In The Media

Bankrate: SIMPLE 401(k): Here’s how this small business retirement plan works

Saving for retirement is no easy task. Not only is it increasingly difficult for Americans to put enough money away for a comfortable future, but it can be confusing to navigate the many savings vehicles available. Ubiquity Retirement + Savings founder and CEO Chad Parks, weighs in on considerations for setting up a SIMPLE 401(k) plan.

Chad’s main message: no matter the kind of retirement plan, read the fine print. Be sure you know all the fees you’re paying, who you’re paying them to, and how much of your account it’s eating. Any type of retirement plan can come with a wide range of fees, including management, participant and administrative fees.

“You need to ask the questions and say, what investments are you using? And how much do those costs as a percentage of my assets? Is there or is there not a flat participant fee?”

While enrolling in any employer-sponsored retirement plan with matching contributions is a great idea, savers should always be aware of how much those plans are costing them.

Fox Business: Retirement Reform Bill: Key Provisions That Could Affect You

Congress is stepping in to help more Americans save for retirement.

One of the biggest savings barriers to American workers right now is access to workplace retirement plans. Lawmakers are working to change this with the first comprehensive retirement reform bill in more than a decade. The Setting Every Community Up for Retirement Enhancement (aka the SECURE) Act, which passed May 23rd with bi-partisan support in the House of Representatives, aims to provide new opportunities to save for people of all ages.

“Obviously it was quite a comprehensive bill, I think that the best way to characterize this is, it’s kind of cleaning house … [lawmakers] knew they had all these little things that are not quite right.”

– Chad Parks, founder and CEO of Ubiquity Retirement + Savings

If passed, the bill will expand access by increasing the tax credits the government will give to small businesses for having plans up to a maximum of $5,000 per year, from $500 per year. For businesses that automatically enroll employees, the maximum is $5,500. This tax credit expires after three years.

“The government is paying you to put a retirement plan in place,” Parks said.

The bill would also make it easier for companies to band together to offer multi-employer plans, brings greater retirement plan access for part-time workers to participate, and calls for an annuity option in retirement plans which are fixed sums paid out over a lifetime.

Pensions & Investments: Online Providers Filling a Void for Small-Employer 401(k)s

54% of workers nationwide — or 82.2 million people — do not have access to a workplace retirement plan says the Center for Retirement Research at Boston College. When it comes to small businesses, the numbers are even grimmer.

With employers with less than 100 employees, 70% of them don’t offer a retirement plan. Robo recordkeepers and a new generation of 401(k) providers, including Ubiquity Retirement + Savings, are working to close this gaping hole in the U.S. retirement system.

“The new 401(k) providers have managed to automate everything from record keeping and plan administration to compliance testing and reporting, a level of automation and integration that more traditional record keepers haven’t been able to achieve. While traditional record keepers, too, have made huge investments in technology, they’re hampered by legacy systems that they’re reluctant to jettison.”

Ubiquity underwent a technology overhaul in 2016 and was built “from the ground up” using the Amazon web-services cloud, giving us access to an incredible amount of computing power, data storage, and secure infrastructure for a fraction of the cost.

“I don’t have to charge more because my infrastructure costs are lower,”

-Chad Parks, Founder and CEO of Ubiquity Retirement + Savings

CNBC: What the Secure Act Would Mean to You

We’re so excited and we just can’t hide it!

On Thursday, May 23rd, the House of Representatives passed the Setting Every Community Up for Retirement Enhancement Act of 2019, known as the Secure Act. This is a bill backed by both Republicans and Democrats that aims to improve the nation’s retirement system. If the legislation passes, these changes would be the most significant to retirement plans since 2006, when the Pension Protection Act made it easier for companies to automatically enroll their employees in 401(k) plans.

“This is a stepping stone to try to solve that looming retirement crisis, ”
-Chad Parks, founder and CEO of Ubiquity Retirement + Savings

Here are some of the provisions included in the Secure Act:

• Repeal the maximum age for traditional IRA contributions, which is currently 70½
• Increase the required minimum distribution age for retirement accounts to 72 (up from 70½)
• Allow long-term part-time workers to participate in 401(k) plans
• Allow more annuities to be offered in 401(k) plans
• Parents can withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses
• Parents can withdraw up to $10,000 from 529 plans to repay student loans

Many Americans are not prepared for their golden years: Just 36% of non-retired adults think that their retirement saving is on track, the Federal Reserve found in its annual study on household well-being. And 25% of Americans have no retirement savings or pension. Our CEO Chad says that part of this problem comes down to the simple fact that many workers don’t have access to 401(k) plans.

“The reality is that almost half of all working Americans don’t have the ability to save for their retirement at their job. That’s primarily because small businesses are hesitant or intimidated by offering either a 401(k) or some sort of payroll-deduct IRA program.”

A goal of the Secure Act is “to incentivize businesses to put [plans] in place,” Parks explains. One of the ways it’s doing that is by making it easier for small businesses to band together to offer 401(k) plans via Multiple Employer Plans, known as MEPs.

By making it easier and cheaper for small businesses to offer 401(k) plans, if the bill becomes law, “millions more people, hypothetically, should have access to the ability to save at work,” says Parks.

The bill would also allow more part-time workers to participate in 401(k) plans. Currently, employers generally can exclude people who work less than 1,000 hours per year from its defined contribution plan. But with the new bill, “any employee who has worked for you for at least three years and at least 500 hours a year is now able to participate in your retirement plan,” says Parks.

Business News Daily: What the SECURE Act’s Passage in the House Means for SMB Retirement Plans

Weeks after its passage through the Ways and Means Committee, “Setting Every Community Up for Retirement Enhancement of 2019,” or the SECURE Act, got one step closer to becoming a law following a 417-3 vote in the House of Representatives.

This piece of legislation had strong bipartisan support and is considered a major step in making retirement benefits more attainable for American workers.

What the SECURE Act means for small businesses and American workers

If made into a law, the SECURE Act will:

• Offer a larger tax credit to small businesses that opt to set up retirement plans for their employees
• Make it easier for small businesses to sponsor plans by removing existing restrictions on multiple employer plans (open MEPs) that let SMBs enter a plan with other, unrelated businesses
• Give employers a “fiduciary safe harbor” when selecting a lifetime-income provider.
• The bill increases the age that retirees must reach before being able to withdraw cash from their individual retirement accounts (IRAs) and 401(k)s from 70.5 to 72.
• It removes the age cap for contributions to IRAs entirely, allowing older workers to put money into their retirement accounts.
• It allows employers to increase employee contributions from 10% to 15%.
• The bill allows long-term, part-time workers to participate in 401(k) plans by requiring employers to have “a dual eligibility requirement under which an employee must complete either a one year of service requirement (with the 1,000-hour rule) or three consecutive years of service where the employee completes at least 500 hours of service.”
• It allows new parents to withdraw up to $5,000 from retirement accounts to cover expenses for their newly born or adopted child without any penalties.

Our founder and CEO Chad Parks is encouraged by the bill’s attention to small businesses retirement issues.

“Many of the changes that were included in this legislation show that regulators are working to clean up some loose ends and loopholes that were historically problematic to plan administrators and employees…While the fate of this legislation is unknown at this point, we are enthusiastic about regulatory support to help end the looming retirement crisis.”