contributions for at least five years).
- Can afford a generous contribution to employees (usually 8%-10% of pay).
- Are comfortable with a conservative investment mix.
- Aim to attract and retain high-caliber employees.
For more information, please contact your Relationship Manager.
Save Time with Trust Point’s Notice of Termination
Your time is valuable—too valuable to spend combing through old personnel records, trying to figure out historical hours worked for a former employee who left the company more than 10 years ago. Let Trust Point’s Notice of Termination form help.
As technology changes and companies update their HR and payroll software, this historical employee information can be all but impossible to find. Yet, across the retirement plan service industry, this is exactly what employers are asked to do. Former employees who take distributions years after they have left employment are often required to go back to their previous employer to get a signature on their distribution application, and the employer is often required to verify the original hire date and vesting percentage of the former employee. It can be uncomfortable for business owners and HR professionals to work with employees who left on bad terms, with whom they are not familiar, or for whom they have trouble finding original personnel records. And, most importantly, the searching takes a great deal of valuable time.
Trust Point’s solution—the Notice of Termination form—is available on the Plan Sponsor website. This form was designed to save you time. How does it work? Complete a Notice of Termination form for each employee, with a balance in the plan, who leaves employment for any reason. Then, return the form to your Relationship Manager. Your Authorized Signature on this form allows us to process future distributions with ease. What are the benefits? The form:
- Is retained by Trust Point, and as long as all of the information on the form was completed, future distributions, whether immediate or years down the road, can be handled by Trust Point without employer involvement.
- Gives Trust Point the information needed to usher out of the plan employees who leave with balances of less than $5,000. This means the employer does not need to continue sending them ERISA-required notices throughout the year.
- Serves as proof, in case of audit, that the vesting of employee accounts is accurate since it asks for verification of hours worked. It’s much easier to verify hours right after an employee has left than years later.
The Notice of Termination is a great solution to the industry standard—make sure to add completing it to your employee termination checklist so that, together, you and Trust Point can ensure accurate records and save valuable time!
Campaign to Increase Deferrals
At Trust Point, we’re on a mission. We want to see your plan participants have enough money to one day retire comfortably. As a result, we’ve begun a campaign to increase deferrals. How does it work? At the end of each presentation for annual education, we will encourage employees to increase their deferral by as little as 1% or more. Those who increase their deferral that week will be put into a drawing for a chance to win one of several Trust Point prizes, including a water bottle, electronic device charger, coffee mug, and more. These deferral increases will not only serve your employees by increasing the amount they save toward retirement, but it will also serve them by increasing the amount of assets in the plan, which can mean a reduction in fees over time. If you have questions about the campaign to increase deferrals, please contact your Education Specialist or Relationship Manager.
For Plan Sponsors and Participants
Designed to be copied and pasted into Employee Communication
It’s Never too Early or too Late to Start Saving
Whether you start saving for retirement early or late, don’t overlook the impact of increasing your savings deferral even by 1% per year. What is a deferral? It’s the portion of your paycheck that you direct into your 401(k). How much difference will 1% make? Consider this example:
A 25 year-old with steady career earnings of $40,000 has the following savings potential:
-Total contribution assumes retirement at age 65.
Think of that for a moment. By making it a yearly habit to increase your deferral 1%, you can soon reach the 10-15% annual savings rate experts agree is necessary to obtain financial independence. Starting later means it’s necessary to get to 10-15% annual savings as quickly as possible. An additional $6,000 in catch-up contributions is allowed for anyone who turns 50 during the calendar year.
In addition to building bigger balances sooner, increasing your deferral plan helps drive down costs and may lessen your income taxes for the year you contribute or when the money is withdrawn. Retirement readiness requires a commitment and annual deferral increases are one of the best you can make. Keep saving.
Market Volatility? Focus on What You Can Control
If there’s one sure thing about investing, it’s this: you can count on market volatility. After markets perform well for a while, it’s not surprising to see a small pullback. Short-term declines in the market are an unavoidable part of investing. Although you can’t control or prevent ups and downs in the market, you can take a few steps to minimize the effect on your portfolio:
- Keep your eye on the prize:
- Staying focused on your long-term goals is a must when investing for the long haul and can make it easier to remain calm during market declines. Unless an investment consistently underperforms its benchmark, think twice about selling when prices are low. Continue with the investment strategy you originally chose if you haven’t changed your goals. Invested in a Trust Point Profile Fund? Take comfort in the fact that our Investments team is monitoring all of the investments in your fund lineup, their performance, and current macroeconomic conditions.
- Ration your dollars:
- Diversification helps offset risk. That means you can protect your portfolio from market volatility by investing in a variety of different asset classes, industries, economic sectors, and areas of the world. Keeping a diverse portfolio cushions it against major losses, as each investment performs differently under various market conditions. That means while some may decline a bit, others may post gains. A diverse portfolio is designed to perform well over the longer term under various adverse situations.
- Consider your Risk Tolerance:
- If your impulse is to panic and sell when the market takes a tumble, think twice. Historically, markets do experience ups and downs but recover their losses eventually. Think about your risk tolerance. Make sure your portfolio is right for both your age and your personal comfort zone.
Investing, like everything else in life, bears risk. But remember, market volatility doesn’t prevent you from achieving your long-term financial goals. Keep your eye on the goal, and stay focused on what you can control.
Have a Question? Contact Our Team
If you have questions about your 401(k) plan, please contact the Trust Point Retirement Plan Services Team at 800.658.9474.