Advisor Banner Image

He Did Not Know He Couldn’t Fly and So He Did   

 

The following in an excerpt from the November 10th JULY Team Connect Newsletter, written by JULY’s CEO, John Humphrey.

Over the last 5 years, and especially this past year, the Texas / Americana / Folk country music scene has taken a hit with the deaths of iconic singer songwriters like Jerry Jeff Walker, Waco native Billy Joe Shaver, John Prine, and Guy Clark, among others. 
Whether or not you like “country music”, I would encourage everyone to sample the music of some of these non-traditional, soulful artists.  They were colorful characters, and their sound and lyrics combine wit, history, humor, sadness, joy, and anger to make interesting and engaging stories that are relatable to life’s ups and down.

A few of my favorites include :

That Old Time Feeling – Guy Clark”

Mr. Bojangles – Jerry Jeff Walker”

She is My Everything – John Prine”

Ragged Old Truck – Billy Joe Shaver”.

And why am I writing about the Americana music scene in Team Connect?  Well … I recently came across a song called “The Cape” by Guy Clark which struck me in both a personal and professional way.  It starts out about a confident child with his “cape” and tells the story about him climbing on his garage thinking he could jump and fly.  The song follows the unnamed character through adulthood and old age …

“Well, he’s one of those who knows that life is just a leap of faith.  Spread your arms and hold your breath and always trust your cape”. 
“He did not know he couldn’t fly and so he did.”

Personally, this song made me hope that my children and grandchildren will always trust their cape.  And at JULY – we have a lot happening, and we face challenges, large technology projects, competitors, fee pressure, and an ever-changing industry that is complex and difficult.  One thing we should never face is our own doubts.  We have a tremendous team of people at JULY with expert-level knowledge and strong talent, and I am very proud of each of you.

We are working in an industry with a noble purpose – to help people achieve financial freedom – and our clients and participants need us to give our expertise, talents, and our best selves every day.  As we move forward with growth, innovation and our company’s mission, I want to challenge each of us to have confidence in ourselves and in one another and let’s always remember to trust our cape

 

About JULY:

JULY is a 401(k) services company specializing in hi-touch, tech-enabled retirement plan services. Our employees have served as plan experts to advisory firms, advisors, and employers in the small and micro 401(k) plan market for over 25 years. Over the last decade, our in-house software development team has built a host of proprietary technology solutions to streamline, automate, and simplify all facets of retirement planning to make processes rewarding and easy for our clients. For more information about JULY, visit our website https://www.julyservices.com.

 

JULY Honors Veterans   

 

In honor of Veterans Day, JULY proudly acknowledges the service and sacrifices of its employees and employee family members who have served our country within a branch of the U.S. Armed Forces. Following is a listing of those we celebrate and honor today.

JULY Employees

Name Branch of Service Details JULY Job Title
Anabel Figueroa U.S. Navy Chief Petty Officer, 15 years of service Fee and Billing Coordinator
Julie Gale U.S. Navy Petty Officer 3rd class Client Service Manager
 

Relatives of JULY Employees

* Deceased veteran

 
  • Eugene Edward McNamara

    Eugene Edward McNamara

    Specialist, Vietnam War
    Father of Kelli Pledger, Internal Sales Consultant

  • Mike Shumaker

    Mike Shumaker, third from left

    U.S. Army, Sergeant Major, 3rd Brigade Combat Team, 1st Calvary Division at Fort Hood Husband of Shelly Shumaker, Accounting and Payroll

    Additional Details:

    Mike has been on active duty for 24 years. Mike, Shelly and family have endured two deployments to the Balkans, three to Iraq, and one to Egypt (time totaling over 5 years).

    About the photo:

    Mike’s job at the time this photo was taken was in Egypt as part of the Multinational Forces & Observers Team. They were based with soldiers from all over the world. Their mission was to supervise the implementation of the security provisions of the Egyptian-Israeli Treaty of Peace and to prevent any violation of its terms. There were 14 countries represented in all. Mike made a ton of friends-his favorites were the soldiers from Fiji- and Genero, one very outspoken Italian soldier.

  • Great Uncles of John Humphrey

    Great Uncles of John Humphrey, CEO

  • Wayne Rockwell

    Wayne Rockwell

    U.S. Navy, WWII
    Grandfather of Michelle LeCates, VP of of Marketing & Relationship Management

  • Sammy Humphrey

    Sammy Humphrey

    North Korea, 1952
    Uncle of John Humphrey, CEO

 

 
  • Ray Johnson

    A newspaper clipping on Ray Johnson’s early military career

  • Ray Johnson

    A citation from the Secretary of the Navy for Ray Johnson’s division highlighting bravery and determination.

  • Ray Johnson

    Ray Johnson with his plane

  • Ray Johnson

    Ray Johnson in uniform

  • Frank Johnson

    Frank Johnson as a brand new arrival in the tropical land of Vietnam

 

 
  • michael giovenazzo

    Mike Giovenazzo, Uncle of Brian Smith, Regional Sales Director (Plaque is at Mt. Soledad National Veterans Memorial in La Jolla, CA)

  • Mike and Joe

    Mike Giovenazzo, Uncle of Brain Smith, Regional Sales Director, in Pearl Harbor days before the attack

  • giovenazzo brothers

    Uncles of Brian Smith, Regional Sales Director

  • jack smith

    Jack Smith, Uncle of Brian Smith, Regional Sales Director

  • jack

    Jack Smith, Uncle of Brian Smith, Regional Sales Director, aboard the U.S.S. Stonewall Jackson

  • Bob

    Bob Jones, Uncle of Brian Smith, Regional Sales Director, in Vietnam. At the time he was a Major, retired as a Colonel. He was a helicopter pilot in U.S. Army 1st Cavalry Division.

  • Frank Johnson

    Robert Casagrande (right), Grandfather of Brian Smith, Regional Sales Director, during WWII. He was a Staff Sargent in Patton’s Third Army.

 

 
  • Mel Mai

    Mel Mai

    U.A. Air Force – Served in WWII – Grandfather of Doug Mai, Director of Information Technology

  • John O'Neal

    John O'Neal

    U.S. Navy – Served in WWII – Grandfather of Doug Mai, Director of Information Technology

  • Fredrick J. Kroger*

    Fredrick J. Kroger*

    U.S. Army – Served in WWIIPOW in France – Grandfather of Megan Knapp, Marketing & Institutional Relationship Coordinator

  • Steven B. Bogner Steven B. Bogner

    Steven B. Bogner*

    U.S. Army – WWII, Wounded on Omaha Beach, Normandy, France – Step Grandfather of Megan Knapp, Marketing & Institutional Relationship Coordinator

    Details

What’s New At JULY   

 

 
 

Disruption → Innovation

Even in the wake of so much uncertainty as a result of the COVID-19 pandemic, JULY believes our mission to build retirement security is more important than ever.

Over the past few months, our team continued to create innovative retirement plan solutions including:

  Expanded 3(16) Services

  Easy Enrollment

  JULY PEP

Expanded 3(16) Services

JULY has years of experience serving as a functional 3(16) fiduciary through Launch401k – our low-cost 401(k) plan solution.

As a 3(16) fiduciary, we perform many duties each year for these plans, which can consume small business plan administrators’ time such as:

  Helping to Monitor plan providers and ensuring fees are reasonable

  Maintaining the plan document

  Approving distributions and loans

  Tracking employee eligibility and contributions

  Distributing notices throughout the year

  Signing and Filing government required returns

But we repeatedly heard from advisors with clients in plans outside of Launch401k that plan administrators, plan sponsors and small business owners desired for someone else to take on ALL of their 3(16) fiduciary needs

JULY gladly responded to their call with a solution. We are expanding 3(16) services to Liberty401k – our bundled, customized retirement plan offering.

Easy Enrollment

JULY’s new, proprietary enrollment software simplifies how participants enroll in and interact with their retirement plan.

Short, professional videos in our Learning Library guide participants through the enrollment process and address participants’ questions like:

1. Why Should I Participate?

2. How Much Should I Save?

3. How Do I Choose Investments?

This takes the guess work out of enrollment and enables participants to make informed decisions quickly.

Our Quick Enroll option has pre-configured elections. A plan may have one Quick Enroll choice or up to three choices (i.e. deferral rates at 6%, 8%, and 10%). Participants simply confirm their personal information and begin their retirement savings journey with one quick election.

 
 

 
 

JULY PEP

The SECURE Act expanded Americans’ access to retirement savings. One of its provisions created an entirely new type of multiple-employer plan (MEP): the pooled employer plan (PEP) and JULY will be taking on the role of Plan Administrator in order to ease the burden from small businesses.

A PEP allows unrelated small businesses to band together under one retirement plan, hopefully creating economies of scale, which must be governed by a pooled plan provider (PPP).

JULY intends to register as a PPP once final guidance is issued by the Department of Labor.

We will offer a competitively-priced PEP solution.

Also, conversations have begun with some of our institutional partners about creating a PEP for their advisor channels. Each version will include a level of customization to meet the partner’s requirements. We expect to continue creating institutional solutions throughout 2021.

2021 & Beyond

2021 will be a year for small business owners to rebuild their core business.

JULY wants to remove the barriers to retirement plan adoption and administration that lie in their way.

There’s more on the horizon:

– Notice Delivery – proprietary technology to manage notice delivery for 3(16) service clients using the new electronic delivery regulations

– Online Plan Setup – end-to-end plan setup with JULY support available on-demand

– 401Pay Suite of Tools – payroll integration available on even more platforms

– Online Proposal Center – advisors can produce plan proposals for 401(k) and cash balance plans, perform total cost analysis, benchmark fees and more

Replay Our Recent Webinar to Learn More

For a more in-depth look at what’s new at JULY, watch our webinar.

 
 

About JULY:

JULY is a 401(k) services company specializing in hi-touch, tech-enabled retirement plan services. Our employees have served as plan experts to advisory firms, advisor and employers in the small and micro 401(k) plan market for over 25 years. Over the last decade, our in-house software development team has built a host of proprietary technology solutions to streamline, automate and simplify all facets of retirement planning to make processes rewarding and easy for our clients. For more information about JULY, visit our website https://www.julyservices.com.

 

Financial Advisor Marketing & Prospecting During COVID   

 

It can be done!

The pandemic has limited traditional in-person networking. But forward-thinking advisors aren’t discouraged…

Here are 5 Ways Advisors Can Meet Clients Where They Are Today:

Expand Your Social Media Presence

Pair High-Tech with Low-Tech

Play the Long Game

Increase Your Industry Knowledge

Clarify Goals & Message

Expand Your Social Media Presence

Meet your clients where they’re spending the majority of their time: online.

Think beyond the confines of a Zoom meeting. Let clients come to you: Regularly update your business existing social media accounts. Utilize platforms new features like Instagram Reels. Hesitant in the past to advertise on Facebook? Run an ad and see the results. Or even consider gaining exposure through a new platform.

Keep the tone light, message concise and info helpful. Let clients know you’re there for them during this difficult time, whatever form that may take.

Pair High-Tech with Low-Tech

While technology has enabled many industries to continue conducting business during the pandemic, technology fatigue is also a very real phenomenon.

Send clients a handwritten note or suggest a socially distant “across-the-parking-lot meeting” if your client prefers a face-to-face meeting. Flexibility and versatility are key.

Play the Long Game

While the pandemic may require your clients to shift their focus to the short-term, retirement security is still a long-term priority for Americans.

Be available for your client’s immediate needs while anticipating their future ones. Once they’ve weathered the pandemic, how can you be of assistance? Come armed with an answer whenever they’re ready to have the conversation.

Increase Your Industry Knowledge.

Use this time to learn. Become a subject matter expert. JULY has many resources for you to brush up on plan-specific knowledge. Not sure where to start? Here’s a few suggestions:

1) Read our previous article on The SECURE Act

2) Check out JULY COO Blake Willis’ Prospecting with Total Cost Analysis webinar

3) Explore our Cash Balance Plan Calculator

Clarify Goals & Message

“Story is the most powerful tool on the planet to captivate the human brain,” Storybrand CEO Donald Miller says.

How are you leveraging this tool to its full potential?

What story is your advisory business telling?

Most importantly, how can JULY help tell it?

Take this time to refine your pitch, clarify your professional and personal goals and perfect your messaging. Need help? Register for our upcoming advisor-centric Storybrand Virtual Event.

 

Partner With JULY

JULY empowers advisors. We’ll partner with you to help locate new prospects in your area, prepare plan illustrations and cost analyses, provide educational information on plan design features, build your center of influence in your community and help your business tell a compelling narrative.

 

About JULY:

JULY is a 401(k) services company specializing in hi-touch, tech-enabled retirement plan services. Our employees have served as plan experts to advisory firms, advisors, and employers in the small and micro 401(k) plan market for over 25 years. Over the last decade, our in-house software development team has built a host of proprietary technology solutions to streamline, automate, and simplify all facets of retirement planning to make processes rewarding and easy for our clients. For more information about JULY, visit our website https://www.julyservices.com.

 

Adjusting marketing and prospecting techniques.

5 ways advisors can expand business during a pandemic.

Register for our webinar.

retirement plan, customized retirement plans, cash balance plan, 401(k) plan, 401(k) services, SECURE Act, retirement

What is a Pooled Plan Provider (PPP)?   

 

The SECURE Act

The Setting Every Community Up for Retirement Enhancement (SECURE) Act expanded Americans’ access to retirement savings. One of its provisions created an entirely new type of multi-employer plan (MEP): the pooled employer plan (PEP).

A PEP allows unrelated small businesses to band together under one retirement plan, hopefully creating economies of scale, which must be governed by a pooled plan provider (PPP).

Pooled Plan Providers (PPPs)

The SECURE Act stipulates pooled plan providers (PPPs) will serve as a PEP’s named fiduciary, plan administrator and perform all associated administrative duties.

PPPs are responsible for all oversight of the plan. This builds upon the past decade’s trend whereby providers began taking on more 3(16) and 3(38) fiduciary responsibility.

 
 

Requirements to Become A PPP

1. Register with Department of Labor & Treasury – The DOL will issue more guidance.

2. Provide Written Acknowledgement of Named Fiduciary & Plan Administrator Status – The DOL will issue more guidance.

3. Maintain ERISA Fidelity Bonding – An ERISA fidelity bond is a type of insurance that protects the plan against losses caused by acts of fraud or dishonesty. It protects the plan, NOT the fiduciary. This is another level of protection for small businesses.

4. Hire Trustee to Collect Contributions – This approved custodian will be responsible for collecting employers’ contributions in a timely, consistent and integrated manner.

Likely PPP Candidates

Although there are no imposed conditions on who may serve as a PPP, because of the above requirements, financial service providers are most likely to serve as PPPs. These include:

  Banks

  Insurance Companies

  Registered Investment Advisor Firms

  Third Party administrators (TPAs)

  401(k) Recordkeepers

 

The Department of Labor will release more guidelines regarding what entities may act as a PPP.

PPPs Shift Fiduciary Responsibility

While small business owners participating in a PEP will still have a fiduciary responsibility to: select a prudent advisor, ensure said advisor’s continued prudence and retain responsibility for the selection of monitoring of the PPP, the pooled plan provider dramatically reduces their exposure to liability.

PEPs shift the real risk and administrative burden from employers who lack the time, industry-specific knowledge and resources to the PPP.

 

About JULY:

JULY is a 401(k) services company specializing in hi-touch, tech-enabled retirement plan services. Our employees have served as plan experts to advisory firms, advisors, and employers in the small and micro 401(k) plan market for over 25 years. Over the last decade, our in-house software development team has built a host of proprietary technology solutions to streamline, automate, and simplify all facets of retirement planning to make processes rewarding and easy for our clients. For more information about JULY, visit our website https://www.julyservices.com.

 

The Cash Balance Catch Up   

 

AUTHOR: Blake Willis, COO of JULY Services

I am grateful for the American small business owner, and I admire their grit, tenacity and innovative spirit. Small business owners account for over 50% of American employment and create more than 60% of new jobs . They put their money where their mouth is; more specifically, into their practices, firms and ventures.

But at JULY, we don’t want to just pay lip service to the vital role small business owners play in our economy. We want to equip these cornerstones of the economy with a tangible way to build retirement security. So, how do we help those who often spend decades plugging their profits back into their businesses and writing excessive checks to Uncle Sam at the expense of their 401(k)s? Cash balance plans.

Cash Balance Plan

A cash balance plan is a type of qualified retirement plan that enables business owners and highly compensated employees to maximize tax deductions and accelerate savings. A hybrid plan, it combines the best of both a defined benefit and a defined contribution plan.

JULY’s Regional Sales Directors provide expert field support for retirement plan-focused financial advisors and third party administrators. They organize and host educational events, coordinate plan design illustrations, prepare and present proposals, and are speakers on topics relevant to industry professionals. Geringer will be responsible for working with advisors and other JULY relationship partners in the West Central Region and will be based in Denver, Colorado. See JULY’s national sales map for more details.

Essentially, it’s a way to save more, faster.

Best Candidates

Healthcare industry professionals, lawyers, dentists and CPAs who own their own practice, or other types of businesses that have steady cashflows and high profits and are already maxing out their 401(k)s are likely to benefit from a cash balance plan.

 
 

Advantages

  Maximize Tax Deductions

  Accelerate Savings

  Provides Measure of Certainty

  Flexible Plan Design

  Easy to Understand

  Small Employee Benefit

Maximize Tax Deductions

Cash balance plans are one of the last, best tax deductions available to the American small business owner. Even the most aggressive small business 401(k) plan cannot replicate the financial benefit these plans offer.

How? Cash balance plans are uniquely structured to allow the business owner(s) to receive an outsized percentage of funds contributed to the plan compared to their employees. Paying a few thousand dollars to employees and an administrative fee that begins at four to five thousand dollars is quickly recovered by the gargantuan-in-comparison tax deduction the business owner receives.


Accelerate Savings

It’s not too late to save big. And quickly. Cash balance plans dramatically accelerate retirement savings. Yearly 401(k) contributions are capped at $57,000 for those under fifty and at $63,500 for those fifty and over. This level of savings is often not enough for high earners to maintain their lifestyle in retirement.

When high earners combine their cash balance plan with a traditional 401(k)/profit sharing plan – which almost all cash balance sponsors do – they can set aside $100K+ more per year.

Cash balance plans also offer an effective diversification method for owners who have too much money tied up in their firms or would like to hedge against some higher-return, riskier investments.

Provides Measure of Certainty

Cash balance plan contributions are typically invested in a conservative manner, but participants receive a set rate of return (normally 3-5%, which is defined in the plan document) regardless of the actual performance of the funds. Remember, since a cash balance is, in part, a defined benefit plan, the amount the owner will receive is defined no matter the gains or losses the investments yield.

A cash balance plan is not focused on huge gains from the market, which may make this seem like a less-than-flashy investment. And it is. But a cash balance plan not being subject to the whims of a highly volatile market is freshly compelling in the light of COVID-19.

Just this past March, the Dow dropped more than 35%, and the CBOE Volatility Index “VIX”, commonly known as the “fear index,” reached an all-time high. While the market has since recovered most of the ground it lost, the near and medium-term outlook remains highly uncertain, per Fed Chair Jerome Powell . Cash balance plans offer a refuge from market turbulence in the form of set, predictable returns for participants.


Flexibility in Plan Design

Cash balance plans offer a high degree of flexibility in plan construction.

A Tale of Two Partners – Consider an ENT practice with two partners. Think about these highly compensated professionals’ educational and career trajectories. The first partner just turned 35. The second partner is 55.

Both partners completed extensive schooling (often 8 or even 12 years of postsecondary education), studying hard in undergrad, medical school and in residency. Both partners worked to establish their practice. They assembled a great team, built their book and established a solid infrastructure. But that’s where their paths diverge.

The 35-year-old is still paying off student loans (often $100K+ for specialty doctors), is building a new home for her expanding family and saving intensely for her children’s education through a 529 plan. She is likely not interested in a cash balance plan.

The 55-year-old has raised a few kids, put them through college and paid off his daughter’s recent wedding. He is comfortable in his career, has no debt and few expenses and is rapidly approaching retirement age. He is a prime candidate for a cash balance plan.

A cash balance plan can help the 55-year-old understand his financial goals and create a plan to rapidly meet them. We can adjust the plan to exclude the younger partner, or bring them in at a much lower, but equally beneficial contribution level.

Easy to Understand

Like a 401(k), cash balance plan statements are easy to understand. Contribution and interest credits are clearly delineated in an easy-to-read, lump-sum format. Participants know exactly where their money is, how it’s being invested and what their account balance is.

Simply put, clarity + transparency = happy participants.

Employee Benefit

While cash balance plans require some pay-in to employees’ accounts, it is a small tradeoff when you take into consideration the enormous tax break employers reap because of it.

But even this small contribution can increase employee morale, help retention rates and attract new talent.

The Cash Balance Impact

I’ve become a champion for cash balance plans, because I see firsthand the outsized impact they have on individuals’ ability to save quickly and smartly for retirement.

The combined benefit of shielding a quarter million dollars from a 37% tax rate while earning a respectable three to five percent return on that investment makes a compelling argument.

As with any retirement plan, there are drawbacks. Some factors for small business owners and financial advisors to take into consideration before proceeding with a cash balance plan are: the IRS’ permanency requirement (plans are not to be altered often), an excise tax can be levied against the owner for failing to make yearly contributions and census data can affect the level of employer benefit.

Partner with JULY

Cash balance plans are the fast-growing segment of retirement plans. Financial advisors have an opportunity to partner with JULY to seize upon this trend.

Our advisor-centric approach provides support to educate advisors on cash balance plans, craft a proposal and design a plan for their clients.

For more on how cash balance plans work and the advantages they offer: https://www.julyservices.com/plan-types/cash-balance/

 
 

About the Author

Blake Willis is a highly recognized thought leader and event speaker within the retirement and financial services industry, and a domain expert in cash balance plans. He is one of the nation’s leading authorities on all aspects of retirement plan governance, plan design and 3(16) plan administrator roles, but also practical aspects of retirement plans such as product development and distribution strategies.

 

1 https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

2 Some plans may elect to credit the actual rate of return.

3 https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20200429.pdf

4 Assuming the highest tax bracket.

 

About JULY:

JULY is a 401(k) services company specializing in hi-touch, tech-enabled retirement plan services. Our employees have served as plan experts to advisory firms, advisors, and employers in the small and micro 401(k) plan market for over 25 years. Over the last decade, our in-house software development team has built a host of proprietary technology solutions to streamline, automate, and simplify all facets of retirement planning to make processes rewarding and easy for our clients. For more information about JULY, visit our website https://www.julyservices.com.

 

Don’t Shirk Fiduciary Responsibility – Shift It   

 

Offering a retirement plan to employees has several benefits for small business owners.

1.  Speaks volumes about how they value their employees 2.  Demonstrates their long-range vision 3.  Allows them to participate in the plan themselves
However, reticence to accept fiduciary liability has long been a significant barrier to more widespread small business employer adoption of retirement plans.

A fiduciary is legally and ethically bound to act prudently on behalf of retirement plan participants. Small business employers are automatically granted fiduciary status when they provide employers with a retirement plan, which means they must assume liability and either themselves execute or outsource many administrative tasks for the plan. Plan fiduciaries are tasked with knowing the rules and managing over 200+ fiduciary tasks and could even face legal and financial repercussions if they neglect to prudently oversee the plan. Examples of some of these duties include:

1.  Monitoring plan providers and ensuring fees are reasonable 2.  Maintaining the plan document 3.  Approving distributions and loans 4.  Monitoring employee eligibility and contributions

JULY’s Proven 3(16) Track Record

JULY can take on the responsibilities a 3(16) fiduciary must perform every year, which can consume your plan administrator’s time. We have years of experience serving as functional 3(16) fiduciaries through such innovative offerings as our Launch401k and Liberty401k plans. These customized, cost-effective, simple-to-operate plans lessen the fiduciary burden placed on small business owners. Recently-passed legislation took steps allowing small businesses to even further shield themselves from fiduciary responsibility.

The SECURE Act

The Setting Every Community Up for Retirement Enhancement (SECURE) Act expands Americans’ access to retirement savings. It includes many provisions aimed at making it easier for small business employers to join multi-employer plans (MEPs), and pooled-employer plans (PEPs), for which a pooled plan provider (PPP) will serve as the designated 3(16) fiduciary.

Pooled Plan Providers (PPPs)

“Think of a PPP as a 3(16) plus,” Blake Willis, COO of JULY, says. While a small business owner’s fiduciary duty to their employees will never disappear entirely, a PPP shields them even further by serving as the top-level, named fiduciary for the plan participants. This finally shifts the real risk and administrative burden from employers – who lack time, industry-specific knowledge and resources – to the PPP.

JULY’s Fiduciary Promise

Small business owners/employers are naturally entrepreneurial spirits who relentlessly pursue their objectives. They are major drivers of job growth and spur innovation. However, the same risk-tolerant business approach that enables their companies to succeed is not necessarily transferrable when it comes to ensuring a high level of fiduciary care for their employees’ retirement plan. Here at JULY, one of core values calls us to conduct business with a ‘Servant’s Heart’. This relationship-centered approach to business means we will always act with integrity. Whatever our fiduciary capacity, JULY holds itself to an unimpeachable standard when it comes to handling our participants’ retirement security.

About JULY

JULY is a 401(k) services company specializing in hi-touch, tech-enabled retirement plan services. Our employees have served as plan experts to advisory firms, advisors, and employers in the small and micro 401(k) plan market for over 25 years. Over the last decade, our in-house software development team has built a host of proprietary technology solutions to streamline, automate, and simplify all facets of retirement planning to make processes rewarding and easy for our clients. For more information about JULY, visit our website at www.julyservices.com.

Expanding the Future of Retirement – MEPs, PEPs and the SECURE Act   

 

The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law in late 2019. Designed to aid Americans’ ability to save for retirement, it enjoyed broad-based, bipartisan support in Congress. “The SECURE Act excites us here at JULY because its aim is in lockstep with our mission: building retirement security,” John Humphrey, President and CEO of JULY, says. “We enthusiastically support any legislation designed to expand Americans’ access to a more secure retirement future.”

 
 

Prior to the SECURE Act’s passage, small business owners and employees already had the option of utilizing a multiple employer plan (MEP) – a retirement savings plan shared by two or more related employers. This enabled them to lower a plan’s associated administrative costs and shift fiduciary responsibility from themselves to the plan provider. The SECURE Act sought to build upon – and slightly adjust – the MEP model’s demonstrated success in lowering costs and increasing access to retirement saving via several key provisions:

  Fixed the “One Bad Apple” Rule for MEPs

  Removed the “Common Nexus” Requirement

  Created Pooled Employer Plans (PEPs) to be Governed by Pooled Plan Providers (PPPs)

 

Fixed “One Bad Apple” Rule

MEPs are not a new concept, having been around for the better part of a century now. However, many companies were justifiably hesitant to adopt them because of a risk factor beyond their control: fellow participating employers in the plan. There was a fear that “one bad apple” among the employers that comprised the MEP would shirk fiduciary responsibility (e.g. fail to make timely contributions) therefore jeopardizing the plan’s overall health.

The SECURE Act created a mechanism for spinning these “bad apples” out of MEPs while keeping the rest of the participants’ funds safe. “Small business owners and employees will find MEPs not only digestible, but appetizing now that this safeguard is in place,” Blake Willis, COO of JULY, says.

Removed “Common Nexus” Requirement

Participating employers were formerly required to be bound by a connection besides their retirement plan such as being in the same trade industry or geographic location. The SECURE Act removed this limiting “common nexus” requirement. Companies are now free to band together with fellow unrelated employers under an Open MEP for the practical, attractive benefits of lowering costs, increasing bargaining power and shifting both the administrative and/or fiduciary burden.

Created Pooled Employer Plans (PEPs)

The SECURE Act also created an entirely new type of MEP: the pooled employer plan (PEP). A PEP allows unrelated small businesses to band together under one retirement plan, hopefully creating economies of scale, which must be governed by a pooled plan provider (PPP).

Think of a MEP as a sector fund. Its representative members are confined to a single industry. A PEP, on the other hand, is more akin to a general mutual fund. Its participating employers represent many industries from a broad swath of the market.

Pooled Plan Provider (PPP)

The SECURE Act stipulates that pooled plan providers (PPPs) will serve as a PEP’s named fiduciary and plan administrator. This builds upon and legitimizes the past decade’s trend whereby providers began taking on more 3(16) and 3(38) fiduciary responsibility.

While small business owners participating in a PEP will still have a fiduciary responsibility to choose a prudent advisor and ensure said advisor’s continued prudence, the PPP dramatically eases their exposure to liability. “The SECURE Act settles the question of whom top-level fiduciary responsibility belongs to,” Willis says. “It is definitively the province of the PPP.”

The professionals at JULY have a proven track record of providing 3(16) fiduciary services, and are well-positioned to enter the PEP market. The retirement plan industry awaits specific regulatory language about the SECURE Act’s provisions from the DOL. JULY is actively monitoring developments to ensure our products and services take full advantage of the Act’s many beneficial provisions.

Looking Ahead

"Small business owners will spend much of 2020 rebuilding their businesses as a result of the economic hit they incurred from COVID-19. However, one thing the pandemic hasn’t changed is this: providing employees with access to solid retirement security options is one of the best ways for small business owners to demonstrate they care about their employees’ wellbeing,"

– Humphrey says.

If the pandemic has brought anything into perspective, it’s how invaluable savings are during times of uncertainty. PEPs should provide a measure of comfort for small business owners and employees seeking to build retirement security.

 
 

About JULY:

JULY is a 401(k) services company specializing in hi-touch, tech-enabled retirement plan services. Our employees have served as plan experts to advisory firms, advisors and employers in the small and micro 401(k) plan market for over 25 years. Over the last decade, our in-house software development team has built a host of proprietary technology solutions to streamline, automate and simplify all facets of retirement planning to make processes rewarding and easy for our clients. For more information about JULY, visit our website. https://www.julyservices.com .

 

Could Your 401(k) Plan Better Meet Your Business’ Needs?   

 

The beginning of the year is a popular time for employers to review their retirement plans for compliance and effectiveness. This year, when you’re evaluating your 401(k) plan, you may want to consider how, in addition to giving your employees a way to save for retirement, the plan could be used to improve your business’ bottom line.

 

Consider whether your business is taking full advantage of the basic benefits of sponsoring a retirement plan or if modifying your plan’s design could make it more valuable to the company. Employers generally sponsor retirement plans to help them recruit and retain qualified employees and for the tax advantages. Here are some business goals your plan might help you accomplish.

Protect Profits for Key Employees

Professional service firms and small businesses, in particular, may want to look at optimizing the plan’s ability to accumulate capital for certain key employees and owners/stockholders in a tax-deferred and cost-effective manner. One way is to make sure that the total plan administrative costs, including employer contributions, are less than the income and FICA taxes that would be due on those contributions if paid as compensation. The fact that plan account balances are protected in bankruptcy is an added benefit for this group of employees.

Cut Training Costs

Has your business incurred high training costs due to turnover of managers or other skilled personnel who aren’t viewed as “highly compensated” under the tax law? Use your 401(k) plan as a retention tool. One idea: Add a profit sharing feature to your plan that covers only these employees. Using a three-year cliff vesting schedule (100% vesting after three years) for the profit sharing contributions may help limit your training costs by lowering turnover and, thus, lessening the need for training. The plan could also allow withdrawal of the funds once they’d vested as an added retention incentive.

Increase Productivity

A management change often causes productivity to drop — sometimes significantly — while employees familiarize themselves with the new manager and his or her expectations. Bringing in a new employee at any level can decrease productivity temporarily while that employee learns the job. Using plan features to retain managers and trained employees can help maintain productivity levels.

Including plan features that employees want, such as a variety of investment options to choose from and investment tools, education, and assistance to help them plan for retirement, can increase productivity. Employees who are happy with their jobs and appreciate their benefits generally are more committed to their employer and more productive in their work.

As a plan sponsor, you can foster commitment and productivity by regularly providing employees with plan information and financial education. Providing regular communication about benefits can sometimes increase commitment almost as much as the benefits themselves. Employees feel you, the employer, care about their future.

Improve Customer Satisfaction

Happy employees usually provide better service and leave customers more satisfied. In addition to using your 401(k) plan to generally improve work force morale, you might want to consider taking specific steps to tie the plan to customer satisfaction. For example, you might tie profit sharing contributions or discretionary employer matching contributions to feedback you receive from periodic surveys of your customers. You might engage employees by conducting meetings to update them on customer satisfaction and expected contributions.

Of course, every employer’s needs are different. We would be happy to review your plan with you and discuss ideas for using it to accomplish specific business objectives.

 
 
“Using plan features to retain managers and trained employees can help maintain productivity levels.”
 

JULY Hires Ryan Geringer as West Central Sales Director   

 

Press Release

 

Waco, TX – July Business Services (JULY), a 401(k) services company specializing in hi-touch, tech-enabled retirement plan services, is pleased to welcome Ryan Geringer as the company’s West Central Regional Sales Director. Geringer joins a growing team of regional business development leaders that provide expert service to financial advisors and TPA partners on all facets of the sales process, including retirement plan design, proposals, prospecting, and sales support.

Geringer has more than 15 years of sales and service experience in the retirement planning industry. Prior to joining JULY, he worked for Paychex Retirement, ASPire Financial Services and Great-West Life & Annuity Insurance Company. In each of these roles, he excelled at connecting advisors with resources and opportunities to help them grow their business.

“We are excited to welcome Ryan to our growing sales team. He has an appreciation for JULY’s independent, entrepreneurial culture and tech-enabled retirement platform and looks forward to working with advisors, plan sponsors and institutional partners in creating tailored retirement plans to help participants build retirement security.” – John Humphrey, JULY’s CEO.

JULY’s Regional Sales Directors provide expert field support for retirement plan-focused financial advisors and third party administrators. They organize and host educational events, coordinate plan design illustrations, prepare and present proposals, and are speakers on topics relevant to industry professionals. Geringer will be responsible for working with advisors and other JULY relationship partners in the West Central Region and will be based in Denver, Colorado. See JULY’s national sales map for more details.

 

About JULY:

JULY is a 401(k) services company specializing in hi-touch, tech-enabled retirement plan services. Our employees have served as plan experts to advisory firms, advisors, and employers in the small and micro 401(k) plan market for over 25 years. Over the last decade, our in-house software development team has built a host of proprietary technology solutions to streamline, automate, and simplify all facets of retirement planning to make processes rewarding and easy for our clients. For more information about JULY, visit our website.