Millennials Confident in Their Financial Skills

Despite economic hurdles, the majority thinks they will “make it” financially.

Despite greater economic hurdles Millennials will face compared to their elders—unprecedented student loan debt, unemployment and stagnant wage growth—they are confident that they will “make it” financially. This is according to a survey of 1,100 Americans by TD Bank.

As to how they define “making it” financially, 61% of Americans define that as being debt free. Fifty-four percent classify it as owning a home, and 52% identify it as having an emergency fund. Thirty-three percent consider investing an important milestone, followed by growing their career (30%),  putting their children through college (29%) and graduating from college (28%).

Millennials are more competitive than older generations when it comes to their finances; 45% say it is important to achieve financial success before their friends, compared to only 10% of Baby Boomers and 29% of Gen Xers.

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“Millennials have unfairly earned a reputation for being less financially responsible than previous generations,” says Andrea Johnson, head of financial education at TD Bank. “While they may delay traditional milestones like marriage and children, they still aspire to achieve traditional hallmarks of the American dream, including owning a home, getting an education and being debt free.”

As to what advice they would give to others to improve their finances, the majority said, “Don’t spend what you don’t have.” Among those older than 35, it would be to tell 20-somethings to start saving.

Thirty-three percent of Boomers rely on a financial adviser, but 26% of Millennials turn to the Internet.

Deadline Approaching for Pre-Approved Plan Restatements

The IRS is offering a new correction method for retirement plan sponsors that miss the deadline.

The Internal Revenue Service (IRS) is reminding plan sponsors that April 30, 2016, is the deadline for those using pre-approved retirement plan documents to sign an updated version of their 401(k), profit-sharing or other defined contribution (DC) retirement plans.

April 30, 2017, is the extended deadline for any defined contribution pre-approved plan adopted on or after January 1, 2016, other than a plan that is adopted as a modification and restatement of a defined contribution pre-approved plan that had been maintained by the employer prior to January 1, 2016. This extension is to facilitate a plan sponsor’s ability to convert an existing individually designed plan into a current defined contribution pre-approved plan. The Internal Revenue Service (IRS) announced in July 2015 its intent to eliminate the staggered five-year determination letter remedial amendment cycles for individually designed retirement plans. The IRS also said it would limit the scope of the determination letter program to initial plan qualification and qualification upon plan termination.

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Retirement plan documents must be revised when the law changes. A retirement plan will remain qualified and provide tax benefits only if the plan document is updated for law changes by the required deadline. After April 30, 2016, if a plan sponsor hasn’t adopted a restated plan, the plan does not comply with the tax laws and may be ineligible for tax benefits.

A plan sponsor’s retirement plan provider should have sent a revised plan document, approved by the IRS, which complies with the Pension Protection Act of 2006 (PPA) and other law changes listed on the 2010 Cumulative List of Changes in Retirement Plan Qualification Requirements.

Previously, the only way an employer could correct not signing a pre-approved DC retirement plan by the deadline was to complete a submission under the IRS’ Voluntary Correction Program (VCP). A new option allows the financial institution or service provider to request a closing agreement on a plan sponsor’s behalf.

To reduce employers’ burden of submitting VCP applications, the IRS invites financial institutions or other service providers to submit proposals for umbrella closing agreements that cover individual employers affected by the failure to update their plans by the deadline. These would be similar to a group submission under the VCP, but under these closing agreements the organization doesn’t need to have made a systemic error.

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