Products July 30, 2019

Partnership Allows RIAs to Integrate HSAs Into Retirement Planning

Offering health savings account (HSA) services allows advisers to add value and help clients more holistically plan for retirement, Kristen Donovan, with BAM Retirement Solutions, tells PLANADVISER.

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HealthSavings Administrators, a health savings account (HSA) provider, and Orion Advisor Services, LLC, a portfolio management solution provider for registered investment advisers (RIAs), announced a strategic partnership to empower RIAs to easily integrate HSAs into retirement planning services for their clients.

Kristen Donovan, retirement solutions manager and retirement adviser with BAM Retirement Solutions in St. Louis, Missouri, which offers advisers support and help, tells PLANADVISER, “We requested an Orion link so that our advisers can have a direct link with information from HSAs. The benefit to that is being able to include that in a client’s overall portfolio management.”

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The HealthSavings and Orion integration allows RIAs to manage their clients’ HSAs in the same dashboard as other investment accounts—IRAs, 401(k)s and more.

According to Donovan, the primary reason it is so important is that advisers would like to take a look at all assets being invested for the goals of a client. “When advisers are looking at client accounts, they are looking at a number of different things, including whether an account is tax-advantaged versus taxable. They are considering the tax efficiency of the asset location,” she says.

“Advisers are seeing more and more plan sponsors offer HDHPs with HSAs, and it’s important that employees understand the opportunity to save for not only current medical expenses, but if able, for retirement medical expenses. It allows people to prepare more holistically for retirement,” Donovan adds.

While advisers can’t offer HSAs, Donovan says they can choose to work with an HSA vendor to offer a benefits lineup—with HSAs, employees don’t have to use the vendor the employer offers. “Providing more value means making sure you have a solution for the HSA piece of benefits,” she adds. “Providers could also offer better investments for HSAs.”

According to Donovan, if offering HSA services, an adviser would be expected to provide education. Advisers can choose to charge a fee based on services provided, but she says she would expect that advisers would add HSA services because it is the right thing to do. “It’s something advisers should have. It makes sense to have this tool in their quiver. If they don’t, someone else will,” she concludes.
Compliance July 29, 2019

DOL Issues Final Association Retirement Plans Rule

In addition to the final ruling, the department has also released a 16-page request for information (RFI) on open MEPs. 

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The Department of Labor (DOL) has issued a final rule to help more employers offer retirement savings benefits through association retirement plans (ARPs).

The rule, which will go into effect on September 30, will permit employers to connect with associations of employers in a city, county, state, or a multi-state metropolitan area, or in a particular industry nationwide to provide retirement plans for their employees. The DOL says the rule will allow small and midsized plan sponsors to offer competitive benefits packages similar to those of larger organizations, a resource usually unattainable for smaller businesses due to high costs and overwhelming paperwork.

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“Less than a year ago, President Donald J. Trump signed an Executive Order focused on expanding quality, affordable workplace retirement plan options for America’s small businesses and their employees,” said Acting Secretary of Labor Patrick Pizzella. “Many small businesses would like to offer retirement benefits to their employees, but are discouraged by the cost and complexity of running their own plans. Association Retirement Plans offer valuable retirement security to small businesses’ employees through their retirement years.”

With ARPs, businesses can join retirement plans without sorting through the filing and administration burdens, as the association handles this on behalf of small plans.

Under the rule, retirement plans may also be sponsored through professional employer organizations (PEOs), third-party human resources providers offering services to small and midsized plan sponsors. The DOL adds that the rule creates a safe harbor for PEOs, which offers clarity in administering retirement plans and in their role as PEOs. This includes “recruiting, hiring and firing workers of its client-employers that adopt the MEP [multiple employer plan],” and assuming “responsibility for and has substantial control over the functions and activities of any employee benefits which the service contract may require the PEO to provide,” according to the DOL.

The proposed rule was first introduced last October and opened for a comment period, after President Trump had ordered the DOL to address the issue directly in an August 2018 executive order.  DOL officials state the final rule is mainly unchanged from the proposal, despite a more simplified PEO section and a switch from multiple safe harbor regulations to a single one. However, in response to an influx of commenters who requested additional information on open MEPs, the department has issued a 16-page request for information (RFI), set to publish on July 31, and open for comments until October 29.

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