Retirement Benefit Changes are Coming Soon
Did you know saving at least 10-15% of your pay throughout your entire career is estimated to provide you with enough savings to replace about 85% of your pre-retirement income? Many save too little or start too late.
With people living longer, undersaving has become common, leading to avoidable anxiety during retirement.
Servant Solutions is making saving for retirement and receiving the full Employer matching contributions easier with two plan changes listed below. These plan changes will be implemented beginning January 1, 2025.
Employees are struggling to save for retirement, but automated plan design features may help your employees get on track to reach their retirement goals.
Automatic Enrollment : Simplifying the Start
To jump-start savings, all eligible employees who are not contributing to the Servant Solutions Retirement Plan, or who are contributing at a rate below 1% can now be automatically enrolled to contribute 1% of regular pay to the Servant Solutions Retirement Plan on a pre-tax basis. Contributions will be invested in the default LifeFund investment option appropriate for the member’s age unless directed otherwise.
If the member is already contributing 1% or more pay to the Servant Solutions Retirement Plan, the contribution amount won’t change.
Automatic Annual Increase : Growing Savings Over Time
Many people begin contributions to their retirement plan and then forget about it. This is fine if they start immediately saving at 10%, but most do not. Automatic annual contribution increases help make it easier for employees to reach their retirement goals. Regularly increasing contribution amounts is much easier if it happens automatically. If an employee is contributing less than 10% (pre-tax and Roth combined) of pay to the Servant Solutions Retirement Plan, their contribution percentage can now be automatically increased by 1% once annually as designated by the employer, up to a maximum 10% contribution rate. Employees must be notified on an annual basis prior to the automatic increase. (If employees do not want their contribution rate automatically increased, they can opt out on an annual basis.)
By automatically increasing contributions, Auto Escalation helps ensure that account holders’ retirement savings grow as their income and financial capacity increase, reducing the risk of shortfall in retirement.
Why It Matters
At Servant Solutions, we understand the unique challenges faced by those in ministry. With options like Auto Enrollment and Auto Escalation, we aim to make retirement planning as seamless and effective as possible. These tools are designed to serve you by simplifying the process and enhancing your financial security for the years to come.
By taking advantage of Auto Enrollment and Auto Escalation, you can ensure that you and your staff are on the right path to a secure and fulfilling retirement, allowing you to continue your mission of serving others with peace of mind.
What do you, as an Employer, need to do?
The plan changes outlined above will take effect on January 1, 2025. Employers will need to:
1. Annually, just before the start of your fiscal year, notify employees:
a. Our HR/Payroll Team will be automatically increasing each account holder’s contribution rate by 1% unless you are already contributing 10% (employer and employee amounts combined).
b. They need to opt out annually if they choose not to participate. (You may use sample form linked below).
2. Annually, at the start of your fiscal year, increase each account holder’s contribution rate up by 1%. Do NOT do so for an employee if:
a. He/she has completed an opt out form for this year.
b. They are already contributing 10% or more and do not wish to contribute more (employer and employee amounts combined).
What do Employees need to do?
A. If they are already contributing to the Servant Solutions Retirement Plan: Employees don’t need to do anything to take advantage of the new Plan features.
B. If they are NOT contributing to the Servant Solutions Retirement Plan: Employees need to complete both an Online Application and Salary Reduction Form online in the NEW MEMBER CHECKLIST.
If you have any questions:
Servant Solutions Retirement Specialists are available to help with any questions Monday – Friday, 8am to 4:30pm EST by calling (800) 844-8983 or emailing us here.
Remember, if any employees decide the Plan’s automatic savings features aren’t right for them, they may opt out (or elect a different contribution percentage) by contacting you or their HR Department to complete an opt-out form. Make sure they submit the completed opt-out form to your HR/Payroll by the deadline your organization has set.