Long Term Care

Long Term Care. When those three words are spoken, what comes to mind? Many make the common association with a nursing home. Others may mistakenly think that they are already covered for related long term care matters through their health insurance or disability income policy or policies, or they think that the Government will pay for this issue.

Colorado Secure Savings Program

This blog has posted previously (June 9, 2020, May 2, 2019 and January 21, 2019) about state mandates which require small employers to offer employee funded individual retirement plans like Roth IRA’s to their workforce. Since tax advantaged traditional IRA’s have been available under federal law since 1982 and Roth IRA’s since 1998, these state capitol developments are hardly “blazing new trails.” The only novelty is the element of coercion placed on the employer and the linkage of payroll deduction to the funding of the account, similar to what is commonly done with 401k’s, 403b’s, SIMPLE IRA’s etc. It is also worth noting that nearly every private financial institution currently offering IRA’s allows contributions to be made via regular pre-established electronic fund transfers from individual checking/savings accounts. The previous postings, while applauding any gesture that improves individual retirement readiness in the U.S., question whether these duplicative legislative efforts constitute a good use of taxpayer dollars. Colorado has just joined New Mexico, Oregon, Illinois, California, Connecticut, Maryland and Massachusetts with Governor Jared Polis signing Senate Bill 200 creating the Colorado Secure Savings Program.

Target Date Funds

The market volatility introduced by the coronavirus outbreak has certainly tested the nerves of investors. Sponsors of employer-based retirement plans spend a great deal of time worrying about the reactions of their employees to such downturns. Their greatest fears are that plan participants will panic during a stock market drop and subsequently sell all of their holdings to lock in substantial losses. They will then become very risk averse in the future and avoid repurchasing equities until the lion’s share of the recovery has already taken place. Even professional investors fall victim to these tendencies so plan sponsors reason that surely unsophisticated employee/investors will do so as well. The end result is an inadequate retirement account balance and blame being thrust on the plan sponsor/employer.

SECURE Act

Despite the abundance of impeachment activity taking place in Washington during the fourth quarter of 2019, the U. S. Senate actually found the time to pass some substantial retirement legislation which was subsequently signed by President Trump. The Setting Every Community Up for Retirement Enhancement (SECURE) Act (Ever wonder if there’s a “Deputy Director of Legislative Acronyms” living off our tax dollars in Washington?) has nothing to do with “communities” but does make some substantial changes to the rules affecting our individual and employer-sponsored retirement accounts. These new rules took effect on January 1, 2020. As usual, the changes have also caused some confusion in the U.S populace.