Retirement and Investment Solutions Newsletter
Insights
2011 – ISSUE 1
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Availability of products and services featured in Insights varies by plan. For details, contact your J.P. Morgan representative.
How do you fix the retirement problem? Ask a crowd
“There is no proof that Phineas Taylor Barnum ever said, ‘There's a sucker born every minute.’ He did, however, say that ‘Every crowd has a silver lining,’ and acknowledged that ‘The public is wiser than many imagine.’ (Source: www.ringling.com)
If you ever query co-workers for advice about a business problem or send a Facebook® message to relatives to see what they want to eat at the next family gathering, you’re using crowdsourcing.
The term crowdsourcing refers to tapping into groups for input, feedback or wisdom. Think of it as a massive focus group, but not bound by the constraints of size or geography.
We recently used crowdsourcing to ask JPMorgan Chase & Co. employees for their help in answering the question, “How do you encourage people to save for their future?”
We targeted the thousands of employees outside our line of business – a large, geographically and demographically diverse group. We kicked off the online experiment with a video from Pam Popp, our CEO, who encouraged JPMorgan Chase employees to participate in our retirement challenge. Pam shared the fact that not everyone with access to a 401(k) plan takes advantage of it. "Let's face it,” Pam said in the video, “We probably all know someone who's at risk for not having enough money when they stop working. Why not help them?"
The month-long campaign generated hundreds of comments and votes (employees were able to give a “thumbs up” to favorite ideas) and 128 unique ideas. The majority of employees that participated came from outside J.P. Morgan Asset Management, where our line of business resides.
Here are some of the retirement challenge ideas from our co-workers:
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A "Donate now" button for 401(k) contributions could be delivered in the form of a mobile application or as a plug-in for a Facebook page, blog or Web page.
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Provide an "Easy Starter" program that begins at a 1% contribution level and automatically assigns contributions to the most appropriate fund based on age and retirement needs.
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Take advantage of existing online bill-pay, reminding people to "pay themselves" [contribute to their 401(k)] when they're paying bills online.
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Give people a more realistic view of retirement, putting 401(k) balances in terms of groceries, meals out and movies.
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Offer a high-yield savings account with each 401(k).
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Provide automatic spillover of checking into savings and savings into investments.
We shared the retirement challenge ideas with our product organization and throughout J.P. Morgan Retirement Plan Services. These ideas, as well as input we regularly get from our clients’ participants (on the phone, the Web and in face-to-face meetings) will be useful as we develop new programs and communication messages aimed at helping people save and invest for retirement.
Crowdsourcing is not a new concept at J.P. Morgan. In November 2009, Chase Community Giving launched its “You Decide What Matters” campaign on Faceook. Our company asked Facebook users to help decide which small and local not-for-profits would receive a total of $5 million. Invisible Children, based in San Diego, California, received the most votes and won the $1 million grand prize. The top five runners-up received $100,000 each, and 100 finalists were awarded $25,000 each.
Facebook® is a registered trademark of Facebook Inc.
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Closing the savings gap for key employees
A comfortable retirement for your employees requires a combination of sources, including savings from company-sponsored programs, Social Security and personal savings. Senior executives and other highly compensated employees often require additional resources to avoid a savings gap. Nonqualified plans, which do not qualify for tax advantages under the Internal Revenue Code, can be an important vehicle to help key employees meet their retirement income goals.
Given qualified plan limitations, an individual earning $160,000 or more annually cannot attain a 70% income replacement ratio (what many believe to be a desired amount) through the defined contribution plan alone, according to our research. To help close the retirement savings gap and attract and retain key employees, a nonqualified plan can provide a viable solution for your organization.
You can tailor a nonqualified plan to meet the needs of your company and its employees. As a best practice, consider the following issues:
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type(s) of nonqualified plans
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structure of the plan
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funding of the plan
We understand the unique aspects of executive benefit programs and can help you design and implement an integrated approach. We offer these customized services and tools to ease the complexity of managing nonqualified plans:
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plan design consulting
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full recordkeeping and administrative services from a single platform
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online enrollment, deferral elections and beneficiary designation
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comprehensive plan sponsor reporting
If you would like to learn more about establishing a nonqualified program, contact your J.P. Morgan representative.
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New feature: Test your retirement plan knowledge
Ever been stumped by a 401(k) question? Here’s one from our Technical Consulting team: Can a non-Roth account in a 401(k) or 403(b) plan be rolled over to a Roth IRA? Find the answer below.
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The Way Forward 2011 – Steps to financial fitness
Help shape up your employees’ financial fitness by directing them to The Way Forward on the participant Web site.
This year, the focus is on steps participants can take today to help them live comfortably through retirement. This includes tips to “retire on track” and information on broad financial topics, like budgeting, debt management and saving for college.
As always, we’re providing ways for your employees to talk with us directly about saving and investing via “live” Webcasts. (These can also be viewed later at more convenient times, if needed.) To encourage your employees to join us, you’ll receive a flyer, poster and e-vite for each of the Webcasts. Here’s the schedule:
All Webcasts are at noon Eastern, 11 a.m. Central, 10 a.m. Mountain and 9 a.m. Pacific. To join a Webcast, call 800-857-4508 (passcode 9605863). Please sign on 15 minutes before the meeting. Space is limited.
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Electronic delivery provides new opportunities
In an effort to find new ways to reach participants about their retirement plans, we’re launching an initiative that will allow personal e-mail addresses to be used for discretionary participant communications.
Over the years, participants have provided us with nearly two million e-mail addresses through various channels such as the participant Web site, Secure Message Center and the Retirement Service Center. These e-mail addresses provide us with an opportunity to reach participants in a way that may be more conducive to their lifestyle versus traditional print or corporate-wide e-mail distribution.
To facilitate this complex-wide initiative, we will add language to the participant Web site this month that indicates personal e-mail addresses may be used to communicate plan information. The language will be placed on pages where a participant enters an e-mail address.
Additionally, we will reach out to participants who previously supplied personal e-mail addresses and give them the option to remove e-mail addresses from their profiles, if they prefer not to be contacted this way. The targeted e-mail communication will be distributed in phases beginning this month.
This initiative provides a great opportunity to reach participants about their retirement plan in a way that may be more user-friendly and is based on communication preferences. If you have questions about this electronic delivery initiative, contact your communications strategist. As always, plan sponsors will continue to be involved in the development and chosen distribution method of communication pieces developed for their plans and participants.
Availability of products and services featured in Insights varies by plan. For details, contact your J.P. Morgan representative.
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Test your retirement plan knowledge
Question: Can a non-Roth account in a 401(k) or 403(b) plan be rolled over to a Roth IRA?
Answer: Yes, amounts available for distribution and eligible for rollover (this excludes hardship withdrawals) can be rolled over to a Roth IRA. Doing so will result in taxation of any amounts not previously taxed. Beginning in 2010, such a rollover is allowed without regard to the participant’s earned income level. (Previously, only individuals with modified adjusted gross incomes of $100,000 or less were eligible.) The income tax on a rollover made to a Roth IRA in 2010 is equally spread over 2011 and 2012, unless the participant elects to treat the entire amount as taxable in 2010. For such rollovers made after 2010, income tax is due in the year the rollover is made.
The Small Business Jobs Act enacted into law last September adds another option for converting non-Roth amounts to a Roth basis. Participants in a 401(k), 403(b) or 457(b) plan may take an eligible distribution of non-Roth balances and convert them to a Roth basis via an in-plan rollover. This option is available in plans which have a provision allowing Roth contributions and those that permit in-plan Roth rollovers (or conversions).
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For questions about your personal retirement plan, contact J.P. Morgan Retirement Plan Services at 800-345-2345 or call your retirement plan provider.
Availability of products and services featured in Insights vary by plan. For details, contact your J.P. Morgan representative.
This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for investment, accounting, legal or tax advice.
Certain underlying Funds of the Target Date Funds may have unique risks associated with investments in foreign/emerging market securities, and/or fixed income instruments. International investing involves increased risk and volatility due to currency exchange rate changes, political, social or economic instability, and accounting or other financial standards differences. Fixed income securities generally decline in price when interest rates rise. Real estate funds may be subject to a higher degree of market risk because of concentration in a specific industry, sector or geographical sector, including but not limited to, declines in the value of real estate, risk related to general and economic conditions, changes in the value of the underlying property owned by the trust and defaults by the borrower. The fund may invest in futures contracts and other derivatives. This may make the Fund more volatile. The gross expense ratio of the fund includes the estimated fees and expenses of the underlying funds. A fund of funds is normally best suited for long-term investors.
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