5 Strategies to Reduce Future Required Minimum Distributions (RMDs) Before They Begin

If your retirement savings exceed what's needed to support your lifestyle, required minimum distributions (RMDs) could significantly increase your taxable income and even raise your Medicare premiums. Fortunately, there are strategies to proactively reduce future RMDs or defer them to minimize their impact. Here are the five effective strategies:

1. Roth Conversions

• Convert part of your traditional IRA or 401(k) to Roth IRA before reaching RMD age.

• Roth IRAs do not have RMDs during your lifetime, and future withdrawals are tax-free.

• Conversions will trigger taxes in the year of conversion, but this can be managed by spreading conversions over several years, especially when your taxable income is lower.

2. Qualified Charitable Distributions (QCDs)

• Once you reach age 70 1/2, you can donate up to $108,000 annually directly from your IRA to qualified charities.

• These distributions count toward satisfying your RMDs but are not included in your taxable income.

• This strategy is ideal if charitable giving is part of your financial plan.

3. Accelerated Withdrawals

• Take larger withdrawals from your traditional accounts before RMD age to reduce the account balance subject to future RMDs.

• Withdrawals are taxable, but they may reduce future RMDs and spread out the tax impact over time.

• Be mindful of staying within your current tax bracket to avoid triggering higher taxes.

4. Delay Social Security Benefits

• Delaying Social Security until age 70 can reduce taxable income during your early retirement years, allowing more room for tax-efficient Roth conversions or withdrawals.

• This also maximizes your Social Security benefits, which can complement other tax-planning strategies.

5. Shift to Taxable and Tax-Deferred Accounts

• If you're still working or contributiong to retirement accounts, consider redirecting new savings to taxable brokerage accounts or tax-deferred options, such as health savings accounts (HSAs).

• Taxable accounts offer flexibility for withdrawals without RMD rules, and HSAs provide tax-free withdrawals for qualified medical expenses.

Final Thoughts

Planning ahead to manage future RMDs can reduce taxes and prevent surprises in retirement. By implementing these strategies, you can maintain more control over your income and minimize unnecessary tax burdens.

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Adviser, Member FINRA/SIPC. Rose Street Advisors is independently owned and operated. #7548719.1

Staying Ahead: Key Focus Areas for 401(k) Plan Success in 2025

As 2025 begins, 401(k) plan sponsors are entering another dynamic year shaped by fresh regulatory updates, technological advancements, and the evolving expectations of employees. At Rose Street Advisors, our team remains committed to helping you stay ahead, ensuring your retirement plan remains competitive, compliant, and effective. This blog post highlights key areas to focus on in 2025.

1. Adapting to SECURE 2.0 Updated

The full rollout of SECURE 2.0 provisions continue into 2025. Plan sponsors should prioritize compliance with new rules, such as expanded catch-up contributions and automatic enrollment requirements. Partner with your advisor to ensure that plan amendments are timely and align with the updated guidelines. These changes represent an opportunity to enhance plan design for participants.

2. Embracing Flexible Fiduciary Practices

Maintaining fiduciary excellence requires regular evaluation of your plan’s operations, investment lineup, and participant experience. With shifting market dynamics, now is the time to reassess the performance and fees of your investment options and adjust the plan design to meet employee needs.  

3. Enhancing Financial Literacy Through Technology

A Standout trend in 2025 is the growing emphasis on personalized financial education. Employees expect interactive, accessible resources to guide their retirement decisions. Whether it’s mobile apps, webinars, or AI-driven tools, consider these platforms that resonate with a digitally savvy workforce. Better education means better engagement—and ultimately, better retirement readiness. 

4. Automation and Plan Design Optimization

Automatic features, including enrollment, escalation, and re-enrollment, continue to be regulatory favorites. These features not only align with industry best practices but also significantly boost participation rates. Evaluate how incorporating these features, along with well-chosen QDIAs, can simplify the participant experience and increase overall plan effectiveness. 

5. Strengthening Cybersecurity Measures

As the use of digital platforms grows, so does the importance of robust cybersecurity. Implement advanced measures to protect participant data and ensure your service providers meet stringent security standards. A secure plan inspires trust and safeguards your organization against potential liabilities. 

6. Benchmarking for Competitiveness

With economic pressures and increased transparency, regularly benchmarking your plan against peers is critical. Review fees, performance, and participant outcomes to ensure your plan stays competitive. This analysis also serves as a tool to negotiate better terms with providers and enhance the overall value of your plan.  

7. Streamlining Administrative Processes

Simplify plan administration by leveraging modern tools and outsourcing where appropriate. Efficient processes save time, reduce errors, and allow your team to focus on higher-level strategic initiatives. 

Looking Ahead

As 2025 unfolds, the ability to anticipate and adapt to changes will define the success of your 401(k) plan. At Rose Street Advisors, we specialize in breaking down complexities and providing tailored guidance. Whether it's navigating new regulations, enhancing participant engagement, or leveraging technology, we are here to elevate your retirement program.

If you'd like any specific updates or additional insights for 2025, let us know!

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

Pros & Cons of Loans and Early Withdrawals from Your Retirement Account

When faced with financial needs, taking a loan from your employer-sponsored retirement account, such as a 401(k), can seem like a tempting solution. However, it's important to understand both the advantages and disadvantages, considering both the short-term and long-term impacts.

Short-Term Perspective

Advantages:

1. Quick Access to Funds: a 401(k) loan can provide quick access to cash for emergencies or major expenses without needing to qualify through a credit check.

2. Lower Interest Rates: Compared to other forms of borrowing, 401(k) loans often come with lower interest rates.

3. Paying Interest to Yourself: The interest you pay on the loan goes back into your retirement account, so you're effectively paying interest to yourself.

Disadvantages:

1. Repayment Requirements: You must repay the loan with interest, usually through payroll deductions, which can reduce your take-home pay.

2. Double Taxation: Loan repayments are made with after-tax dollars, and you'll be taxed again when you withdraw the funds in retirement

3. Risk of Job Loss: If you leave your job or are terminated, the loan may become due in full, and any unpaid amount may be treated as a taxable distribution with potential penalties.

Long-Term Perspective

Advantages:

1. Avoiding Penalties: Taking a loan instead of an early withdrawal helps you avoid the 10% early withdrawal penalty and immediate income taxes.

2. Continuing Growth: While the borrowed amount is no longer invested, the remaining balance in your account continues to grow tax-deferred.

Disadvantages:

1. Reduced Retirement Savings: Borrowing from your 401(k) reduced the amount invested for your retirement, potentially compromising your long-term financial security.

2. Lost Compounding: The money taken out as a loan is no longer compounding, which can significantly impact your overall retirement savings over time.

3. Repayment Risk: If you're unable to repay the loan, it may be treated as a taxable distribution, resulting in taxes and penalties.

Considerations Before Taking a 401(k) Loan

• Financial Discipline: Ensure you have a solid repayment plan and the discipline to follow through.

• Alternative Solutions: Explore other borrowing options, such as personal loans or home equity lines of credit, which may have less impact on your retirement savings.

• Impact on Retirement Goals: Consider how the loan will affect your long-term retirement goals and whether it aligns with your overall financial plan.

Should You Take an Early Withdrawal from Your Retirement Account?

As a retirement plan participant, you might find yourself considering early withdrawals from your retirement account to pay off debt. Before making such a decision, it's essential to understand both advantages and the potential drawbacks, including the taxation and penalties involved.

Advantages of Early Withdrawals:

1. Immediate Debt Relief: Using retirement funds to pay off high-interest debt can provide immediate financial relief, potentially reducing stress and improving your financial situation.

2. Interest Savings: Paying of debt early can save you money in interest payments over time, especially if you have high-interest loans or credit card debt.

3. Improved Credit Score: Reducing or eliminating debt can positively impact your credit score, making it easier to access favorable loan terms in the future.

Disadvantages of Early Withdrawals:

1. Taxation: Early withdrawals from retirement accounts are typically subject to income tax. The amount withdrawn is added to your taxable income for the year, which could push you into a higher tax bracket.

2. Early Withdrawal Penalty: If you withdraw funds before reaching age 59 1/2, you may incur a 10% early withdrawal penalty on top of the regualr income tax, further reducing the amount you receive.

3. Loss of Future Growth: Withdrawing funds early means losing out on potential investment growth, which can significantly impact your retirement savings over time.

4. Reduced Retirement Savings: Using retirement funds to pay off debt reduces the amount available for your future retirement needs, potentially compromising your long-term financial security.

Considerations Before Making a Decision

• Tax Implications: Consult with a tax advisor to understand the full tax impact on an early withdrawal and explore strategies to minimize the tax burden.

• Alternative Solutions: Consider other options to manage debt, such as debt consolidation, negotiating with creditors, or exploring financial assistance programs.

• Long-Term Impact: Evaluate the long-term impact on your retirement savings and consider whether the immediate relief is worth the potential sacrifice to your future financial security.

Conclusion

Taking a loan or early withdrawal from your retirement account can provide short-term financial relief but comes with significant long-term implications and potential tax implications and penalties. It's crucial to weigh the pros and cons carefully and explore alternative solutions before making a decision.

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

ERISA Bond vs. Fiduciary Liability Insurance: What Plan Sponsors Need to Know

Plan sponsors play a critical role in managing retirement plans, and with this responsibility comes risk. Two essential tools to protect both the plan and the fiduciaries are ERIS bonds and fiduciary liability insurance. Here's what they are, why they're needed, and why plan sponsors should consider them.

What Is an ERISA Bond?

An ERISA bond is a legal requirement under the Employee Retirement Income Security Act (ERISA). It safeguards the retirement plan from losses caused by theft, fraud, or dishonesty by individuals handling plan assets.

• Why is it needed? To comply with federal law and protect plan participants' assets.

• Who must have it? Any person handling plan funds, including fiduciaries.

• Coverage amount: At least 10% of plan assets, with a $500,000 cap (or $1,000,00 for plans with employer securities).

What is Fiduciary Liability Insurance?

Fiduciary liability insurance is optional but vital. It protects plan sponsors and fiduciaries from personal liability if they are accused of breaching their fiduciary duties, such as poor investment decisions or failure to monitor service providers.

• Why is it needed? Fiduciaries can be held personally liable for plan losses due to mismanagement.

• Who benefits? Plan sponsors, fiduciaries, and organizations overseeing the plan.

• Coverage amount: Tailored based on the plan's size and complexity.

Why Would a Plan Sponsor Want Both?

While an ERISA bond protects the plan against fraud or theft, fiduciary liability insurance protects fiduciaries personally from lawsuits related to breaches of duty. Without both, plan sponsors risk non-compliance, financial loss, and personal exposure to legal claims.

In short, the ERISA bond ensures compliance and asset protection, while fiduciary liability insurance offers financial clarity and financial security for those managing the plan.

By securing both, plan sponsors demonstrate a commitment to protecting participants and fulfilling their fiduciary responsibilities effectively.

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

Secure Your Legacy: Why You Must Add a Beneficiary to Your Retirement Account Now!

Designating a beneficiary for your retirement account is a crucial step in ensuring your hard-earned savings are distributed according to your wishes. Here's why it's essential and the potential pitfalls of not having a designated beneficiary:

Why You Must Add a Beneficiary

1. Control Over your Assets: Naming a beneficiary ensures that your retirement assets go directly to the individuals or entities you choose, without going through lengthy and potentially costly probate process.

2. Ease for Your Loved Ones: A clear beneficiary designation simplifies the process for your loved ones during an already difficult time. It helps avoid conflicts and confusion about who should receive your assets.

3. Tax Benefits: Beneficiaries may receive favorable tax treatment. For example, a spouse can roll over the account into their own IRA, potentially deferring taxes further.

Potential Issues Without a Designated Beneficiary

1. Probate Process: If no beneficiary is named, your assets may have to go through probate, which can be time-consuming and expensive. This delay can prevent your loved ones from accessing funds when they might need them most.

2. State Default Rules: In the absence of a beneficiary, state laws will determine how your assets are distributed, which may not align with your wishes. This could lead to unintended recipients receiving your funds.

3. Increased Tax Burden: Without a designated beneficiary, your retirement assts may be subject to higher taxes, reducing the amount your loved ones ultimately receive.

Take Action Today!

Ensuring your beneficiary designations are up to date is a simple yet vital step in securing your legacy. Regularly review and update your designations to reflect life changes such as marriage, divorce, or the birth of a child.

Scott Higgins | AIF ®, CFP®,CPFA®, NSSA®

Financial Advisor

Since 2012 at Rose Street, Scott has been responsible for helping the firm's individual wealth management clients with income strategies for retirement and consulting with employers with their employee retirement plans. In free time, he enjoys golf, biking, skiing, cooking, and traveling. Fun Fact, Scott has a hobby of filling growlers with coins!

Top 5 Administrative Failures in Employer-Sponsored Retirement Plans and How to Prevent Them

Managing an employer-sponsored retirement plan can be complex, and even well-intentioned plan sponsors can encounter administrative failures. Here are the top five common failures and practical suggestions to prevent them:

1. Failure to Follow Plan Terms

Failure: Not adhering to the specific terms outlined in the plan document, such as compensation definitions or eligibility criteria. Prevention: Regularly review and understand the plan document. Ensure clear communication between HR, payroll, and plan administrators.

2. Missed Enrollment of Eligible Employees

Failure: Failing to enroll eligible employees in the plan, leading to missed contributions and potential compliance issues. Prevention: Implement automated enrollment processes and conduct periodic audits to ensure all eligible employees are enrolled.

3. Incorrect Loan Repayments

Failure: Not properly withholding or collecting loan repayments, resulting in defaulted loans and potential tax penalties. Prevention: Establish robust loan administration procedures and regularly monitor loan repayments to ensure compliance.

4. Late RMDs (Required Minimum Distributions)

Failure: Failing to distribute the required minimum amounts to participants who have reached the age for RMDs, leading to penalties. Prevention: Set up automated reminders and tracking systems to ensure timely distributions.

5. Inconsistent Record-Keeping

Failure: Inaccurate or incomplete record-keeping, which can lead to errors in contributions, distributions, and compliance testing. Prevention: Maintain meticulous records and conduct regular audits to ensure accuracy and completeness.

By addressing these common administrative failures, plan sponsors can enhance the efficiency and compliance of their retirement plans, ultimately benefiting both the employer and the employees.

Scott Higgins | AIF ®, CFP®,CPFA®, NSSA®

Financial Advisor

Pre-Tax vs. Roth Retirement Savings: What’s the Difference?

When it comes to saving for retirement, choosing between pre-tax and Roth savings options is one of the most important decisions you’ll make. Both have unique benefits, and understanding their differences can help you make a choice that aligns with your financial goals and tax strategy. Let’s break it down:

Pre-Tax Retirement Savings

Contributing to a pre-tax account, such as a traditional 401(k) or IRA, means your contributions are made before taxes are deducted from your income. Keep in mind the annual contribution limits differences in an individual IRA or Roth and those of an employer sponsored retirement plan such as a 401(k).

Key Benefits:

• Immediate Tax Savings: Your taxable income is reduced in the year of contribution, potentially lowering your tax bill.

• Tax-Deferred Growth: Investments grow without being taxed until you withdraw them in retirement.

• Ideal for Higher Earners: If you’re in a high tax bracket now and expect to be in a lower one during retirement, this option may save you money in the long run.

Consideration:

• Withdrawals in retirement are taxed as ordinary income.

• Required minimum distributions (RMDs) begin at age 73, forcing you to take taxable withdrawals.

Roth Retirement Savings

Roth contributions, available in accounts like a Roth 401(k) or Roth IRA, are made with after-tax dollars. While there’s no immediate tax deduction, the long-term benefits can be substantial.

Key Benefits:

• Tax-Free Withdrawals: Qualified withdrawals of contributions and earnings are completely tax-free in retirement.

• No RMDs for Roth IRAs, Roth 401(k), Roth 403(b) and 457(b): You’re not required to take distributions during your lifetime, allowing your savings to grow tax-free indefinitely.

• Flexibility for Lower Earners: If you’re in a lower tax bracket now, paying taxes upfront may make sense.

Consideration:

• Contributions don’t reduce your taxable income in the year they’re made

• Recent tax rule changes no longer require RMDs from Roth 401(k) 403(b) 457(b) accounts similar to Roth IRAs.

Which Option is Right for You?

The best choice depends on your current tax situation, future income expectations, and retirement goals:

• If you anticipate being in a lower tax bracket in retirement, pre-tax savings may provide greater benefits.

• If you’re in a lower tax bracket now or want to hedge against future tax increases, Roth savings can offer tax-free income in retirement.

• A mix of both accounts can give you flexibility and diversification to manage taxes effectively in retirement.

• If a high income earner, there are no income limits to make Roth contributions to 401(k), 403(b), and 457(b) accounts.

• If you’re a younger age, a Roth may be advantageous with a longer timeframe to potentially benefit from compounding returns.

Final Thoughts

Understanding the differences between pre-tax and Roth retirement savings is key to building a tax-efficient strategy for the future. By weighing the pros and cons of each option, you can choose a path that helps increase your savings and decrease tax burdens

Julia Sanders | AIF ®, CPFA®

Retirment 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.

Empowering 401(k) Plan Sponsors: Navigating Success in 2025

As we step into 2025. 401(k) plan sponsors find themselves at the forefront of a rapidly changing landscape marked by new regulatory requirements, advancements in technology, and evolving employee expectations. At Rose Street Advisors, our mission is to help you stay ahead, ensuring your retirement plan remains competitive, compliant, and effective. Here are the key focus areas for 2025:

1. Adapting to SECURE 2.0 Updates

With the complete implementation of SECURE 2.0 provisions in 2025, plan sponsors must prioritize compliance with new rules, such as expanded catch-up contributions and automatic enrollment requirements. Collaborate with your advisor to ensure timely plan amendments that align with these updated guidelines. These changes present an opportunity to enhance plan design for participants.

2. Embracing Flexible Fiduciary Practices

Achieving fiduciary excellence requires ongoing evaluation of your plan’s operations, investment lineup, and participant experience. Given shifting market dynamics, now is the time to reassess the performance and fees of your investment options and adjust the plan design to meet employee needs.

3. Enhancing Financial Literacy Through Technology

A standout trend in 2025 is the increased emphasis on personalized financial education. Employees seek interactive, accessible resources to guide their retirement decisions. Consider mobile apps, webinars, and AI-driven tools that resonate with a digitally savvy workforce. Better education leads to better engagement—and ultimately, better retirement readiness.

4. Automation and Plan Design Optimization

Automatic features, including enrollment, escalation, and re-enrollment, remain regulatory favorites. These features not only align with industry best practices but also significantly boost participation rates. Evaluate how incorporating these features, along with well-chosen QDIAs, can simplify the participant experience and increase overall plan effectiveness.

5. Strengthening Cybersecurity Measures

As the use of digital platforms grows, the importance of robust cybersecurity cannot be overstated. Implement advanced measures to protect participant data and ensure your service providers meet stringent security standards. A secure plan inspires trust and safeguards your organization against potential liabilities.

6. Benchmarking for Competitiveness

With economic pressures and increased transparency, regularly benchmarking your plan against peers is crucial. Review fees, performance, and participant outcomes to ensure your plan stays competitive. This analysis also helps negotiate better terms with providers and enhance the overall value of your plan.

7. Streamlining Administrative Processes

Looking Ahead

As 2025 unfolds, the ability to anticipate and adapt to changes will define the success of your 401(k) plan. At Rose Street Advisors, we specialize in breaking down complexities and providing tailored guidance. Whether it’s navigating new regulations, enhancing participant engagement, or leveraging technology, we are here to elevate your retirement program.

If you’d like specific updates or additional insights for 2025, let us know!

Scott Higgins | AIF ®, CFP®,CPFA®

Financial Advisor

Understanding the New Catch-Up Contributions and Retirement Plan Limits for 2025

Enhanced Catch-Up Contributions for Ages 60 - 63

Starting in 2025, individuals aged 60 to 63 will benefit from increased contribution limits. This change is part of SECURE Act 2.0, designed to help older workers boost their retirement savings as they approach retirement. The new provision allows these individuals to contribute up to $10,000 or 150% of the standard catch-up contribution limit, whichever is greater¹ ². For example, with the standard catch-up limit for those aged 50 and older set at $7,500 for 2025, the enhanced limit for those aged 60-63 will be $11,250³.

This increase provides a significant opportunity for older employees to enhance their retirement savings, potentially lowering their taxable income and improving their financial security in retirement. It’s important for plan sponsors to communicate these changes effectively to eligible participants, ensuring they understand the benefits and how to take advantage of them.

New Retirement Plan Limits for 2025

In addition to the enhanced catch-up contributions, the IRS has announced new contribution limits for various retirement plans for 2025. Here are the key updates:

• 401(k), 403(b), and Governmental 457 Plans: The annual contribution limit for employees participating in these plans will increase to $23,500, up from $23,000 in 2024³ ⁴. This adjustment reflects the cost-of-living increases and provides participants with an opportunity to save more for retirement.

• IRA Contributions: The limit for IRA contributions remains unchanged at $7,000³. However, the catch-up contribution limit for individuals aged 50 and over remains at $1,000, with an annual cost-of-living adjustment³.

• Combined Contribution Limits: For employees aged 50 and older, the total contribution limit, including catch-up contributions, will be $31,000 for 401(k), 403(b), and governmental 457 plans³. For those aged 60-63, this limit increases to $34,750, considering the enhanced catch-up contributions³.

Implications for Plan Sponsors

As plan sponsors, it’s essential to update your plan documents and communicate these changes to your participants. Here are a few steps to consider:

1. Update Plan Documents: Ensure that your plan documents reflect the new contribution limits and enhanced catch-up provisions. Recordkeepers and TPA’s are all handling this differently and amendments must be made by December 31, 2026. This may involve working with your plan administrator or legal counsel to make the necessary amendments or have some kind of documentation on file until plan document language is available.

2. Educate Participants: Provide clear and concise information to your participants about the new limits and how they can maximize their contributions. Consider hosting informational sessions or webinars to explain the changes and answer any questions.

3. Review Payroll Systems: Ensure that your payroll systems are updated to accommodate the new contribution limits and catch-up provisions. This will help prevent any issues with contribution processing and compliance.

4. Encourage Participation: Use this opportunity to encourage eligible employees to take full advantage of the increased limits. Highlight the benefits of maximizing their contributions, such as potential tax savings and increased retirement security.

By staying proactive and informed, you can help your employees make the most of these new opportunities and enhance their retirement readiness. The changes for 2025 represent a significant step forward in supporting older workers and ensuring they have the resources they need for a secure retirement.

¹: Kiplinger ³: IRS ⁴: The Motley Fool ²: CNBC

Julia Sanders | AIF ®, CPFA®

Retirment Relationship Manager

Unlocking the Best Safe Harbor 401(k) Design: Options That Maximize Benefits & Compliance

When it comes to offering a retirement plan that’s both attractive to employees and compliant with IRS regulations, Safe Harbor 401(k) plans are a top choice for many employers. These plans simplify administration by eliminating the need for annual nondiscrimination testing, while also providing employees with valuable contributions that are immediately theirs. But did you know that there are different types of Safe Harbor 401(k) plans to choose from? Each has its unique structure, advantages, and requirements, making it important to understand which one best aligns with your company’s goals. Let's explore the key Safe Harbor plan designs and how they can benefit both you and your employees. 1. Basic Safe Harbor Match The “Basic Safe Harbor Match” is a straightforward option where you, as the employer, match 100% of the first 3% of employee contributions, plus 50% of the next 2%. This plan encourages employees to save more for retirement while ensuring that your plan remains compliant with IRS rules. All contributions are immediately vested, making it an attractive choice for employees. 2. Enhanced Safe Harbor Match For companies looking to offer a more generous benefit, the “Enhanced Safe Harbor Match” is ideal. It typically involves a 100% match on the first 4% of compensation, although it can be higher. Like the Basic Match, it’s simple to administer, and the immediate vesting of contributions makes it a strong tool for attracting and retaining talent. 3. Nonelective Safe Harbor Contribution If your goal is to provide a retirement benefit to all eligible employees, regardless of whether they contribute, the “Nonelective Safe Harbor Contribution” is a great option. This plan requires you to contribute at least 3% of compensation to every eligible employee's account, irrespective of their participation in the plan. It’s a robust benefit that demonstrates your commitment to your employees' financial futures. 4. Qualified Automatic Contribution Arrangement (QACA) The QACA Safe Harbor plan adds an automatic enrollment feature, making it easier to boost participation rates. Employees are automatically enrolled at a contribution rate starting at 3%, which increases by 1% each year until it reaches at least 6% (but not more than 10%). Employer contributions can either follow a match formula—100% on the first 1% and 50% on the next 5%—or be set as a 3% nonelective contribution. Unlike other Safe Harbor designs, QACA allows for a vesting schedule of up to two years, providing some flexibility. Choosing the Right Safe Harbor Plan Selecting the right Safe Harbor 401(k) plan design depends on your company’s specific needs and objectives. Whether you want to encourage employee contributions, ensure broad-based retirement savings, or increase plan participation through automatic enrollment, there’s a Safe Harbor design that fits. By understanding the nuances of each option, you can create a retirement plan that not only meets compliance requirements but also serves as a valuable benefit to your employees.

Scott Higgins | AIF ®, CFP®, CPFA®

Financial Advisor

Since 2012 at Rose Street, Scott has been responsible for helping the firm’s individual wealth management clients with income strategies for retirement and consulting with employers with their employee retirement plans. In free time, he enjoys golf, biking, skiing, cooking, and traveling. Fun fact, Scott has a hobby of filling growlers with coins! Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Adviser, Member FINRA/SIPC. Rose Street Advisors is independently owned and operated. #6879522.1

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