Tackling The Tough Stuff

Have you ever had to explain to your child in grade school what compounding interest is and why they should begin saving early?

I had to once because my son was furious that his father and I were “taxing” his allowance and making him save a portion of his money for college. Believe me, that was not an easy conversation because he was already dead set against it, and it was hard for him to wrap his young mind around why he should be saving for something so far off in the future. In retirement plan administration, we would argue that there are several topics that we must explain to our clients which are difficult for them to understand—and that at times they are dead set against doing. In this article, ASPPA President-Elect Justin Bonestroo and I discuss four of the most difficult topics to explain to a client so that they understand them, accept them, and administer them properly: eligibility, compensation, earned income and RMDs.

01.Eligibility

One of the statements we hear repeatedly from our clients is, “Our plan only covers full-time employees ”or “He can’t be eligible for the plan because he is not full-time.” Therefore, the first topic we are going to tackle is—you guessed it—eligibility. When we first meet with a client to take over their plan or to design anew plan, one of the very first topics we cover is eligibility.

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