Posted on by Jerome.Pfeffer

The link between stress and employee productivity is real. Experts estimate that it costs companies $500 billion or more per year due to “health costs, absenteeism and poor performance”. [1]

And with finances being the number one stressor, offering a financial wellness benefit can help!

This quarter, we’ll be sharing our insights and best practices through the following topics:

Jerome Pfeffer, CRC, AIF
Managing Director

6020 Academy NE, Suite 206
Albuquerque, NM 87109

(505) 888-4015 Direct
(505) 515-0036 Fax


Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. Member FINRA / SIPC.

[1] Salary Finance. “The Employer’s Guide to Financial Wellness.” 2019.

Infographic: The CARES Act and its Impact on Retirement Plan

Posted on by Jerome.Pfeffer

Coronavirus, COVID-19, CARES Act, these topics have without a doubt overtaken your media feeds and with a valid reason. However, in this time of turmoil, we wanted to take a moment to explain what some of this means in hopes of bringing you some calm.

For employers, a lot has changed and very quickly. To help you navigate these changes, we have created a simple infographic that walks through two key points:

CARES Act Update: Changes Impacting Retirement Plans

Posted on by Jerome.Pfeffer

Signed into effect on March 27, the Coronavirus Aid, Relief and Economic Security (CARES) Act is a robust economic stimulus package designed to help small business owners and hardworking American families during these unprecedented times.

For small businesses, the new regulation allows access to capital to help maintain operations. For employees, it grants new ways that they can use their retirement plan savings for emergency financial relief. Additionally, for qualifying individuals, there are other features available that strive to alleviate financial anxiety around tax filing deadlines, HSA payments, student loans, and the new $1200 recovery rebate checks.

This article will focus on the information that plan sponsors should know about retirement plan changes and what questions to anticipate from employees.

Who is Eligible for CARES

Before we dive into these three changes, let’s start with eligibility. The new CARES Act is specific to individuals affected by coronavirus. For plan participants to qualify, that individual needs to claim they meet these requirements:

– An individual who:

  1. Is diagnosed with the virus by a test approved by the CDC
  2. Has a spouse or dependent that is diagnosed with the virus by a test approved by the CDC
  3. Experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury.

– Additionally, they need to take the distribution before 12/31/20.

While that definition does appear to cover all workers, it’s important to let your employees know which of the qualifying exemptions they might claim in the future. Two valuable things to note:

3 Major Coronavirus-related Retirement Plan Changes

Now that your participants are eligible to qualify for Coronavirus-related changes. Here are some of the major updates impacting retirement plans.

  1. Plan loans

If your plan allows for loans, then participants may take a plan loan for the lesser of $100,000 or 100% of the vested account balance.


Alex has $200,000 vested in their retirement account

They can take a plan loan of $100,000

Alex is eligible for a $100,000 plan loan

Jordan has $50,000 vested in their retirement account

They can take a plan of 100%

Jordan is eligible for a $50,000 plan loan

If your plan does not allow loans. You can amend your plan to allow for the new option(s). However, plans do not have to offer the expanded Coronavirus-related distribution or loan options. This is a fiduciary decision and should be considered thoughtfully.

If any participants have existing plan loans and for qualifying employees, their scheduled repayments and any accrued interest can be delay for the remainder of the year (12/31/20). As a best practice, direct your employee to contact the plan’s administrator for their specific loan repayment details. 

The CARES Act created a new type of withdrawal from retirement plans. It is separate and unique from traditional Hardship Withdrawals. The differences are:

One reminder, while these times are difficult for everyone, as the plan sponsor, you have the ability to decide if your plan will offer the Coronavirus-related distribution withdrawal. This will mean amending your plan for these new options. While you can start utilizing any of these provisions immediately, it is best to setup a call with your third party administrator to discuss the details.

Common questions

In addition to the new ways to access retirement plan accounts, many employees are going to have questions about rebate checks and other CARES Act changes.

How much can I expect from the coronavirus stimulus check and when will it arrive?

For employees that earn under $75,000 per year, they should receive a $1,200 stimulus check. For employees earning up to $99,000, they will receive a reduced stimulus check. The payments are reduced by $5 for every $100 in income above $75,000. Additionally, for employees with children, each child may add another $500 to the stimulus check. The stimulus checks are anticipated to arrive in April.

Does the CARES Act include student loan relief?

Yes, if the employee has federal student loans, they can pause payment for the next six months (through September 30, 2020) and during this time interest is waived.

Also, as an employer, under the new CARES Act, you may contribute up to $5,250 annually toward your employee’s student loans, and that amount would be excluded from the employee’s income.

How have health savings accounts changed?

The CARES Act has increased access to telehealth networks and expands the list of qualifying expenses. It best to contact your HSA provider for specifics.

Does the CARES Act include relief for small businesses?

If you are a small business owner with under 500 employees that has been financially impacted by COVID-19 and meet the application requirements, then you could apply for a federally backed loan. For more information, click here: https://covid19relief.sba.gov/#/

While these seem like a lot of changes, the CARES Act cuts the red tape and provides an avenue to those most impacted by coronavirus the ability to access their financial accounts.

As an employer, right now we understand it can be an incredibly stressful time. That is why we are here to keep you informed and updated on how new regulation may impact your company’s retirement plan and your employees. This knowledge is another way that you can educate your employees to make smart financial decisions and help you continue offering this incredibly value company benefit.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements and you should consult your attorney or tax advisor for guidance on your specific situation.

Sources“Coronavirus Aid, Relief, and Economic Security Act or the CARES Act.” Congress.gov. Mar 2020.

Jerome Pfeffer, CRC, AIF

Managing Director


6020 Academy NE, Suite 206

Albuquerque, NM  87109

(505) 888-4015 Direct

(505) 515-0036 Fax



Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. 

Member FINRA / SIPC.

Coronavirus and Retirement Savings: Lessons to help mitigate long-term retirement savings mistakes

Posted on by Jerome.Pfeffer

It’s easy to say “stay calm” but harder to actually walk the walk.

Keeping emotions out of investment strategies can be challenging even on a normal day. Add a dose of a health pandemic, in this case the worldwide coronavirus, and you could have a recipe for widespread investor panic. Unfortunately, that recipe could be a breeding ground for long-term retirement savings consequences. 

As we have seen, COVID-19 is wreaking havoc on financial markets, both in the U.S. and abroad. Recently, the Dow Jones Industrial Index has resembled a car dealership air dancer, wildly flailing about, bending all the way to the ground and then randomly bouncing straight back up for a moment or two.

However, there are lessons to learn from history. By looking back in time, we might be able to educate and inform investor actions today.

Lesson #1: Dollar cost averaging

It is a simple investment strategy where plan participants invest a fixed amount into the same fund or investment asset over a gradual period of time. When the investment prices are reduced, investors get a chance to purchase more units, and this can help to reduce price volatility.

Lesson #2: Past performance is no guarantee of future results

Participants should focus on their long-term financial goals, not short-term fluctuations. Even during such market fluctuations as the 2001 tech bubble, the 2008 market crash and the Great Recession, the average growth rate of the S&P 500 still produced positive annual returns.

Lesson #3: Timing the market

To help weather difficult market turns, portfolios should reflect both a risk and asset allocation approach. This includes diversification, both regionally and by product (stocks, bonds, cash and alternative asset classes). Participants should avoid making any knee jerk reactions, such as moving all of their assets from equities to bonds in the hopes of avoiding any losses due to volatility.

Lesson #4: Throwing in the towel

Post-2008, one study found that 27% of respondents either stopped saving for retirement or adding to their 401(k).[1] At the same time, according to a Fidelity Investments report, the average 401(k) retirement plan balance rose by 466% to $297,700 between 2009 and 2019.[2] Millennials’ average retirement savings of $7,000 in Q1 of 2009 grew 1,762% to just under $130,000 in 2019. Translation: participants shouldn’t stop saving for retirement in market downturns.

Lastly, try not to watch the markets with myopic intensity. The U.S. is currently experiencing low unemployment, solid GDP and job growth, and a so-called “Goldilocks” economy (overall, neither too hot or cold).

Analysis after analysis of past financial events show that when investors don’t make panicked decisions, they are more likely to ride out volatility and come out ahead. 

While we understand that is all easier said than done, please contact us if you have any questions, concerns, and/or want to talk because we’re here to help.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

Past performance is no guarantee of future results. Indexes cannot be invested into directly.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio.

Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.

[1] “Betterment’s Consumer Financial Perspectives Report: 10 Years after the Crash.” Sept 2018. Betterment. https://www.betterment.com/uploads/2018/09/Betterment-Consumer-Financial-Perspectives-Report.pdf

[2] “Fidelity® Q1 2019 Retirement Analysis: Account Balances Rebound From Dip In Q4, While Savings Rates Hit Record Levels.” May 2019. Fidelity.  https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/press-release/quarterly-retirement-trends-050919.pdf


Posted on by Jerome.Pfeffer

DOL audits can be stressful, complicated and expensive! The best way to handle one is to avoid it in the first place. Through our experience, we’ve outlined three hot button issues that are major red flags for the DOL. Watch our short video for the tips and best practices to help manage risk.


Posted on by Jerome.Pfeffer

While we firmly believe life is meant to be lived, we also know that it’s important to have peace of mind in the event of an emergency.  Your employees might be in the dark about the most important documents they would need if something were to happen to them.

To help, we’ve put together a comprehensive checklist for your employees to organize their lives. Share this with your employees at the next employee education meeting!


Posted on by Jerome.Pfeffer

Scan the business news and you will likely find an article detailing the latest 401(k) litigation against a company accused of a fiduciary breach. The litigious trend started with corporate behemoths but has been trickling down to small and mid-size plans.

Adding to this, a survey found that 43% of company fiduciaries don’t actually think they are fiduciaries.[1]

“We see this regularly and stress that plan sponsors need to understand their fiduciary responsibility and all that it entails,” said Roger Levy, AIFA, an Analyst for the Centre for Fiduciary Excellence (CEFEX). CEFEX is an independent certification organization that works closely with industry experts to provide comprehensive assessment programs to improve the fiduciary practices of investment stewards, advisors, recordkeepers, administrators and support services firms.

“Even if a company outsources their fiduciary oversight for some aspects of their retirement plan, they still have certain obligations under the law,” says Levy. As a plan sponsor, you are still responsible for adhering to the Department of Labor’s Employee Retirement Income Security Act of 1974 (ERISA) guidelines, which govern and enforce the administration of 401(k) plans and their assets.  

Here are five ways that plan sponsors can aim to lower fiduciary risk and stay in accordance with ERISA. If you have questions about the complexities of plan management, contact us for support.

  1. Plan Committee, IPS and Governing Documents 

Establishing a plan committee is the first step in guiding the fiduciary oversight process. The committee should be a reasonable size and include experienced members of finance, HR and operations. In turn, members will be responsible for numerous aspects of plan management, often in conjunction with your retirement plan advisor.

Next, the investment policy statement (IPS) is a roadmap for investment oversight because it determines the prudent processes and criteria for selecting and monitoring plan investments. When the plan committee meets, it uses the IPS to benchmark and review funds, fees and whether the investment strategy is meeting its stated goals and objectives, among other things.

Additional governing documents include the plan document, trust statement and charter statements that should be read, reviewed, understood and followed by all committee members. 

Documentation of process is critical in establishing fiduciary compliance. This includes recording minutes every time plan fiduciaries or investment committees meet to discuss investment changes or decisions. The documentation must show that due diligence has been taken in advance of a decision. “One of the biggest mistakes plan sponsors make is failing to properly document their investment decisions,” says Levy.

Investment committees should have regularly scheduled meetings (either annually, biannually or quarterly, depending on the size of the plan) to monitor the performance, evaluate service provider agreements and ensure that costs and fees remain reasonable.

Be careful of the tempting “set it and forget it” mindset that leads to infrequent monitoring and lack of process, which can result in a failure of fiduciary duties.

Offering numerous funds (i.e., “a fund for everyone”) does not reduce fiduciary risk. Rather, plan sponsors should conduct prudent due diligence to ensure that fund selection aligns with the IPS and corresponding investment strategies are appropriate.

The investment choices should not favor a particular asset class over another nor be overtly correlated to each other; however, the fund menu should provide a spectrum of risk and reward.

Underperforming funds should be monitored closely and replaced if necessary. Simply adding funds to counteract low performers increases fiduciary risk and can be interpreted as not fulfilling ERISA responsibilities. 

Since the 2012 Department of Labor rule, the transparency of retirement plan fees has significantly improved. Each year, plan sponsors are provided with a disclosure and information detailing their retirement plan’s fees.

As a plan sponsor, it is your responsibility to verify the accuracy and reasonableness of all plan fees and document the benchmarking process.

While plan sponsors bear significant responsibility and oversight for the company’s 401(k) plan, the burden can be eased by working closely with financial advisors and staying abreast of fiduciary obligations. 

The result? 

A win-win-win for the plan sponsor, advisor and participants!

[1] “Let’s be clear about fiduciary status.” J.P. Morgan. 10 Oct 2017. https://am.jpmorgan.com/us/institutional/library/lets-be-clear-about-fiduciary-status


Posted on by Jerome.Pfeffer

Your plan data and private information are valuable, but unfortunately, cybersecurity is a critical but often overlooked aspect of a plan sponsor’s fiduciary responsibility.

Given the risk of cyberattacks targeting plan data and retirement savings, it’s important for plan sponsors to be diligent and proactive in making sure they understand what safeguards their third-party 401(k) service providers have in place to protect participants’ privacy and keep their data safe and secure.

Here are 11 key questions you should be asking your 401(k) service providers about the cybersecurity of your retirement plan data.


Posted on by Jerome.Pfeffer

Hot breath, fear, sweaty palms – You’ve received a request from the Department of Labor (“DOL”) to provide documents about your retirement plan. You are being investigated.

Your first thought may be, how did this happen? Why does the DOL care about my company’s retirement plan?

Whether it was a complaint from a plan participant, a referral from another agency, an error on your Form 5500, or simply the luck of the draw, you could spend the next 12 to 24 months becoming familiar with the DOL’s concern over how your plan’s fiduciaries carry out their responsibilities.

Before the Request: 5 Tips You Should Know

If you knew in advance that your plan was going to be investigated, how would you have prepared? As a best practice, all plan fiduciaries should take the following five steps:

  1. Know who the plan’s fiduciaries are. This will be one of the first questions asked by the DOL, and they will be looking to understand the knowledge level of these fiduciaries.
  2. Document your decision making. The DOL looks for written documentation showing how the plan’s fiduciaries carried out their responsibilities. The documentation should demonstrate the process that results in the decisions made in the best interests of the plan participants.
  3. Get fiduciary training. Trying to learn as you go during an investigation can be problematic. Understanding ERISA’s fiduciary duties and how to properly administer plans ahead of time can make the investigative process much smoother.
  4. Have good insurance. It’s a best practice to get fiduciary liability insurance related to your plan. You can even pay the premiums from the plan under certain conditions. Notably, some policies will cover the costs of investigations after the deductible has been reached.
  5. Keep plan related documents organized. Having your plan-related documents organized and accessible prior to the investigation will make responding to the DOL much smoother. 

During the Investigation: 5 Hassle-Saving Suggestions

Once you receive the notice of investigation requesting plan-related documents, how can you prepare for the process? The following steps should be taken:

  1. Choose a primary contact. It is best to have only one person communicate with the DOL investigator throughout the process to eliminate confusion. All communications should be kind, respectful and courteous. Consider ERISA counsel as the primary contact as they can act as a translator to eliminate misunderstandings and often look for ways to streamline the process. 
  2. Negotiate the scope of the requests. The DOL intends to be reasonable in their requests for documents. If a request seems overly burdensome, explain the situation and the DOL might modify their request in an appropriate fashion.
  3. Perform a review of the documents prior to production. Documents should never blindly be provided to the DOL. You (or your ERISA counsel) should review the documents to fully understand what is in them and to ensure that collections of documents are complete. If a negative is found (such as earning contributions have been late), it may make sense to report them to the DOL voluntarily.
  4. Present the documents in a neat and organized fashion. When documents are provided to the DOL in a neat and orderly fashion, either on paper or electronically as requested by the DOL investigator, you are demonstrating that as fiduciaries you are organized. When documents are presented haphazardly, it may cause the DOL concern about how the plan’s fiduciaries carry out their responsibilities.
  5. Always be truthful. The DOL will request interviews with the plan’s fiduciaries. The interviews will feel similar to a deposition with the DOL asking questions about the plan and how the fiduciaries administer it. It is always key to be truthful in answering, even if it may be uncomfortable when you have noted an error such as late contributions (a favorite area of investigation by the DOL). Being truthful about errors commonly results in the DOL allowing voluntary efforts to fix them. The DOL is more likely to seek to penalize or enter into settlement agreements in the most egregious cases. 

DOL investigations happen. Take the time now to clearly document your plan actions, explain why they were taken, and always remember to act in the best interest of plan participants. This way, if the DOL comes knocking at your door, you will be prepared.


Posted on by Jerome.Pfeffer

Offering a competitive benefits package, including a top-notch 401(k) plan, is essential for your company to recruit and retain top talent. Today’s workers highly value employer-sponsored retirement plans: 88% of them say that an employee-funded retirement plan is important to them.[1] In addition, eight out of ten new hire candidates consider retirement savings programs offered by prospective employers a major factor in their job search decisions.[2]

As a result, you should evaluate your 401(k) plan regularly — at least once a year — to ensure that it continues to be the right fit for your business and employees. For example, if you find during your review that you’re not satisfied with your current 401(k) provider due to high fees, poor investment performance or a lack of service and support, it may be time to consider changing providers. In addition, with many 401(k) providers offering new technology and features, now may be a good time to see if it makes sense to update your existing 401(k) offering by switching to a new provider.

If you’re considering making a change, here are five tips to help you evaluate your current provider. If you decide to switch, we can help make the transition to your new one as smooth as possible:

#1 Before considering new 401(k) providers, carefully review your existing one. Clearly identify why you’re unhappy with your current plan provider and services, then determine the improvements you’d like to see going forward. While your cons list for your existing provider may include “fees are too high,” don’t let that be the only reason for switching. Comparing plan providers based on fees alone doesn’t usually reflect the value you’re getting for what you’re paying.

Instead of focusing solely on fees, weigh your current provider — and any prospective ones in the running — based on factors such as:

#2 Get familiar with the conversion process. Let’s say you decide to change plan providers. After you choose one, what’s next? An experienced provider should do most of the heavy lifting when transitioning your plan to their platform — called a conversion. To start, you’ll need to review and complete paperwork for your current plan to share with your old and new providers.

You can also expect[3]:

#3 Take note of applicable fees. Your current provider may charge you a termination and/or surrender fee when you switch to a new one. These fees can range from a few hundred to a few thousand dollars. Call your existing provider to determine their termination and/or surrender fees in advance to avoid any surprises. Your new provider may also charge you to establish the new plan.

#4 You don’t have to stick to your old plan design. Plan sponsors often update their plan designs when switching providers. Most plan documents allow changes to be made at any time, but keep in mind that there may be amendment, regulatory or notice requirements you must meet before these changes become effective. Also, be aware of any timing concerns — for example, investment changes must be aligned with notice and blackout period requirements. Be sure to touch base with your old and new providers to address any potential issues.

#5 Communicate plan changes to your participants. When you make changes to your 401(k), including switching providers, you’re legally required to provide participants with a blackout notice that includes information about:

You should also provide employees with information regarding any fund or plan design changes.

It may take some time to review your current plan and switch to a new provider, if beneficial. Getting the support, and features and investment options that are best for your plan and participants will make the effort well worth it.

Need assistance? We can help you create an innovative and competitive 401(k) offering to give you an edge when it comes to recruiting and retaining talented employees. Contact us today to receive more information!

[1] Transamerica Center for Retirement Studies. 17th Annual Transamerica Retirement Survey. “A Compendium of Findings About American Workers.” December 2016.

[2] Transamerica Center for Retirement Studies. 19th Annual Transamerica Retirement Survey. “Employers: The Retirement Security Challenge.” October 2019.

[3] Human Interest blog. “How to Change Your 401(k) Provider.” April 2017.

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