Retirement Plan Restatement

Every six years the Internal Revenue Service (IRS) requires certain qualified retirement plans to be fully amended and restated to comply with law changes. The Cycle 3 Defined Contribution (DC) Plan Restatement period began on August 1, 2020, and plan sponsors of defined contributions plans (401(k), profit-sharing, and money purchase pension plans) will have until July 31, 2022, to comply. Plans that do not restate their plan document by this date will be subject to IRS-imposed penalties, which, in extreme cases, could jeopardize the plan’s tax-qualified status.

So why is this important? Plan documents are the framework that an individual retirement plan must follow. They are drafted based on laws and regulations set forth by three federal regulators: Congress, the Treasury Department (IRS), and the Department of Labor (DOL). The IRS is the main overseer, and it has the ability to “pre-approve” plan documents. 

Jana Samek, Relationship Manager – Retirement ServicesRetirement Plan Restatement
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Retirement Plan Limits for 2021

The Internal Revenue Service (IRS) has set inflation-adjusted limits for IRAs and company-sponsored retirement plans for 2021. While some of the contribution limits have remained the same, other limits important to determining the amount you can save have changed.

The basic salary contribution limit for a 401(k) and similar company-sponsored retirement plans remains the same at $19,500; and the catch-up contribution for those who are 50 years of age or better, also remained the same at $6,500. However, the overall annual additions limit for these types of plans goes up from $57,000 to $58,000 in 2021.

The table below provides additional information regarding the 2021 contribution limits for retirement accounts as well as prior limits for the past five years. It is for informational purposes only.

Jana Samek, Relationship Manager – Retirement ServicesRetirement Plan Limits for 2021
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When to Consider Target-Date Funds

Since target-date funds were first offered in the early 1990s, they’ve become a widespread investment vehicle for retirement. Their booming popularity is no surprise. After all, a target-date fund (or TDF) is easy for novice investors to manage, and even experienced investors can appreciate the hands-off simplicity they can offer.

But do your research: a TDF may not always be the best choice for you.

TDFs are designed for individuals with particular retirement dates in mind. In fact, the name of the fund often refers to its target date. For example, you might see funds with names like “Portfolio 2030,” “Retirement Fund 2030,” or “Target 2030″ that are intended for individuals who plan to retire in or near the year 2030. The fund’s mix of investments automatically adjusts as time moves on, becoming more conservative as you get older and closer to retirement.

Jana Samek, Relationship Manager – Retirement ServicesWhen to Consider Target-Date Funds
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COLA Limits for 2019

The Internal Revenue Service and the Social Security Administration have announced the cost of living adjustments (COLA) applicable to dollar limitations for retirement accounts and the Social Security wage base for 2019. Many of the limits have changed for the 2019 plan year. Changes for 2019 are in bold in the chart below.

IRA and SIMPLE plan limits are both up $500. The annual IRA limit is now $6,000 (catch-up remains the same at $1,000 for those 50 and older) and the SIMPLE limit is $13,000 (catch-up remains at $3,000).

Jana Samek, Relationship Manager – Retirement ServicesCOLA Limits for 2019
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