Transcript:

[00:00:00] Voiceover: Welcome to the Life Unlimited Podcast with Larry Heller. You deserve complete financial advice so you can confidently live your life your way for life. Now let’s get into this week’s podcast episode.

[00:00:19] Matt Halloran: Hello and welcome to another Life Unlimited podcast with your host Larry Heller. This is going to be a very interesting series.

[00:00:26] Matt Halloran: We’re gonna do a four part mini series on. 401k plans. So Larry, um, you know, this is one of those things where a lot of independent financial advisors like you aren’t in this space, and I think there’s a lot of reasons for that. But the human sort of, component that you bring, I think is a big difference maker in this 401k space.

[00:00:45] Matt Halloran: Uh, and on top of that, you work with a lot of business owners, but. Where do we begin with this huge juggernaut of 401k topics that we’re gonna go over over the next four episodes?

[00:00:55] Larry Heller: Yeah, Matt, I’m so excited to be talking about, there’s so much to really bring out there about what’s going on with the 401k plans, and educate you kind of what you need to do.

[00:01:06] Larry Heller: A lot of people put a 401k plan in and they kind of fig. Get about it. And a lot of times, companies are doing, and they’re really just doing it as a cost factor and, and the, the less least expensive cost. And there’s a lot of great reasons why not just to focus on that and what makes a really good.

[00:01:24] Larry Heller: 401k plan and how does it not only benefit the company, but also helps to retain and [00:01:30] retract, uh, attract employees? I wanna talk about all of that. So really the first thing is when we’re talking to somebody, is finding out what, what is the goals? What are the plans, goals, and objectives of the plans? And there’s really, I look at it from two different perspectives.

[00:01:47] Larry Heller: The owners. perspectives and the employee’s perspective ’cause it’s a little bit different and you really wanna look at, look at it through the eyes of both to really to get a good plan that’s really working for, for somebody. the, you know, the first thing really what I. Talk about what we’re gonna talk about today in part one is really the, is the plan design.

[00:02:09] Larry Heller: And like I mentioned before, it’s when you’re first starting a plan, you really spend time figuring out what the plan design is. At least hope. Hopefully you do because I’m gonna mention a few mistakes that I’ve seen over the years of plans that weren’t designed properly and can’t be changed. And so, but the plan design, a lot of times you can’t just put it in for.

[00:02:30] Larry Heller: Get about it because a lot of things change over over the time. So we’re gonna talk about really from the o, from the owner’s perspective first, and then we’ll talk a little bit about from the employee’s perspective. So we got a lot to unwrap. And then parts two, three, and four get into a lot of different areas on the 401k plan.

[00:02:49] Matt Halloran: I was just at a conference recently, Larry, and they were, they were talking about the biggest trends in hiring. it used to be, you know, like, prospecting and, you know, bringing in new business as a business owner. That is not [00:03:00] number one anymore. Number one is hiring and retaining high quality talent.

[00:03:05] Matt Halloran: And, and you know, as well as I do that offering benefits packages like this can be a huge wave. For the owners to be able to retain that and for the employees to really feel like they’re being loved. But let’s start with the owner. So why don’t you go ahead and, uh, let’s, let’s start rolling that puppy out.

[00:03:20] Larry Heller: Yeah. So, so the first thing, a lot of times from the owner standpoint, what is the objective? And a lot of times it changes based upon the size of the company. Are you a. company with a few part, few employees and the owners and a few different owners. Are you sole owner? Do you have 20 owners?

[00:03:36] Larry Heller: Is is the plan 300 employees, 500 employees, or is the plan six employees? So the first thing is really trying to. Figure out what are the goals and what are the objectives of this plan? And from an on perspective, they may say, well, I, the most important thing is I want to put away the most amount of money myself, tax deferred.

[00:03:58] Larry Heller: and maybe I can give, I’ll give some of the employees some, some money, but that’s not as critical. And some other ones may say, I want him to have. Plan that’s gonna attract the best and retain the best employees. Because like you mentioned before, it’s not just the amount of money that you’re earning these days.

[00:04:16] Larry Heller: We all know post covid, a lot of it is now quality of life, but the, the first question, or at least high up on that list when you start talking to people is, well, what are the benefits? What is the 4 0 1? What is the 401k plan? [00:04:30] So really having that conversation and really looking at the census and really.

[00:04:34] Larry Heller: Seeing with a breakdown of the employees and that could, you know, that could change. Now I’m gonna give a couple different stories as we go, go along, but we were looking at a, a camp, a few years ago. Uh, the 401k plan was with a big payroll company. and we look, we were looking at them, we were looking at the census, and the way this was designed was not.

[00:04:57] Larry Heller: It was not proper. Um, in other words, the owner was making a lot of money and a camp had a lot of part-time employees, so they didn’t really have a lot of full-time employees, and they were very young, so the owner was making a lot of money. And we said, did you ever think about combining your 401k plan with a cash balance plan and.

[00:05:18] Larry Heller: Basically, no. What is that? Well, we’re not gonna get into the details of a cash balance bill. We’ll talk about some more of, more of them. But in long story short, instead of putting away 60 something thousand dollars, they able to put away a quarter of a million dollars to themselves. A huge difference.

[00:05:35] Larry Heller: And why wasn’t that? Talked to me before and Well, you know, the plan was put in place. Maybe it a. At certain time, and there’s nobody there looking at the census and really talking to them. So really figuring out what the objective is from a tax savings and a tax deferral standpoint is one of the key things.

[00:05:53] Larry Heller: Now, of course, we wanna look at the 401k plan and we want to devise a 401k plan that’s [00:06:00] works really smoothly for a cost effective, cost effective amount. So yes. One of the, discussions, and it’s a lot of times it’s the first discussion. What is the plan costing me? How much is it costing me, the company, the owners?

[00:06:15] Larry Heller: How much is it costing the, the employees? And first times I. With the owners, I’m looking saying, well, sometimes, let’s see how it’s going to possibly save the owner’s money. And, and if you’re at a law firm with a lot of different partners and what you’re putting away, the tax savings alone can outweigh the cost of what they’re actually contributing to the employees.

[00:06:38] Larry Heller: So really looking at what the cost is, not only pre-tax and what the administration cost is, but what is the cost. After tax savings and we have a whole kind of program that put into place to show them what is the actual net after tax cost. So, ’cause the government, they, if, if they’re doing certain things, they could put a plan in place where they’re saving some money along those lines.

[00:07:03] Larry Heller: And then, you know, there’s a couple of different. Types of plans, and we’re gonna talk about some in general. Of course, we’re not gonna go in into specifics really details because everybody is different based upon the comp plan. There’s, so we’re gonna mention a lot of, of course, anybody wants to reach out and get some more information from us.

[00:07:21] Larry Heller: Can can they? They, they definitely can do that. So,

[00:07:24] Matt Halloran: Larry, I’m, I’m gonna interrupt you there because there’s two things that you said that I really, really just wanna make sure that I highlight. The [00:07:30] first one is, the absolute. Benefit to the, owners of the business, the partners in the business on how this can really end up by implementing this into their practice or their business can really make them, uh, have the opportunity to save a bunch of taxes.

[00:07:44] Matt Halloran: but, but. I want to talk about the cost very quickly because I, I’ve known many, many 401k advisors in in the past. and it’s always interesting to me that, uh, so many of them think they have to compete on the cost of the plan, but what we are finding is it’s actually the value that somebody like you adds into the plan.

[00:08:01] Matt Halloran: That these larger 401k companies don’t even think about. that really justifies the small increase in the cost of the overall plan because again, your employees don’t want to just have a 401k plan. They want all of the other stuff that goes along with that. And I know you’re gonna talk about that in a minute when we really go from the employee’s perspective.

[00:08:22] Matt Halloran: Okay. Yeah. So let’s talk, um, from a high level on the different types of plans.

[00:08:27] Larry Heller: So let, let’s just start with a plain, your plain 401k plan without anything else along those lines. So you can have a 401k plan, and basically what you’re doing is you’re letting the employees contribute money. And we’re gonna talk a little bit about this as far as the benefits down the road, but, but mostly pre-tax.

[00:08:46] Larry Heller: So they get to put away money pre-tax in an account over their life while they’re working there. And that will grow tax deferred for them and when they retire they can take that money out. But they’ve had the, uh, [00:09:00] advantage of uh, the government contributing a little bit ’cause you’re not paying taxes now.

[00:09:04] Larry Heller: And the tax deferral growth. However, there are some caveats for that and just doing a regular plan, regular kind of deferral plan that the government has said, Uhuh, you can’t just do this. Uh, because then the, just the top heavy, the people making more money are going to. Contribute to the plan and the lower end, the not really gonna be able to contribute to the plan.

[00:09:27] Larry Heller: So they want to get lower end, employees to be in the 401k plan. ’cause it’s really the best way to save for retirement. If a lot of people, it’s the only way to save for retirement. So they have certain testing. If you just put a plan in place, and we’ve seen it before we’ve come, people have come in and they don’t wanna give any money to the employees.

[00:09:46] Larry Heller: so they have a regular plan in place and The key people put money away the entire year. At the end of the year, they do this. The, the actuary does this testing and they fail the testing, and a lot of the money that the key employees and the owners have put away have to be refunded to them, and nobody is really happy.

[00:10:07] Larry Heller: Ooh. So yeah, so, so that’s kind of one of the problems with now, as the plans grow in year, if you have a, a very large plan, most of those plans are gonna put in something so they can alleviate that. And a lot of times the what, the best way of doing what’s, what’s called a safe harbor plan. And by doing that is by putting, by actually [00:10:30] contributing money to everybody, a certain percentage, 3% to everybody.

[00:10:35] Larry Heller: Right now, that means that there is no more testing, so you don’t have to worry about that. But that also means that everybody is going to be, getting this 3%. Now, of course, when designing the plan, there’s certain waiting periods before they’re eligible, how long they have to work there, what age they have to be so you can kind of do something, do something like that.

[00:10:55] Larry Heller: and there’s a couple different types of safe harbor plans, and this is where it gets a little bit talking to them, what makes sense. Some employees, just wanna do the, the 3%. It’s a great way of attracting people. Others wanna have something in there that maybe they’re gonna put something in place, but only if the employees do.

[00:11:14] Larry Heller: So you can do what’s called the safe. Harbor match, whereby now you may end up having to give a max of 4% as a combination to get to that number, but that’s only if the employees contribute. So if the employees aren’t contributing, the company’s not putting a match in place. So what one works better for the company will almost.

[00:11:34] Larry Heller: Better for attracting employees for doing this. So there’s a conversation to have on putting in the right type of 4 0 1, 401k plan and, putting those in place a lot, a lot of times that we’ve seen that if they don’t have that in place over the long term, it’s not going, it’s not going to work. again, this is a out-of-pocket.

[00:11:55] Larry Heller: Cost contribution. So again, we have the [00:12:00] conversations, well, how expensive is it? Is if you lose an employee because they are leaving you to go someone else and now you gotta bring a new employee and you gotta recruit ’em, you gotta train ’em. You gotta do that. That’s a lot more expensive than maybe giving them a 401k contribution or maybe even some other Type of plan. So you gotta look at the long-term, the big picture, and have those conversations with the owners, the HR departments, the people out there when you, when you’re looking at this plan, what makes sense and what makes sense in this environment and what makes sense compared to their peers. We’ll talk a little bit later about benchmarking what you do, but how do you compare against your peers?

[00:12:39] Larry Heller: So some, if you’re trying to recruit somebody from your peers, what are the different benchmark? What are the different benefits that you offer? So th that’s really the first kind of type, the first base level is really the, you know, the 401k and the types of 4 0 1 Ks. and then on top of that you can add certain other types of plans, some other.

[00:12:59] Larry Heller: Contributory plan. I talked a little bit about that cash balance plan. Now that doesn’t work for a lot of firms. ’cause the, a lot of times there’s too many employees for that to, to make sense. That’s the old kind of traditional defined benefit plans. But in certain cases it does make sense. But there’s also some other types of plans, and we’re not gonna go into the details of all of them, but there’s profit sharing plans and new comparability plans and in the profit sharing plans.

[00:13:25] Larry Heller: There’s traditional, there’s age weighted, so this is a way of giving [00:13:30] a little bit more to employees. But now here you could do what’s called vesting. And what you’re doing here is the longer that they stay and you can defer it in up to six years in different ways, the longer they stay, the more they become vested.

[00:13:46] Larry Heller: So now if they leave and they go to another plan, another company, they’re maybe have to start all over again. So is the, again, is the advantage of doing something like this. And there’s a lot of times this is, can be decided. Each year. So it’s not a, it’s not a definite, if the companies make certain amount of money, they can put more in, they could put less in.

[00:14:09] Larry Heller: You can devise it differently based upon income, based upon ages, based upon a lot of different ways. So the plan design is so critical and putting the right plan in place for. Really, uh, attracting and retaining employees and attracting, retaining good employees, which in essence could make the company more profitable and be able to grow a lot of ways.

[00:14:33] Larry Heller: So you can’t just look at what the administration cost is gonna be.

[00:14:36] Matt Halloran: Now before we get into the employee’s perspective on, on all of this, mean you just had a, a mouthful there, Larry. So, so let’s say I, I choose one of these plans and we go ahead and build the plan and get it in place. How, how flexible are changes for the employer if because of growth or because of need or because of the competitive marketplace that they need to adjust to the plan?

[00:14:56] Matt Halloran: Is that difficult? Is that entirely impossible or is that [00:15:00] possible?

[00:15:00] Larry Heller: So there’s a lot of flexibility in what you could do to change it, but you can’t make the plan worse than it was beforehand. So this, sometimes we, we actually have something going on, right? Right. Now that we have a, company and when they started, they were a relatively modest.

[00:15:16] Larry Heller: Company now they’re up to 90 something employees, but they have a three month waiting period and they hire a lot of people and a lot of the people may stay, may not stay. There is definitely some, some turnover. So that means after three months, we’ve gotta en enroll. ask them if they wanna enroll, there’s a cost to enroll, they can enroll the company.

[00:15:38] Larry Heller: then has gotta make sure that they include everybody. We can’t make it worse. We can’t go to a one year waiting period or a six month waiting period ’cause it’s already in place. There’s nothing else we can do about it. So there are some things in place, but that, so that’s why if you’re, even if you’re starting a plan and you’re relatively small plan, you wanna think about, well, what is the ultimate goal?

[00:15:58] Larry Heller: Where are, where are we want to grow by this? some of it is also when can you get, when can you get in the plan? Should you let your employees get in once a year? Twice a year, four times a year. so all those type of things are, are part of the flexibilities. And of course the changing of the, the, the plan.

[00:16:16] Larry Heller: Yes, you can change. Do you have a safe harbor? Changing it to a safe harbor match. There’s certain timeframes, there’s certain, things you can do, but there is a lot of flexibility. But something just hit. Just popped into my head that I think I wanna let everybody know. ’cause [00:16:30] getting towards the end of the year, you know, this podcast will probably come out actually beginning of 2024.

[00:16:35] Larry Heller: So you may say, oh, I missed the boat for 2023. And up until last year, that would’ve been the case. But the government hasn’t actually now changed. And they basically said, you can go back. To the previous year, and you could put a retirement plan in place. Now, you can’t go back and do employee deferrals for last year, but you could actually put in a type of profit sharing plan on top of the 401k, and you can do the profit sharing for last.

[00:17:06] Larry Heller: For the previous year and you have up until you actually file your tax return to do that. so if you had a great year last year and you think you might have missed the boat Hmm. You may want to talk to somebody about that because you may be able to put up something in place for the previous year.

[00:17:21] Matt Halloran: Cool. I had no idea that that was, uh, I’d heard that there were some changes coming on the pipeline, but that, that’s, that’s really, really good news for employers. Alright, so now we’re gonna switch gears to talk about the employee perspective. Where do we begin? Here? I.

[00:17:35] Larry Heller: So, so from the employee’s, the employee’s perspective, uh, we talked about from the owner’s perspective and what kind of plan are they gonna put, kind of plan they’re gonna put in place.

[00:17:46] Larry Heller: so is it a safe harbor plan? Is it a regular plan with a match? Is it a safe Harbor match plan? And I remember, so I’ve been doing this for a while. We used to do employee education meetings in [00:18:00] person. Now we do, we do do some, we’ll talk about that a lot in part four. Um, a lot of ’em are, um, zoom, but one of the first, one of the ones I first did, I came with a, a large amount of single dollar bills and I threw it on the table.

[00:18:13] Larry Heller: And people, there must’ve been 25 people in the room and people were like, looking at me crazy. Why am I throwing this money on, on the table? And I, I kind of asked them, I said, if you saw all this money on the table, would you pick it up? And of course everyone said yes. I said, then how come everybody isn’t contributing it to the plan?

[00:18:29] Larry Heller: ’cause these owners are nice enough to put a match in place that’s free money. They’re giving you free money, and all you gotta do is contribute a little bit about your money and you’ll be able to get this free money. So, so you gotta know what, what is the match. Now of course, we understand that some, sometimes people are younger and they’re, uh, struggling to make ends meet.

[00:18:52] Larry Heller: Yeah. They may not be able to do the max, but a lot of times I, I say to them, I ask them, there’s, I always look around the room. There’s somebody there that. $20 cup of coffee. And I said, you know what, instead of that $20 cup of coffee, maybe if you made your own coffee, you could put $20 away into your, into your plan and get started and then increase it all.

[00:19:12] Larry Heller: Because if you don’t start, then the longer you wait. Harder it’s gonna be, and we’ll talk about the more an employee education. Yeah. And the, the importance of, uh, compounding over, over time. But knowing your plan and knowing what that max is and what that ma do you have a, a match and a safe harbor match, and how much is [00:19:30] that?

[00:19:30] Larry Heller: And how much I can do So that from an employee’s perspective, you want to kind of know that, and you want to kind of see that in there because that’s, IM. Important, when you’re maybe deciding to work for somebody or staying with them, what they are offering there in the in, in the match. and then.

[00:19:47] Larry Heller: We’ll talk about, we talked about a little bit more about that additional plan. Do that, do, does a company have an additional profit sharing plan? Now, a lot of times now, these days, a lot of companies don’t, but if they do have this additional plan in place, knowing what your vesting schedule is. So if you vest after four years and you’re thinking about leaving, you leave right before you would invest for the fourth year?

[00:20:14] Larry Heller: Do you stay Or if you’re contemplating going somewhere else, Hmm, maybe I should stay here because. My company is giving me money that I’m already a hundred percent vested. If I go somewhere else, even for a little bit higher salary, I’m losing this other benefit. So knowing what your vesting schedule is, knowing what your benefits are, knowing, you know, can I take a loan?

[00:20:35] Larry Heller: What is the options of taking a loan, even though we. Probably discourage that, but, but there are certain reasons why you may want to do that and knowing if that’s available. and then the, one of the biggest things that we have conversation, especially with younger people, should I Roth or should I do a pretax?

[00:20:52] Larry Heller: Yep. now let’s talk about Roth. So a lot of these 401k plans were put in place years and years and years ago. So what has not [00:21:00] happened? No one’s looking at this plan design and the owners usually are putting away bigger money and pre-tax and, and no one said, you know what? We should add a Roth option to the 401k plan.

[00:21:12] Larry Heller: So a lot of times we’ll go and look at the plan and we’ll say, you know, why haven’t you put a Roth option in the plan? And, well, nobody said that I should put a Roth option. Well, you wanna do that because if you have. Again, people making lower amounts of money may be beneficial for them to put money away after tax or maybe even split it between the two things.

[00:21:32] Larry Heller: So pre-tax versus Roth from an employee’s perspective. Do I have that? what are some of the education meetings are out there, so I know kind of how do I do that? How do I improve my retire retirement readiness? And we’re gonna, we we’re gonna talk about part three investments, and I’ll mention it a little bit later on, but.

[00:21:51] Larry Heller: A lot of times people need help with their, with the investment. So what are the options? Uh, is there a model portfolio? And we’ll go through that for our plan. 70% of their, of participants select one of our five models that we’ve customized for each of the plans. So does, does a plan, does a plan off of that, um, and what are the fees sometimes in these, are these.

[00:22:15] Larry Heller: Funds, really expensive funds and a lot of the fees being passed down to me, or these are really lower cost fees, and which one should I, should I be in? So from an employee’s perspective, you’re looking to see, okay, how does that benefit me? [00:22:30] What are the options? What are the benefits? And what should I be doing?

[00:22:33] Larry Heller: is there a retirement calculator in there that if I put X amount of money away, what is that going to bring me to? One of the great things that we now do is we get all the participants, emails. And not only, not only does the record keeper actually send these emails education email out.

[00:22:52] Larry Heller: It’s done by age. So as someone who’s older is getting a email based upon something that’s important to them, where by somebody’s twenties they’re getting a different email. So they’re, we’re customizing the education to all the participants. And I, I, I love that. And hopefully we, we talk about the employee education, we talk about the emails for them to make sure they read ’em and see what’s in there and see kind of what they, what they wanna do and how they should benefit by the age that they are.

[00:23:21] Matt Halloran: Well, I, I love the idea of, to Roth or not to Roth. And in fact, for all of you who have been, uh, listening to this podcast, Larry has spent a lot of time talking about the power of, of Roth, uh, IRAs. If you are just coming into this Life Unlimited podcast now with this 401k series, there is a lot of really good information out there about Roths, uh, and we highly recommend that you do that.

[00:23:43] Matt Halloran: Now, LA Larry, when it comes to all of this, I mean, you know, we’ve spent almost 20 minutes here. Really kind of going down from the top, this is somewhat overwhelming. How do you help provide, training and education so that not the only the employers, but the employees can make an informed decision?

[00:23:59] Larry Heller: So the, the, the [00:24:00] first thing that, that we, we do is we bench, we benchmark a plan and, and compare your plan to what’s going on in the industry and start to talk about their goals and their objectives.

[00:24:11] Larry Heller: But what is, what? How’s your plan design? are you trying to do with your plan design? How do your costs. Compare, how do your investments compare? And every few years we actually do this internally with our existing plans because the census changes you, the, the types of employees that you hire change the goals and objectives may change, the laws may change.

[00:24:35] Larry Heller: We’ll talk a little, a little bit about one of the laws that are coming fo coming up for 20. For this year, now, 2024, by the time you’re listening to this, so we, we actually offer a, a benchmarking review and with a few informa some information we can get from you. We’ll put together a, a, a benchmark just to see how you compare to what is going on out there and some of the things that may be you’d be able to offer.

[00:24:58] Larry Heller: And also not just comparing that, but some of the things that could be done to make your life. Easier, and we’re gonna cover a, a lot of that in some of the o in some of the other parts. But there are, there are a lot of features in there and we’ll talk about the benchmarking and if you, you check down on the summary, be below, you can, contact us and we’ll, we’ll provide you with a benchmarking report.

[00:25:18] Larry Heller: But, uh, there are, there are different features in there. We wanna make our clients, uh, plans. Really easier, um, and smooth. And with technology out there, you can do this. And a lot of [00:25:30] times, people have these plans through their 401k provider. Mm-Hmm. Because they think it’s the easiest way of getting done.

[00:25:36] Larry Heller: And we believe that you shouldn’t just do that just because of that. But people don’t know that any 401k plan could be integrated with their payroll, either what’s called a 180 or 360 integration, which we’ll get into a little bit more in one of the other podcasts. But here, this way you can really reduce a lot of the manual work, and you don’t have to have your 401k through your payroll provider.

[00:25:58] Larry Heller: Um, there’s also ways of making the new hirees automatic and packages go out. and then also terminations, getting people out with low balances actually reduce the cost of the plan. So there’s ways of, making this automatic and things now with technologies have improved so, so much. So you don’t need to have just a plan with your payroll provider.

[00:26:21] Larry Heller: But if, again, if you’ve had these plans in place for years and years and years, you may not be aware of some of these features. And we’re gonna talk more about some of these features and some of the future and some of the future podcasts.

[00:26:32] Matt Halloran: Well, let’s go ahead and you just previewed a little bit on what’s gonna be happening in, in episode number two of this four part miniseries.

[00:26:38] Matt Halloran: Uh, what, what do we got for three and four? And then we’ll wrap up today’s show.

[00:26:41] Larry Heller: Yep. so podcast three is all gonna be about investments. What are the costs of vast investments? The diversified investment choice, I’m literate to it before the model portfolios. I can’t believe how big these model portfolio, those, we, we feel that they are.

[00:26:58] Larry Heller: Um, and then there are some [00:27:00] 401k providers that charge an extra. Fee for, for having model portfolios. And a lot of the plans, we just had one that we were, we were talking to a about and they elected to go with someone because they didn’t wanna pay a little bit more money to be able to offer the model portfolios to their, employees.

[00:27:18] Larry Heller: Which what I said before, we have over 75% of our, uh, participants are shooting, choosing these models. I think it, that is so critical. The reason why they choose it. They have no idea what they should be investing in. Yep. And they’re either talking to a friend or somebody else. So we’re gonna talk a little bit, a lot about model portfolios, we’ll talk about target funds, we’ll also talk about rebalancing and auto rebalancing.

[00:27:40] Larry Heller: And why is, why is that important as well? So that’s all coming in part three of the part four series. and part four is all gonna be about employee education and wellness. Mentioned a couple of the highlights and what we do and the emails and things like that and the, and the education and the wellness and, we really believe that offering this and, and to the employees and offering these, these meetings, we have a mandate that we, I.

[00:28:04] Larry Heller: Offer them and try to get every one of our plans to have, have one each year. And now with Zoom, it’s gotten a little bit easier out there, but it’s so important and so beneficial and the employees really, really do appreciate that. that’s coming in in part four. I did mention that, that there was one kinda law change for 2024.

[00:28:24] Larry Heller: so again, being on top of this, so that has to do with, and there’s more than one, but one of the key ones,[00:28:30] from the Secure Act, was that in 2024, you have to make sure that if you have part-time employees, so a part-time employee is anybody less than a thousand hours. But if you have a part-time employee that worked 500 hours.

[00:28:44] Larry Heller: Not a thousand hours for the last three years in a row, they are eligible to to do a deferral in the 401k plan. They may not be eligible for some of the other additional plans, but you need to offer some of these. You need to offer all of these employees that have had 500 hours for the last. Three years.

[00:29:04] Larry Heller: you don’t wanna miss them and fall in default. So, uh, so that’s one thing. If you have a lot of part-time employees out there and you haven’t been told about that, make sure that you do look into that and get all those part-time employees, at least offer them the eligibility of coming into your plan.

[00:29:20] Matt Halloran: Now with that, I’m, I’m sorry. Is that retroactive or does that start in 2024? Moving forward

[00:29:25] Larry Heller: starts January 1st, 2024 is the first year. It’s been pushed back a few times. Okay. So if you worked in 2020, if you had 500 hours in 20, 21, 22, and 23, you’re eligible. 1 1 24. So you really should have been doing this.

[00:29:41] Larry Heller: The last month in, in December of 2023. Getting everybody, ready to start on 1 1 24.

[00:29:48] Matt Halloran: Alright, so you, uh, hinted toward a benchmarking report, which is of great value, uh, to the, um, the plan sponsor, specifically the, the employer. let talk a little bit more about that as we wrap up today’s show. [00:30:00]

[00:30:00] Larry Heller: Yeah.

[00:30:00] Larry Heller: So we, we have a benchmarking re report that we’re offering a free benchmarking review of your plan, which will cover all, all the four areas that we’re doing the four podcasts on. So, uh, if you’d like to do that, we have the link in the summary description below just. Click on the link and we set up a short 20 minute intro call with one of our consultants, and, uh, we’ll be able to get you a benchmarking report to see how you compare to what’s going on out there in the 401k industry.

[00:30:29] Matt Halloran: Larry, thank you very much for all of this information. This is part one of a four part mini series today. We talked about plans and objectives. Uh, the next one we’re gonna be talking about is some of the key features, uh, to make them work very, very efficiently. Uh, number three is going be talking about the investment, model portfolios and investments that you can do within a 401k.

[00:30:46] Matt Halloran: And number four is going to be education and wellness. Which we know is a huge component of making sure that you’re not only attracting, but retaining really good employees. Please take advantage of the benchmarking. I, I just as a, as a person who’s worked with financial advisors for a really, really long time, we know that business owners out there really, really do want to a, want to be able to offer these benefits, to their employees.

[00:31:09] Matt Halloran: But more importantly, they wanna have an actual relationship with a human being. who has been doing this for a while and that human being, is Larry and his team at Heller Wealth Management. So please make sure you click in that link below, for the Benchmark Study opportunity and, uh, we’ll see you for part two of this very, very soon.