Data & Research March 21, 2017

Comfort With Retirement Savings Does Not Match Reality

Americans say they feel more comfortable with the savings they have now compared to the year before, however, a Bankrate survey finds they're not doing a better job at saving: 21% of working Americans aren't saving any of their income for retirement.
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For the first time in more than six years of polling, Americans say they feel more comfortable with the savings they have now compared to the year before, according to a Bankrate.com report.

However, a Bankrate survey finds they’re not doing a better job at saving: 21% of working Americans aren’t saving any of their incomes, unchanged from last year, while just 25% are saving more than 10% of their incomes, down from 28% last year.

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The top reason Americans aren’t saving more money, reported by nearly two-in-five, was having a lot of expenses, and the second most common answer was “haven’t gotten around to it.” After that, other reasons for not saving more include not having a good enough job (16%) and debt, which was a distant fourth on the list at 13%.

“This illustrates what is wrong with Americans and their savings,” says Bankrate.com Chief Financial Analyst Greg McBride, CFA. “Too many Americans let their lifestyles dictate what they save or whether they save at all, instead of saving first and living on what is left over.”

Nearly half of American workers (48%) are saving, but saving no more than 10% of their pay, including one-quarter that are saving between 1% and 5% of their incomes. Just 5% of working Americans say they don’t need to save more.

Good savings habits are not purely a function of income, as households making $30,000 to $49,999 per year were nearly twice as likely to be saving more than 15% of their incomes as households making between $50,000 and $74,999 annually. The survey found 22% of households with an annual income between $30,000 and $49,999 are saving more than 10% of their incomes.

Having a lot of expenses was the biggest reason for not saving more for all age groups except the Silent Generation (ages 72 and older). Those that haven’t gotten around to it are more likely younger Millennials (ages 18 to 26) and seniors (ages 63 to 74).

Middle income households had a higher tendency to blame debt for not saving more, and households with yearly incomes between $30,000 and $49,999 were most likely to say it’s because their job isn’t good enough.

The survey was conducted by Princeton Survey Research Associates International by telephone interviews with a nationally representative sample of 1,003 adults living in the continental United States. Interviews were conducted by landline (501) and cell phone (502, including 326 without a landline phone) in English and Spanish by Princeton Data Source from March 2 to 5, 2017.

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Products March 21, 2017

Determination Letter Support Launched By Trucker Huss

A new program from Trucker Huss provides plan sponsors with a written opinion of counsel that their plan document, as amended after the date of their last IRS determination letter, “continues to maintain its tax-qualified status as to form.”
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The new Qualified Plan Compliance Program (QPC) from Trucker Huss aims to “fill the void left by the Internal Revenue Service’s recent curtailment of the determination letter program for individually designed qualified retirement plans.”

As the firm explains, effective January 1, 2017, the IRS has limited its determination letter program to initial determinations for new plans and final determinations for terminating plans. “As a result, plan sponsors are no longer able to obtain ongoing written confirmation from the IRS that their plan document continues to meet the tax-qualification requirements of the Internal Revenue Code,” Trucker Huss warns. “Plan sponsors have relied on the IRS determination letter program to facilitate the development of effective internal controls and proper plan operations, and to ensure plan document compliance and consistent monitoring.”

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IRS determination letters also provide evidence of qualified plan status, which is crucial to many aspects of plan administration, the firm suggests.

“As the law changes, and as plan documents have to be amended, plan sponsors will no longer be able to rely on their existing IRS determination letters,” the firm explains. “QPCP gives plan sponsors continued confidence that the form of their qualified plan continues to meet the tax- qualification rules of the Code, thus providing stability in administration.”

QPCP provides plan sponsors with a written opinion of counsel that their plan document, as amended after the date of their last IRS determination letter, continues to maintain its tax-qualified status as to form. The QPCP opinion letters will cover required amendments based on updates to the Code’s qualification and transactions.

In addition to an opinion letter, plan sponsors may selectively include the following existing Trucker Huss services under QPCP: reviews of required compliance testing; controlled group/affiliated service group opinions; and customizable operational compliance reviews. QPCP services are available to all types of qualified retirement plans, both defined benefit and defined contribution plans.

For more information, visit www.truckerhuss.com. 

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