Archives for June 2024

It is officially Summer! Favorite summer past times of grilling burgers, hotdogs, swimming, boating, gardening, camping and just spending time outside is here. A staple in many American refrigerators in the summertime, and throughout the year, is Ketchup. Ketchup has a way of giving those grilling favorites that much needed edge to just simply make it better. Just like ketchup gives our grilling favorites the edge needed, catch-up contributions in a 401k can serve the same purpose.

If you or someone you love is still working and is or going to turn 50 this year, while the normal contribution limit to a 401k/403b plan is $23,000 for 2024, those 50 and older can make catch-up contributions of an additional $7,500, totaling $30,500. The extra amount contributed can really give an investor’s portfolio the extra boost needed to stay on track or get back on track for retirement goals.

On December 29, 2022, Congress passed the SECURE 2.0 Act, which stands for Setting Every Community Up for Retirement Enhancement. Several of the provisions outlined in the act have delayed start dates. Beginning in 2025, Section 109 of the SECURE 2.0 Act allows employees who are 60-63 years old to contribute at a “super” catch-up rate! The super catch-up allows for investors to make an additional 50% increase to the $7,500, which would result in $11,250 in additional catch-up contributions in 2025. This catch-up contribution is planned to index to inflation and could mean possibly more contributions in future years.

If you have questions or want to learn more, please reach out and let's chat.

Securities and Investment Advisory Services offered through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Advisor, Member FINRA/SIPC. Rose Street Advisors, LLC is independently owned and operated. File # 6718069.1

Jeremy Heavey

AIF ® | FINANCIAL ADVISOR

Jeremy is passionate about partnering with individuals and families to identify what is important in their lives and creating a comprehensive financial strategy to help them reach their life goals. This holistic approach allows Jeremy and the wealth management team to ensure the specific needs of the client are front and center as they make investment recommendations and collaboratively design custom-tailored financial plans.

Jeremy has a professional track record starting, leading, and managing for-profit and non-profit organizations. He is a graduate of Taylor University and has completed business programs at both Hong Kong Baptist University & Harvard Business School. Jeremy is also formally trained and certified in behavioral assessment, conflict management and life coaching. Jeremy, his wife Kim and their 4 kids reside in Kalamazoo. They love spending time exploring the outdoors, fixing up their farmhouse, and living life with friends and extended family.

Fun fact: Jeremy has been playing drums since he was 13 years old and made callbacks for the Blue Man Group.

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Compliance Testing & Filing Form 5500

Have you received an email asking for the annual census and compliance questionnaire to be submitted? Or maybe you’ve already done that, and have been asked to sign the Form 5500 for your retirement plan offering? These are very important pieces of administering your company/organization’s retirement plan. Let’s talk about why. As we navigate through the complexities of managing retirement plans, there are essential tasks that cannot afford to slip through the cracks. Among these, two crucial elements stand out: compliance testing and filing Form 5500. Today, we're here to offer a friendly reminder of their importance and why they should be at the top of your to-do list.

Understanding Compliance Testing Compliance testing is an essential part of ensuring that your 401(k) or 403(b) plan remains compliant with IRS regulations. These tests assess whether your plan is operating within the legal limits set by the IRS, particularly regarding nondiscrimination and contribution limits. ADP/ACP Testing: The Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) tests evaluate whether contributions made by highly compensated employees (HCEs) are within acceptable limits compared to those made by non-highly compensated employees (NHCEs). Top-Heavy Testing: This test determines whether key employees hold a disproportionate share of plan assets, ensuring that the plan does not unfairly favor highly compensated individuals. Coverage Testing: Coverage testing verifies whether a sufficient number of non-highly compensated employees are benefiting from the plan, preventing discrimination against lower-paid employees. The Importance of Form 5500 Filing

Form 5500 is the annual report that must be filed with the Department of Labor (DOL) to provide information about the operation, funding, and administration of your retirement plan. It serves as a vital tool for the government, participants, and beneficiaries to monitor plan compliance, financial conditions, and investments. Transparency: Form 5500 promotes transparency by requiring plan sponsors to disclose comprehensive information about the plan's operations, investments, and financial health. Legal Requirement: Filing Form 5500 is not optional—it's a legal requirement for most retirement plans. Failure to file can result in severe penalties, including hefty fines imposed by the IRS and DOL. Participant Protection: Completing Form 5500 ensures that participants and beneficiaries have access to critical information about their retirement plan. The Summary Annual Report (SAR) must be provided to plan participants and beneficiaries each year. A Friendly Reminder and Action Plan As a plan sponsor, it's crucial to stay proactive and ensure that compliance testing and Form 5500 filing are on your radar. Here's a simple action plan to help you stay on track:

Mark Your Calendar: Set reminders well in advance of the deadlines for compliance testing and Form 5500 filing to avoid last-minute rushes. Attached is a compliance calendar for Defined Contribution (DC) and Defined Benefit (DB) Plans, for a calendar year plan, that you may use for reference.

Engage with Experts: Consider partnering with retirement plan consultants or third-party administrators who can guide you through the compliance process and ensure that all requirements are met.

Stay Informed: Keep yourself updated on changes to IRS and DOL regulations that may impact compliance testing and Form 5500 filing requirements.

Take Action: Don't procrastinate! Start preparing for compliance testing and Form 5500 filing well ahead of the deadlines to avoid unnecessary stress and potential penalties.

In conclusion, compliance testing and Form 5500 filing are not tasks to be taken lightly. They play a critical role in maintaining the integrity and legality of your retirement plan while safeguarding the interests of plan participants. By prioritizing these responsibilities, you demonstrate your commitment to upholding the highest standards of fiduciary duty and ensuring a secure financial future for all. Click HERE to access the 2024 RSA Compliance Calendar

Julia Sanders | AIF®, CPFA®

Retirement Relationship Manager Meet Julia, a people-focused life-long learner with several years of experience in the retirement plan industry. Throughout her career, Julia has been committed to maintaining strong client relationships by providing incredible customer service. She is passionate about helping clients define and plan for their retirement goals. Julia's daily role at the firm energizes and reinforces her commitment to client-focused work. Investment Advisory Services Offered Through M Holdings Securities, Inc. A Registered Investment Adviser, Member FINRA/SIPC. Rose Street Advisors LLC is independently owned and operated. File #: 6672972.2

Over the years of working alongside a number of family offices, I continue to be impressed by the sincere care demonstrated for the family (or families) they serve. While we provide life insurance reviews, on-going service and marketplace insight on their current portfolios, we also strategize with family offices on how life insurance can support their overall objectives. After many discussions about the complexities and challenges of running a family office, could life insurance possibly be a “Family Office’s best friend”?

Initiating the Conversation

The process of buying life insurance is one focused on the next generation. As a mentor of mine told me early on, “Two types of people buy life insurance - those who care about someone and those who care about something besides themselves." Especially when working with younger generations, any opportunity to discuss the sense of responsibility they should have to future generations and their family legacy is meaningful. A conversation regarding life insurance planning is another occasion for the family to consider who and what they care most about

A Business Model of Service

My experience with family offices has been an atmosphere of high touch and high service. Family offices are intentional about being advocates for their families; their service model intertwines both the personal and professional workings of a family. In order to do that well, there must be wealth to manage and revenue generated so resources are available to support all those important functions. When family trees branch farther and farther out, the level of wealth can be diluted while the service expectation from each increasing family member remains constant. One way to counter that reality is to intentionally plan for ways to mitigate depleting family wealth; revenue must match expectations and obligations. With careful planning to minimize income and estate taxes, wealth spent over multiple generations is naturally replenished by an injection of life insurance.

Forced Savings Plan

Paying premiums can serve as a savings mechanism for those who depend on future trust dollars and prevent current recipients from leaving little behind. This strategy can help family offices and those in a fiduciary role balance the demands of the current generation with the responsibility to look out for the interests of future generations.

An Asset Without Equal

Life insurance is still the only asset that avoids taxation at all levels and continues to be a vehicle used by wealthy families to accomplish explicit wealth transfer objectives. While GST-exempt Dynasty Trusts may hold a majority of family assets, inevitably there will be situations where assets outside the trust are susceptible to future taxation. Life insurance does not recognize income or gains requiring complex annual tax reporting (cash values grow inside the policy free from current taxation). As a prime example, private placement life insurance (PPLI) provides access to alternative investments, while being tax-efficient and eliminating the need to track down another K-1 or further complicate tax returns. Life insurance may not be as warm and friendly as a golden retriever, but for a family office, at least you don’t have to worry about cleaning the carpets. If you have questions or would like to see how the advisors at Rose Street Advisors can help you better serve your clients, please contact us below. We are here to help. Click here to request a policy review!

Rob Hunt II

LIC & CLU® | Principal & Chief Executive Officer

As Principal and CEO, Rob spearheads the vision, drive for growth, and pursuit of excellence at Rose Street Advisors. Rob loves being outdoors with his wife Erin and kids. He has slalom skied for the past 35 years, never missing a season. He also enjoys spending time at the lake and on the golf course. This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. To determine what is appropriate for you, please contact your Rose Street Financial Professional. Information obtained from third-party sources are believed to be reliable but not guaranteed. Securities and Investment Advisory: Services offered through M Holdings Securities, Inc., A Registered Broker/Dealer and Investment Advisor, member FINRA/SIPC. Rose Street Advisors is independently owned and operated. Rose Street Advisors is a member firm of M Financial Group. #6610057.1

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PCORI Fees - What are They and When Do I Pay Them?

One of the many requirements in the Affordable Care Act (ACA) is the Patient-Centered Outcomes Research Institute (PCORI) fee, an often overlooked but essential aspect of compliance. The PCORI fee is a charge imposed on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans. It was established to fund the Patient-Centered Outcomes Research Institute, an organization tasked with improving the quality and relevance of evidence available to help patients, caregivers, and healthcare providers make informed health decisions.

Who Needs to Pay the PCORI Fee?

The fee applies to: • Health Insurance Providers: Issuers of specified, fully insured health insurance policies. For fully insured health plans, the insurance carrier pays the PCORI fee on your behalf. No action is required of the employer. • Self-Insured Plan Sponsors: Employers or plan sponsors of applicable self-insured health plans, including Health Reimbursement Arrangements (HRAs). The employer is responsible for the PCORI fee for self-insured health plans and HRAs.

How Much is The PCORI Fee?

The PCORI fee amount is adjusted annually and is based on the average number of lives covered under the policy or plan. As of the most recent update, the fee is: • $3.00 per covered life for plan years ending on or after October 1, 2022, and before October 1, 2023. • $3.22 per covered life for plan years ending on or after October 1, 2023, and before October 1, 2024. The fee increases slightly each year based on the projected increases in national health expenditures.

Calculating the PCORI Fee

Calculating the PCORI fee involves determining the average number of lives (employee, spouse and dependents) covered under the policy or plan during the plan year. Please note that for HRA plans, an employer pays the PCORI fee only on the number of participating employees, not including covered spouses and dependents. There are several methods for this calculation: 1. Actual Count Method: Count the total number of covered lives for each day of the plan year and divide by the number of days in the year. 2. Snapshot Method: Add the total number of lives covered on one date (or more dates, if using the "more dates" variation) in each quarter of the plan year and divide by the number of dates used. 3. Form 5500 Method: Use the participant counts reported on the Form 5500 for the plan year, if filed. Plan sponsors can choose the method that best fits their reporting capabilities, but they must use the same method consistently within a given plan year.

Reporting and Payment

To report and pay the PCORI fee, issuers and plan sponsors must file Form 720 (Quarterly Federal Excise Tax Return) annually, by July 31 of the year following the last day of the plan year. The fee is reported in Part II of the form under "Patient-Centered Outcomes Research Fee". The latest version of Form 720 can be found here: https://www.irs.gov/pub/irs-pdf/f720.pdf (see Part II, IRS No. 133). Ensuring compliance with PCORI fee requirements is critical to avoid penalties. Failure to pay the fee or report it accurately can result in interest and penalties imposed by the IRS. For more detailed information, refer to the IRS instructions for Form 720 or reach out to your Rose Street Advisors team for assistance.

Alicia Ball

STRATEGIC OPERATIONS ADVISOR

As Strategic Operations Advisor, Alicia has the opportunity to lead the Employee Benefits Department every day. The focus of her role is to ensure the Department is operating at maximum efficiency, which allows us to ensure that our client’s needs and expectations are consistently exceeded. She accomplishes this efficiency through her strong communication, ability to maximize resources and staying true to Rose Street’s core values. Alicia’s tenure with Rose Street began in 2016 as our Maxwell Health Champion. She then spent time as a Employee Benefit Advisor where she built long lasting relationships with her clients that remain in place today even with her role change. In her spare time, Alicia tries to keep up with her very busy son, volunteers as a Big Sister for the Big Brother, Big Sister organization, and makes sure to spend as much time outside as she possibly can.

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