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May 09

Wheeler Mission CEO Rick Alvis reflects on decades of nonprofit service

By Feature

by Shari Finnell, editor/writer, Not-for-profit News

When Rick Alvis took over as CEO of Wheeler Mission in 1990, the challenges of homelessness seemed clear cut.

Alvis, who had previously served as CEO of an Evansville homeless shelter for 10 years, recalled the profile of the typical client at that time. “During the late ’70s and ’80s, a homeless person was really just an alcoholic,” he said. “We weren’t dealing with drugs. We weren’t dealing with mental health issues. If somebody would ask me to describe what a homeless person looks like, I could quickly say it was a white male that had an alcoholic problem and actually had a skill.

“Today, you not only have alcohol challenges, but you also see drug addiction and mental health issues,” said Alvis, who recently announced his retirement from Wheeler Mission. “It has significantly shifted over the past 40 years from being a simple problem to a very complex problem because you must deal with all three of those issues.”

Under Alvis’ leadership during the past 32 years, Wheeler Mission has undergone significant changes, many of them to address the increasingly complex challenges involved in alleviating homelessness. The nonprofit organization, which had 17 employees and a budget of $700,000 in 1990, now has the distinction of being Indiana’s largest nonprofit that serves people challenged with homelessness. Wheeler Mission, which currently has 175 employees and a budget of nearly $16 million, has navigated three mergers, expanded its reach to include women and children, implemented comprehensive programs to address the challenges of drug addiction, and launched a capital fundraising campaign that resulted in the development of the Wheeler Mission’s Center for Women & Children, a state-of-the-art building in Indianapolis that serves up to 367 women and children a day.

Leading through constant change

The ability to adapt to change, as well as proactively pursue change through innovation, has been at the core of Wheeler Mission’s growth, according to Alvis.

“As I look back, it helped me to continually look at our ministry and our programs through new eyes,” Alvis said. “One of my chief program officers always says, ‘Rick’s never satisfied with our programs. Well, that’s true. I’m never satisfied because I want to make sure that our programs are on the cutting edge. Leaders today can get bogged down with protecting the programs they created. I tell our team that it’s open season (on programs) when it comes to strategic planning. Nothing is sacred, even if I created it.”

One of the most challenging tests of that philosophy came when the organization faced a financial crunch in the midst of the Great Recession throughout 2008 and 2009, Alvis recalled. “We had to cut a huge chunk of our budget, which meant we had to cease some programming,” he said.

For an organization that dates back to 1893, determining which programs needed to be canceled was tough, Alvis said. “We had programming here at Wheeler since the Depression years that I decided I needed to go. That probably was among the hardest decisions that we had to make.”

As a leader, making decisions like that, which included cutting a youth outreach program, can also be unpopular, Alvis said.

“One of those programs was what had attracted me to Wheeler 32 years ago,” he said. “For me to let that one go was very hard.”

Throughout his tenure, Alvis said, it was key to make sure that donors’ dollars were being maximized and used appropriately. “We wanted to make sure we are doing the best possible thing that we can with programs. And if there’s something that I created that needs to go, then it must go.”

Expanding support through mergers and new programs

Seeking to meet the needs of people experiencing homelessness also was central to the three mergers Alvis helped to lead during his decades of service to Wheeler Mission. He noted that the first merger with the Care Center in 2000 evolved from a need to better serve women and children. A merger with the Lighthouse Mission followed in 2006, and a 2015 merger with Backstreet Missions in Bloomington helped the organization strengthen services outside of Indianapolis.

“Those three mergers were very significant to Wheeler’s history. We wanted to do a good job of meeting people’s needs, not just men,” he said. “Prior to the merger with the Care Center, Wheeler didn’t have a residential program for women.”

In adapting to the changing needs of people experiencing homelessness, Wheeler Mission also invested in innovative offerings, including an addiction recovery camp on 300 acres. The Hunt Training Center in Bloomington, male participants undergo a six-month comprehensive program in which they cover topics such as anger, worry, biblical communication, relationships and change.

The program, which was launched in 2000, has been effective in helping the participants overcome their addictions, Alvis said. “It’s been great to see men come out of addiction and be productive people again,” he said. 

Although the COVID-19 pandemic limited the team’s ability to expand the program throughout 2020 and 2021, Wheeler is focused on increasing capacity and re-introducing a lodging component that allows family members to visit on weekends. “It allows us to minister to the entire family because the wife and children need just as much help as the man does,” Alvis added. “It helps them recalibrate their marriages and their relationships, which I think is key to the success of our program.”

In addition to providing a focus on addiction recovery at the camp, Wheeler also has made it an integral offering at its Center for Women & Children homeless shelter on East Michigan Street. 

As Wheeler Mission continues to evolve to meet the needs of people facing homelessness, it will always continue to rely on the generosity of its supporters, Alvis stressed.

“Individual donors contribute to 80 percent of our income,” he said. “We always encourage people to give, volunteer and donate food. Others can help by influencing the legislature in some ways to address homelessness throughout the state and in the city. And, of course, people can always pray for us because that’s our No. 1 need. That’s pretty cheap. Prayer doesn’t cost you anything.”

May 02

The tug-of-war of retirement

By Sponsor Insight

by Ann D. Murtlow, President and CEO, United Way of Central Indiana

My retirement clock is ticking. After more than four decades, it’s difficult to believe only a couple months remain for me as a full-time member of the workforce.

If I could describe what this feels like inside my head as of today, I would say it’s like the game tug-of-war. Two equally strong teams are pulling as hard as they can to force the other across the center line. On one side of my brain is Team Look Back and Reflect. The other is Team Dream On.

Team Look Back has been my focus since announcing my retirement early this year. I enjoy reflecting on my career — from my early days as a chemical engineer working in the utility industry to the leap from for-profit to nonprofit leadership at United Way of Central Indiana. Team Look Back is pulling with all its might and reminding me of so many United Way accomplishments, including how we built and strengthened relationships in the community, made important, data-informed decisions, advocated for strong public policies, increased funding to scale successful programs and initiatives and served our community during one of the most stressful times in its history. Personally, I’m also reminded of how lucky and proud I am to have worked alongside some of the brightest people who will now guide United Way into the future.

But in my head, Team Dream On is yanking on that rope just as hard as Team Look Back. I see a promising road ahead for United Way of Central Indiana. I’m energized thinking about the skills, passions, energies and determinations a new leader will bring to this organization and to our community. United Way is on the verge of a new strategic plan, and I have all the confidence in the world for the “Changing of the Guard” to jump in and set a new course for the years ahead.

In retirement, I am dreaming for some rest and more time with my family, but I will be cheering on my colleagues in the sector as they charge ahead and make an even greater impact in our communities.

By the way, this mind game of tug-of-war is exhausting. Until I turn in my office badge, I’ve decided to call a truce, put the rope down, and just be present during this unique time of my life and career. Most of all, I’m going to spend the rest of this time being truly thankful to hundreds of people in my career who believed in, guided, counseled, debated and energized me.

To the United Way board and team, thank you for the challenge, the comradery, and the many victories. To United Way’s community partners, thank you for your constant commitment to excellence and compassionate care for any person who needs help. To our corporate partners, donors, volunteers and advocates, thank you for your extraordinary generosity, your presence and your voice. To all of you, thank you for believing that when we put our brainpower and resources together, we can be successful in solving our community’s most complex and stubborn social issues.

Once the clock’s buzzer sounds on June 30, I’m turning it off. In fact, I’m turning off all the alarms. I imagine a new game of tug-of-war will begin in my head, but this time, it’ll be Team Sleep vs. Team Where Can I Be of Service?

Ann Murtlow

Feb 21

Strategic planning enabled food bank to readily expand operations during pandemic

By Feature

Retiring Gleaners Food Bank of Indiana CEO John Elliott reflects on his tenure

by Shari Finnell, editor/writer, Not-for-profit News

Note: Listen to the full interview with Gleaners’ John Elliott, who talks about strategic planning and provides advice for other nonprofits as they plan for upcoming years.

By any definition, Gleaners Food Bank of Indiana faced a nightmarish situation during the early months of the pandemic in 2020. While demand for food surged to unprecedented numbers, the organization’s typical sources of donations — particularly those from grocery stores — plunged to zero, recalled President and CEO John Elliott, who recently announced his retirement. At the same time, the food bank’s volunteer force dwindled in the face of lockdown orders and the uncertainty around the deadly disease.

Faced with similar daunting circumstances, many food banks temporarily or permanently closed their doors. In New York City, for instance, 39 percent of food banks were closed during the height of the pandemic.

An ambitious strategic plan that had been developed years prior to the pandemic allowed Gleaners to not only keep its doors open but serve 103 million nutritious meals in 2020 — up from 20 million in 2016, said Elliott, who plans to hand over the leadership reins to his successor in September.

“Strategy is absolutely our roadmap,” Elliott said. “We started our strategic plan in February 2019. At that time, we began a lot of change and growth planning, and set a goal of closing the meal gap and keeping it closed. That meant, after 2019, we would need to do 2 ½ that year’s food distribution, sustain it and do it in the right way.”
Along the way, the team also focused on significantly increasing efficiency.

“We did not expect to get 2 ½ times the donations that people have historically given us so we did dozens of things to improve our efficiency,” Elliott said. “We went from 41 cents a meal when I got here to 12 cents a meal last year. There wasn’t one magic thing that led to that, but dozens of dozens of things across the entire organization.

“After about nine months of the pandemic, we didn’t update that strategic plan,” he added. We found ourselves, in a sort of an intriguing way, checking off 2023 strategic plan goals early.”

With the implementation and acceleration of the strategic plan, Elliott said the food bank has undergone a permanent transformation.

“You cannot quintuple your distribution, while simultaneously have dramatically improved the nutritional quality and unprecedented variety of foods,” he said. “We have absolutely left behind the old food banking model of passively waiting to see what loose cans and boxes people choose to donate and then that’s what we distribute. We’ve proactively even maybe aggressively gone after financial resources to shop for food at the lowest cost and at the best nutritional variety we can try to create for the families we’re privileged to serve.”

A renewed focus on employees

Human resources was another key focus of Gleaner’s strategic plan — which also significantly paid off when faced with the challenges of the past two years, Elliott noted.

“We invested in our people,” he said. “We redefined every job, every role in the organization and some of the more impactful ones when the pandemic came along.”

As part of that plan, program staff members served as local service managers of assigned geographies, Elliott said.

“They were out in the field, interacting and working with our partners, understanding the neighborhoods, understanding the counties, and knowing exactly what they needed from us to succeed — not confined by historically what we had done for them or with them. But what did they actually need to do their part of closing the meal gap in their area, providing wraparound interconnected solutions.”

Since that work started in 2019, the team was better prepared to meet the needs of the community. “By the time the pandemic hit in early 2020, we already were equipped with that information. Also, if we had not moved to this current location with this facility in 2010, we absolutely could not have handled the pandemic response. We might very well have done what happened at some food banks and many food pantries around the country, which was temporary shutdowns, limiting our response, and running out of food distributions. But that didn’t happen. We were able to handle it because we were already on a growth and change trajectory.”

As part of the strategic plan, employees were evaluated to ensure they were in the right positions. The organization also hired new employees who would be equipped to handle demands well into the future — not simply fulfill the duties of the previous employees, Elliott said.

“In many ways, we started from an organization that was financially at risk in 2016 to one that is very stable and solid now. It was a financial journey. That financial journey began with my doubling the fundraising team when I got here and, much like corporations will use a dramatic increase in sales to turn the company around, we used a dramatic increase in fundraising to give us the resources to do all of the other things.”

Lilly Endowment, Inc., and other organizations provided the funds needed to expand its team, Elliott noted. “But, from there, we had to earn our own way.”

Looking to the future

Elliott noted that some nonprofits could be shortchanging themselves by focusing on challenges instead of future-setting goals.

“If you have a mindset as a nonprofit that, ‘Well, we’re short-staffed,’ or ‘We don’t have enough funding,’ you can diminish what you get versus if you’re more optimistic and project a vision your stakeholders see, hear and respond to.”

By establishing a vision that Gleaners needed to run at 2 ½ to 3 times the distribution it had in 2019, the food bank was equipped to handle even more under pressure, he said. “Now, we know we can do it in normal times.”

Jun 01

Is it time to let go? Then do it

By Sponsor Insight

by Jan Breiner Frazier, managing member, Planning Plus, LLC

Beginnings are exciting, stimulating, and often exhilarating. Endings are functional, inevitable, and sad.

No words are truer than these when thinking about retirement and succession planning. As a 30-plus year consultant, I have advised a number of CEOs, including owners and founders, to begin thinking about succession planning — not only for them but for their key leadership staff and longevity of their organization. In fact, this is a critical discussion topic that generally emanates from strategic planning. And, on more than one occasion, this advice proved valuable to the company when the key leader unexpectedly was out of the picture.

For the past few years, there has been a sea change occurring in the non-profit community as founders, and long-term CEOs and executive directors are thinking about, planning for, or have already followed through on retirement. Many of those who rose to the occasion of providing “human” services in such areas of healthcare, housing, food insecurity, mental health, domestic violence, etc. to those needing a helping hand were children of the 60’s who wanted to make the world a better place. Many of them did. But, as with all human endeavors, it becomes time to take a rest and turn it over to the next generation.

This article, however, is not about the need for succession planning. Rather, this writing is geared to those who are handing over the reins — and it is much harder than it sounds. I can attest to that.

During my consulting tenure, I have gathered a body of knowledge used to guide, lead and often direct organizations towards success. For the last few years, I have been transferring much of that knowledge to my partners so they can continue the organization into the future, or as long as they want (it helps that they love what we do). As a professional, I know that what I do, I do very well. But as a founder, I know that I need to be open to new ideas of what we do, how we do it, and for whom. At some point, I have to let go to allow my protégés the freedom to experience their own successes, challenges and, yes, sometimes failures. That is the only way to grow.

If I have done my job well, they will be fine. Just as parents must trust they have created a solid foundation for their children to succeed, so it is with business leaders. Yet the human condition is such that it is often difficult to manage such a transition.

As I look at a five-year plan, these are the steps I recommend (and am trying to follow):

  1. Provide opportunities for professional development in other areas than your primary business. Ensure the next generation is well versed not only in your industry, but in higher level thinking and strategizing opportunities. My two partners have enrolled in multiple programs to increase their skill sets (and obtain several certifications) as well as find new ways of looking at things.
  2. Avoid being the “final” say on proposals and project methodologies. Make sure others know the critical pieces but allow for their own language, tone, and approach to working with clients.
  3. Become more of a mentor than a boss. Rather than explaining how they should proceed, ask the critical questions about why they have chosen a particular path.
  4. Identify (and stick to) the role you will play over the next year, two years, etc. It is exceedingly difficult for staff when you float in and out of the business — one day hands off, the next day micro-managing.
  5. Remain open to their ideas of operations, approach, and implementation, while at the same time ensure they are up to speed on all financial and legal requirements of the organization.

To some, this article may seem like “of course” simple concepts, and you may already be going down this path. But for those of you thinking about winding down over the next few years — and those of you who are ready to take up the mantle — it would be an interesting conversation to have to determine how well you are managing an impending transition.

What does staff need from you? How can you provide guidance instead of management? And, most importantly, what legacy do you want to leave?

Mar 22

Financial planning: How to choose a beneficiary for your retirement accounts

By Sponsor Insight

by Shannon Blount, VP, senior personal trust officer, Horizon Bank, and David W Voris, CTP VP, Regional Treasury Management Officer, Horizon Bank

Selecting beneficiaries for retirement accounts is different from choosing beneficiaries for other assets, such as life insurance. With retirement accounts, such as IRA’s and 401k’s, you need to know the impact of income tax and estate tax laws in order to select the right beneficiaries.

Although taxes should not be the sole determining factor in naming your beneficiaries, ignoring the impact of taxes could lead you to make an incorrect choice. In addition, if you are married, beneficiary designations may affect the size of minimum required distributions to you from your IRAs and retirement plans while you are alive. The following are some factors that should be taken into consideration when making your beneficiary designations:

Paying income tax on most retirement distributions

Most inherited assets such as bank accounts, stocks, and real estate pass to your beneficiaries without income tax being due. However, that is not usually the case with 401(k) plans and IRAs. Beneficiaries pay ordinary income tax on distributions from pre-tax 401(k) accounts and traditional IRAs. With Roth IRAs and Roth 401(k) accounts, however, your beneficiaries can receive the benefits free from income tax, if all of the tax requirements are met. That means you need to consider the impact of income taxes when designating beneficiaries for your 401(k) and IRA assets.

For example, if one of your children inherits $100,000 cash from you and another child receives your pre-tax 401(k) account worth $100,000, they are not receiving the same amount. The reason is that all distributions from the 401(k) plan will be subject to income tax at ordinary income tax rates, while the cash is not subject to income tax when it passes to your child upon your death. Similarly, if one of your children inherits your taxable traditional IRA and another child receives your income tax- free Roth IRA, the bottom line is different for each of them.

Naming or changing beneficiaries

When you open up an IRA or begin participating in a 401(k), you are given a form to complete in order to name your beneficiaries. Changes are made in the same way by completing a new beneficiary designation form. A will or trust does not override your beneficiary designation form. However, spouses may have special rights under federal or state law. It is a good idea to review your beneficiary designation form at least every two to three years. Also, be sure to update your form to reflect changes in financial circumstances. Beneficiary designations are important estate planning documents. Seek legal advice as needed.
 
Designating primary and secondary beneficiaries

When it comes to beneficiary designation forms, you want to avoid gaps. If you do not have a named beneficiary who survives you, your estate may end up as the beneficiary, which is not always the best result. Your primary beneficiary is your first choice to receive retirement benefits. You can name more than one person or entity as your primary beneficiary. If your primary beneficiary does not survive you or decides to decline the benefits (the tax term for this is a disclaimer), then your secondary (or “contingent”) beneficiaries receive the benefits.

Having multiple beneficiaries

You can name more than one beneficiary to share in the proceeds. You just need to specify the percentage each beneficiary will receive (the shares do not have to be equal). You should also state who will receive the proceeds, should a beneficiary not survive you. In some cases, you will want to designate a different beneficiary for each account, or have one account divided into subaccounts (with a beneficiary for each subaccount). Keep in mind that, due to legislation passed at the end of 2019 (the SECURE Act), most non-spouse beneficiaries are required to empty their inherited retirement accounts within 10 years (previously, they could take distributions according to their life expectancies).

Avoiding gaps or naming your estate as a beneficiary

There are two ways your retirement benefits could end up in your probate estate. Probate is the court process by which assets are transferred from someone who has died to the heirs or beneficiaries entitled to those assets. First, you might name your estate as the beneficiary. Second, if no named beneficiary survives you, your probate estate may end up as the beneficiary by default. If your probate estate is your beneficiary, several problems can arise. If your estate receives your retirement benefits, the opportunity to maximize tax deferral by spreading out distributions may be lost. In addition, probate can mean paying attorney’s and executor’s fees and delaying the distribution of benefits.

Naming your spouse as a beneficiary

When it comes to taxes, your spouse is usually the best choice for a primary beneficiary. A spousal beneficiary has the greatest flexibility for delaying distributions that are subject to income tax. In addition to rolling over your 401(k) or IRA to his or her IRA or plan, a surviving spouse can generally decide to treat your IRA as his or her own IRA. These options can provide more tax and planning options. If your spouse is more than 10 years younger than you, then naming your spouse can also reduce the size of any required taxable distributions to you from retirement assets while you are alive. This can allow more assets to stay in the retirement account longer and delay the payment of income tax on distributions.

Although naming a surviving spouse can produce the best income tax result, that is not necessarily the case with death taxes. At your death, your spouse can inherit an unlimited amount of assets and defer federal death tax until both of you are deceased (Note: Special tax rules and requirements apply for a surviving spouse who is not a U.S. citizen). If your spouse’s taxable estate for federal tax purposes at his or her death exceeds the applicable exclusion amount, then federal death tax may be due. In other words, one possible downside to naming your spouse as the primary beneficiary is that it may increase the size of your spouse’s estate for death tax purposes, which in turn may result in death tax or increased death tax when your spouse dies.

Naming other individuals as beneficiaries

You may have some limits on choosing beneficiaries other than your spouse. No matter where you live, federal law dictates that your surviving spouse be the primary beneficiary of your 401(k) plan benefit, unless your spouse signs a timely, effective written waiver. Furthermore, if you live in one of the community property states, your spouse may have rights related to your IRA regardless of whether he or she is named as the primary beneficiary. Keep in mind that a non-spouse beneficiary cannot roll over your 401(k) or IRA to his or her own IRA. However, a non-spouse beneficiary can directly roll over all or part of your 401(k) benefits to an inherited IRA.

Naming a trust as a beneficiary

You must follow special tax rules when naming a trust as a beneficiary, and there may be income tax complications. Seek legal advice before designating a trust as a beneficiary.

Naming a charity as a beneficiary

In general, naming a charity as the primary beneficiary will not affect required distributions to you during your lifetime. However, after your death, having a charity named with other beneficiaries on the same asset could affect the tax-deferral possibilities of the non-charitable beneficiaries, depending on how soon after your death the charity receives its share of the benefits.

Here’s some more Investment and Retirement Advice you can count on.

Mar 30

Feeling more secure about new retirement plan legislation

By Sponsor Insight

By Kevin Kidwell, vice president national tax-exempt sales, OneAmerica®

If you oversee or coordinate your employer-sponsored retirement plan or have a team that’s in charge, you’ve no doubt heard about the Setting Every Community Up for Retirement Enhancement (SECURE) Act. Passed by Congress and signed by the president on December 19, 2019, it’s a major bill that affects all Americans.

Like any complex piece of legislation, the SECURE Act impacts companies like OneAmerica®, who administer employer-sponsored retirement plans and are now carefully studying the implications. For our experienced professionals, evaluating and addressing the SECURE Act provisions with clients and financial professionals has been a labor of love ─ especially for our tax-exempt business, because, as our leadership has long said, “Tax exempt is in our DNA.”

This landmark legislation, five years in the making, provides the most significant changes to the retirement industry in more than a decade. In general, the most dramatic changes are to traditional 401(k) plans. However, because nonprofits and healthcare organizations, schools and government agencies are unique and complex, it’s equally important for those who represent tax exempt plans to make sure they remain compliant.

Our analysis uncovered three main takeaways that should fuel important discussions for nonprofits:

  1. We have time to sort it out. The IRS and U.S. Department of Labor have yet to provide key additional guidance, and until then “good faith compliance” is the requirement.
  2. It’s unlikely that the legislation will require you to overhaul your existing employer-sponsored plan. The SECURE Act provides more opportunities and options – such as potentially combining forces with fellow organizations – that could allow your organization to take advantage of scale.
  3. Most likely, the government isn’t done making what they see as improvements to the retirement plan landscape. (Note: Effective dates may also be impacted by the COVID-19 pandemic.)

The SECURE Act contains nearly 30 provisions designed to increase the availability and use of employer-sponsored retirement plans. They may or may not apply to every participant, company or plan.

Here are some areas the SECURE Act may affect:

Accessibility

  • Increases the automatic enrollment cap to 15% for safe harbor automatic enrollment plans. (A safe harbor is a provision in a law or regulation that affords protection from liability or penalty under specific situations, or if certain conditions are met.)
  • Creates opportunities for long-term (by necessity or choice) part-time workers to participate in 401(k) plans.
  • Contains additional provisions that make offering retirement plans more affordable for small businesses, including tax credits (up to $5,000) and elimination of outdated barriers to joining multiple employer plans (MEPs).

Lifetime income

  • While retirement plan sponsors are currently required to regularly notify participants of the value of their plan (including the balance), employers will need to also provide defined contribution participants with an estimate of the monthly income as if an annuity were purchased (even if no annuity option is available).
  • The act provides for a fiduciary safe harbor for selecting a lifetime income provider (usually an insurance company). While selecting a lifetime income option is a fiduciary responsibility, the act absolves the fiduciary of the liability should the provider’s financial condition deteriorate after selection.
  • If a plan-level decision is made to eliminate the lifetime income option, the plan must allow the participant to take an in-kind direct rollover of the option.

Longevity

  • The act removes the maximum age for traditional IRA contributions.
  • The act increases the age for the start of required mandatory distributions (RMD) from age 70.5 to age 72. Those participants between 70.5 and 72 must begin taking the RMD by April of the year following their voluntary exit from their employer or their termination of employment. (NOTE: Due to recently passed CARES Act related to the COVID-19 pandemic, the requirement for RMDs for those over 70-1/2 has been waived for 2020).

HERE ARE SOME FREQUENTLY ASKED QUESTIONS

Q: Are recordkeepers supposed to contact plan sponsors about optional provisions?
A: No. While the SECURE Act provides for increased access to retirement preparation, many of the provisions are optional. Plan sponsors are encouraged to reach out to their record-keeper to discuss the provisions and determine which may be appropriate for their plan.

Q: If an individual didn’t take the Required Minimum Distribution (=

Q: What are these MEPs (Multiple Employer Plans) and PEPs (Pooled Employer Plans) everyone is talking about?
A: The MEPs were available as an option before the SECURE Act. They are typically appealing to organizations where there was a nexus between otherwise unrelated employers and a “commonality of interest” such as an industry association. These opportunities are primarily steered toward 401(k) and while there are advantages, there are also disadvantages.
The SECURE Act created PEPs – Pooled Employer Plans, but that doesn’t apply for tax exempt or 457 government plans (457 is a type of nonqualified, tax advantaged deferred compensation retirement plan that is available for governmental and certain nongovernmental employers).

Q: What’s the post-death beneficiary rule?
A: This applies to retirement accounts where the participant dies and an heir or loved one is the recipient or beneficiary. The money can’t accrue indefinitely and the inheritor(s) is required to deplete that account by the end of the 10th year after the person’s passing, with exceptions provided for minor children of the deceased, disabled or chronically ill beneficiaries or beneficiaries no more than 10 years younger than the deceased. So, someone who inherits a retirement plan account in 2020 will have to have withdrawn it by 2030, noting the exceptions above.

Q: What about the new in-service distribution changes?
A: Section 457(b) government plans reduced the in-service distribution age to 59.5 from what was previously allowed at age 70.5.

Q: What about the penalties?
A: All retirement plans must file a Form 5500 for every year the plan holds assets. Failing to do that will result in penalties for late filing of IRS Form 5500. These fines increase from $25 a day to $250 a day, and the maximum penalty will rise from $15,000 to $150,000.

As the industry continues to comb through the new legislation and awaits required guidance in areas of the legislation that isn’t clear, OneAmerica continues to:

  • Solicit and analyze additional IRS and DOL guidance.
  • Educate plan sponsors on the SECURE Act and its provisions.
  • Engage and partner with plan sponsors to discuss decisions to be made regarding plan changes, including mandatory and optional provisions.

In Kevin Kidwell’s role as vice president of national tax-exempt sales, he works to provide ideas, knowledge, information – both technical and practical – in an effort to facilitate improved plan and participant outcomes. Kidwell has held various positions within the Retirement Services division since 1988. Beginning in 2000, his exclusive focus has been on healthcare and tax-exempt organizations.

Nov 26

A OneAmerica® survey may help participants understand their personal financial picture

By Sponsor Insight

Best channels to help employees understand their retirement picture

By Melissa Musial, marketing research and data manager, OneAmerica  

As a nationally known record-keeper interested in aiding employers with their employee-retirement-plan objectives, the question of whether retirement plan participants have ample education on financial fundamentals ─ and whether increased education on these topics is needed ─ is foremost on our minds at OneAmerica.®

By financial fundamentals, I mean basic budgeting, credit scores and monitoring and debt management; all cornerstones of personal finance and topics that are instrumental to an effective financial wellness curriculum.

Without ample education, adults are often on their own to understand and navigate the delicate balance of paying off owed debt, living the life they want to live, and setting enough money aside to prosper after their work life is completed.

OneAmerica takes the pulse of participants  frequently, and in 2017-18, it conducted its largest-ever survey of retirement plan participants, including those who work with tax-exempt organizations like yours.

The poll of more than 12,000 respondents[1] showed that participants report the highest knowledge levels on the topics of budgeting, credit and debt monitoring and management (95 percent) which is great news, as it indicates educational efforts focused on these topics are influencing audiences.

But the poll also shows that more than 60 percent of respondents lack knowledge on basic investing, retirement plan features, insurance planning and withdrawal strategies at retirement. Additionally, more than one quarter of survey respondents indicate they are only knowledgeable on two or fewer of nine financial wellness topics ranging from budgeting to college planning to personal taxes and that those who are less knowledgeable are more open to receiving education.

Given these results, there is clearly an opportunity for education that OneAmerica encourages plan sponsors (or the human resources professional at your organization) to embrace, because insight is only good when action follows. The company believes it is important to continue to provide education on topics of budgeting, credit and debt monitoring and management, as survey participants did not appear to be applying their reported knowledge.

Equally as important in an effective financial wellness curriculum is including education on those topics that participants report lower knowledge about and that are often a barrier to full-plan participation — for example, investing and retirement plan features.

While the industry is making it easier for participants to begin preparing for retirement with the use of automatic plan features, without education on investment fundamentals or retirement plan specifics, participants may be under preparing or feel that the automatic features are enough to prepare them for a successful retirement.

Tailoring education for pre-retirees regarding to withdrawal strategies is also critical. Without education on withdrawal strategies, those near or at retirement may continue to work due to a lack of knowledge on how to begin the de-accumulation stage. (To de-accumulate is to take the wealth you’ve acquired during your working years and begin to spend it to fund your lifestyle in retirement.)

This could provide additional concerns for plan sponsors – such as increased benefit costs and struggles to bring in new talent due to lack of attrition.

The survey also provided a very clear direction of participant educational preferences. When asked how they like to receive financial wellness education, 65 percent of respondents indicated that having online resources sent to them was their preferred delivery channel.

Additionally, the OneAmerica survey inquired about the value that participants place on educational resources and found:

  • Web-based tools such as webinars, videos and podcasts were reported the most valuable resource by 42 percent of survey respondents, favored as much by men as women and across all three age ranges, but resonating the strongest among those aged 35 and over, as well as those with higher household income.
  • ‘Real-time chat’ tallies in second, at 15 percent, which resonates more strongly with the 18-to-34 demographic (at 21 percent).
  • More traditional methods – direct mail flyers/postcards (13 percent) and posters and flyers at work (four percent) – rank fourth and sixth respectively.

The survey results clearly show a shift in education trends. Traditional communication channels such as print and posted items in the workplace have less value to participants. Plan sponsors should embrace those mediums that participants prefer when selecting education deliverables, and when creating their retirement plan’s participant education and communication goals.

This survey was the third conducted by OneAmerica in five years, and the insights will be used (as has been done in the past) to assist retirement plan sponsors and HR professionals to work with participants to improve their financial wellness and overcome retirement planning hurdles.

Do you want to know more about the OneAmerica Survey? Download a free infographic and whitepaper at www.oneamerica.com/RSsurvey

Melissa Musial is a 20-year veteran of the retirement industry and currently serves as the Marketing Research and Data Manager at OneAmerica, where she focuses on using data, analytics, industry trends to meet people where they are at in their retirement journey. She was recently named by LIMRA as one of the 10 Rising Stars of Marketing and Communications under 40 in the financial services industry. 

OneAmerica is the marketing name for the companies of OneAmerica. Products issued and underwritten by American United Life Insurance Company® (AUL), a OneAmerica company. Administrative and recordkeeping services provided by McCready and Keene, Inc. or OneAmerica Retirement Services LLC, companies of OneAmerica which are not broker/dealers or investment advisors. Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice.

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About OneAmerica

A national leader in the insurance and financial services marketplace for more than 140 years, the companies of OneAmerica help customers build and protect their financial futures. OneAmerica offers a variety of products and services to serve the financial needs of their policyholders and customers. These products include retirement plan products and recordkeeping services, individual life insurance, annuities, asset-based long-term care solutions and employee benefit plan products. Products are issued and underwritten by the companies of OneAmerica and distributed through a nationwide network of employees, agents, brokers and other sources who are committed to providing value to our customers. To learn more about our products, services and the companies of OneAmerica, visit OneAmerica.com/companies.                                                                                                                                                                

[1] From Aug. 25, 2017 to Jan. 31, 2018, more than 12,200 OneAmerica retirement plan participants responded to an online poll, sharing their thoughts on financial wellness, education and resource preferences, and potential roadblocks to retirement.

 

Mar 19

Getting comfortable — and compliant

By Sponsor Insight

By Kevin Kidwell, vice president, national tax-exempt sales, OneAmerica

If your organization has a 403(b) retirement plan, then you may have already received — or should be receiving — a notice from your plan provider regarding a new Internal Revenue Service (IRS) document requirement.

For the first time, the IRS has pre-approved prototype plan documents for 403(b) retirement plans, typically sponsored by 501(c)(3) organizations.

The plan restatement requirement is happening now, not because of the recent tax reform legislation, but rather is a long-overdue response to many years of lobbying by retirement plan sponsors and service providers.

We think this is a good thing.

The IRS’ goal is simple — to get a certified, model blueprint similar to what protects 401(k) plans and has been available to 401(k) plans for decades.

It doesn’t mean if you have a 403(b) plan that your plan is changing or was poorly planned; it just means there will be guardrails.

There are a variety of ways that providers (or a third party) will engage with sponsors and service providers to make them aware of the IRS request.

While completing the request, this is also a great time for the organization to review and re-evaluate whether your plan is accomplishing what it was designed to do; and whether the objectives of your plan matches your mission and aligns with your values. Is there a better way to structure employer contributions to increase participation? Are you operating the plan as it is written within the plan document?  Is the plan optimized to meet the desired outcomes while managing budgetary realities? And, if your plan doesn’t look right, maybe it is because your mission has changed, so does the plan reflect those changes?

At Indianapolis-based OneAmerica®, an organization that can trace its roots back to 1877, we’ve been helping organizations with their tax-exempt retirement plans since 1964. We believe a retirement plan should do more than help someone retire – it can help organizations recruit, retain and reward employees.

In Kevin Kidwell’s role as vice president of national tax-exempt sales, he works to provide ideas, knowledge, information – both technical and practical – in an effort to facilitate improved plan and participant outcomes. Since joining OneAmerica in 1988, Kevin has held various positions within the Retirement Services division. Beginning in 2000, his exclusive focus has been on healthcare and tax-exempt organizations.

What can we answer for you? https://www.oneamerica.com/campaigns/403b-informed/403b-informed-main

More: IRS’ FAQ section: https://www.irs.gov/retirement-plans/403b-pre-approved-plan-program-faqs-what-is-a-pre-approved-403b-plan

OneAmerica® is the marketing name for the companies of OneAmerica.

Products issued and underwritten by American United Life Insurance Company® (AUL), a OneAmerica company. Administrative and recordkeeping services provided by McCready and Keene, Inc. or OneAmerica Retirement Services LLC, companies of OneAmerica which are not broker/dealers or investment advisors.

Feb 15

Should older CEOs be forced to retire?

By Feature, Finance, Leadership

By Walter Frick, senior associate editor, Harvard Business Review |

In October 2000, Jack Welch announced the biggest deal of his 20-year tenure as head of GE: a $45 billion merger with Honeywell. Shortly thereafter he was forced to retire, due to GE’s mandatory retirement policy for CEOs turning 65.

More than a third of S&P 500 firms have a mandatory retirement policy for their CEO. Their aim is to drive out executives who are past their prime. But are such policies a good idea?

Yes, but with some caveats.

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