Thought Leadership

Insights and announcements from our subject matter experts and Ascensus leadership team

Women in Technology Spotlight: Julianne Sumpf

Lead software engineer

Tell me a little bit about where you attended school and your work history.

I attended Millersville University in Lancaster, Pennsylvania. I started as a Business Administration major with a focus in Accounting, but after the first quarter I switched my major to Computer Science. I worked for a litigation company for 10 years, where I focused on electronic discovery. At first I completed quality checks, but I moved my way up to software development.

How did you start your career at Ascensus, and how long have you worked here?

The litigation company I previously worked for had been bought out, so all of my teammates started moving to different companies. One person I worked with joined Ascensus and he recommended I apply for an open position. He put in a reference for me, and now I’m here! I’ve been with Ascensus for a little over 4 years.

What made you interested in pursuing a career in technology?

When I realized business wasn’t the best fit for me, my uncle suggested I try technology. I took my first technology class spring term of freshman year, and I loved it. At my school the curriculum jumped from taking small command classes to video game classes, which showed me that IT was truly a mix of creativity and strategy.

What makes working on the IT team at Ascensus different or unique?

The people at Ascensus make our team extremely unique. All of the associates have vastly different backgrounds, however, we all share the same common goal of making Ascensus the best it can be. Also, you get to work on a variety of projects. One day I’ll work on the website, the next I’m looking at systems and database levels underneath it. We always get to learn and experience something new.

What advice would you give someone who wants to land a job in the technology field?

If you don’t have a lot of experience, try looking for volunteer opportunities. I follow a few technology groups over social media, and I’ll see organizations looking for volunteers to help update their database and website. Those opportunities serve as great projects you can show off to your future employer. Also, it’s important to promote yourself by having your LinkedIn profile up-to-date.

What woman is your biggest inspiration and why?

The professor I had in my first computer science class was a woman. I think her and I had been the only females in the classroom. She showed me it is possible to be a woman working in the technology field. Also, my family is full of strong women that pushed ourselves forward when it came to establishing a career. They taught me how important it is to show pride in what you do.

Did anyone or anything help you to get to where you are today?

My problem-solving skills helped me get to where I am today. These skills are very useful when I see project challenges or support issues, because they help me to think differently and look for solutions others have not tried.

Why do you like working for a company that helps people save?

People work hard for their money, and they work even harder to save their money. They trust the employees at Ascensus to properly handle the money that they need for life’s most important events. I love working for a company that provides accurate results to our clients in a timely manner.

Are You Retirement Ready?

Senior vice president

When it comes to saving for retirement, many individuals are confused about how to start. It can be intimidating to navigate the process alone, especially if you don’t have an understanding of how much money you should be saving. Luckily, financial advisors and retirement providers are able to support retirement savers with helpful tools that help answer the question: “How much is enough?”

Here are five suggestions for retirement savers looking to set and track the progress towards their goals:

  1. Get started. The easiest way to stop worrying about retirement is to start saving now. Begin by saving a percentage of your paycheck that works best for you. As you are able to save more, you can start to increase your contributions. It’s important to remember that any amount of money, no matter how small, makes a difference. The key is to start early and put time on your side.
  2. Speak with a financial advisor at least once annually to review your progress. Financial advisors can help employees determine if they’re on the right track with their savings. By meeting regularly with a financial advisor, savers establish a sense of security and confidence in their strategy. A reliable advisor will be a source of motivation and comfort when times look uncertain.
  3. Take advantage of tools that will help you set and refine your goals. Ascensus offers different resources to help employees reach their savings goals. Our employee website allows participants to keep track of their retirement goals from their desktops and mobile devices, so they can conveniently manage their savings strategy. We also offer access to our Retirement Outlook tool, which helps them determine optimal savings rates.
  4. Consider leveraging automatic features. The easiest way to continue to grow your savings is to save automatically. Savers can leverage automatic increase options to ensure their savings rate increases annually.
  5. Revisit your savings strategy when there are milestones or changes in your financial life. Many individuals will increase their savings percentage after job promotions or career milestones. An increase in income may lead to an increase in spending, so it’s important to also consider this opportunity as a way to increase your retirement savings. It’s key to find a balance between spending and saving.

By consistently assessing your retirement savings goals, you can track your progress and determine if you need to make adjustments. Are you wondering how often you should evaluate your progress? It’s best to check your account at least annually, unless you are experiencing a significant life event or income change.

Women in Technology Spotlight: Sharon Burge

Software development manager 

Tell me a little bit about where you attended school and your work history.

I majored in Mathematics at Drew University, which allowed me to develop my analytical skills. After accepting an offer from Electronic Data Systems (EDS), I attended their technical training for new employees hired as associate developers. I was able to use the skills I learned at EDS to work as a software developer. Afterwards, I worked in the IT division of a mortgage company, and now I’m with Ascensus.

How did you start your career at Ascensus, and how long have you worked here?

When I first came to Ascensus, I started as a senior software developer. My manager was switching positions at the time, so they were looking to hire another manager. Fortunately, I was promoted and was able to work as a development lead. I’ve only been with Ascensus for two years, so I’ve definitely experienced a lot of movement within the company in a short amount of time.

The job description featured on interested me, because it described a position that would be challenging and rewarding. When I started the interview process, I learned that Ascensus was very forward-thinking in terms of their approach to software development.

What made you interested in pursuing a career in technology?

I’ve always enjoyed solving problems. My early attempts at JavaScript and my EDS training highlighted my desire to solve technical problems. Technology is constantly evolving, which adds another layer to an exciting career choice. You can be a master today, and a novice tomorrow. It’s fun and rewarding to continue finding new and better ways to complete processes.

What makes working on the IT team at Ascensus different or unique?

At Ascensus, we’re always trying to make ourselves better. We know there is room for continuous improvement. Something unique the IT department does is utilize TV screens to show the status of our test cases. Our code goes into our development environment and runs automated tests to validate our changes. This ensures that existing functionality has not been negatively impacted. The TVs assist in letting all groups know if one of the applications failed or if tests were not successful. This allows us to immediately celebrate successes or identify potential issues.

What advice would you give someone who wants to land a job in the technology field?

I recommend getting involved in the online community as soon as possible. This can include contributing to open source repositories, responding to questions on Stack Overflow, or even joining technical meet-ups. Internships are also a great way to gain more knowledge about the field and learn from experienced developers. If you’re younger, you could apply to coding challenges offered by your high school.

Can you provide any guidance for women aiming for leadership positions?

Don’t be afraid to speak up and ask questions. It’s okay to question the status quo. Just because something has been done a certain way before, doesn’t mean that it’s the right or the best way to do it. At other companies I’ve worked for, there were times I was the only woman at meetings. Some people may treat you a little differently, but don’t let it prevent you from making sure your word is heard.

Did anyone or anything help you to get to where you are today?

Not only did my EDS tech training help me, but the first technical lead I worked with after my training was very supportive. She was really helpful in teaching me coding, but she also showed me it’s possible to be a successful, respectable woman working in the field of technology.

Why do you like working for a company that helps people save?

Saving is a critical part of my life, especially as costs continue to rise and as the economy fluctuates. My work is more meaningful knowing that I’m helping others save for college, health care, and retirement.

Washington Pulse: RESA’s Return May be Departing Senator’s Gift to Retirement Readiness

Bipartisan legislation proposing many changes to IRAs and employer-sponsored retirement plans has been introduced by Senate Finance Committee Chairman Orrin Hatch (R-UT) and Committee Ranking Member Ron Wyden (D-OR). The Retirement Enhancement and Savings Act (RESA) of 2018 is very similar to a bill approved unanimously by the Senate Finance Committee in 2016, but not considered by the full Senate. With Senator Hatch leaving Congress, there may be an urgency to enact some form of this legislation. A companion bill was also recently introduced in the House of Representatives and is being reviewed to determine if there are any differences between the two. A general summary of the Senate bill is provided below.

Incentives to Establish or Enhance Employer Plans

Many of RESA’s provisions are intended to make it less complicated and less expensive to establish a plan and to reduce fiduciary exposure for employers establishing a retirement plan. To accomplish these objectives, RESA would

  • enhance an employer’s ability to participate in a multiple employer plan, or MEP (the new but equivalent term “pooled employer plan” is coined by RESA). This would allow sharing of administrative responsibility, expense, and liability. RESA would eliminate the current requirement that participating employers have common purpose or ownership (effective for 2022 and later years);
  • allow an employer to establish a plan (e.g., a pension plan or profit sharing plan) by its business tax filing deadline, including extensions. Current rules require employers to establish a plan by the last day of their business year. The extension would not apply to certain plan provisions, such as elective deferrals (effective for taxable years beginning after 12/31/2018);
  • increase the maximum small employer retirement plan start-up tax credit from $500 to up to $5,000 per year, available for three years (effective for taxable years beginning after 12/31/2018);
  • provide a $500 per year tax credit for up to three years, beginning with the first year a 401(k) plan or SIMPLE IRA plan includes an automatic enrollment feature (effective for taxable years beginning after 12/31/2018);
  • allow employers up to 30 days before the end of a plan year to elect a 401(k) safe harbor plan provision without providing a pre-plan year notice if they make a three percent nonelective safe harbor contribution. Employers making a four percent nonelective safe harbor contribution would have until the deadline for removing excess contributions for such year to elect a safe harbor provision (effective for plan years beginning after 12/31/2018);
  • specify a fiduciary safe harbor for plans offering lifetime income investment options in order to offer employers greater protection from fiduciary liability for investment provider selection (effective date is not specified in the bill text); and
  • provide nondiscrimination testing relief for defined benefit pension plans that are closed to new participants; generally such employers offer a defined contribution plan as an alternative for new employees (effective for plan years beginning after 12/31/2013, if the plan sponsor elects).

Enabling Participants to Save More

RESA includes provisions intended to lead to greater saving by retirement plan participants. To accomplish this objective, RESA would

  • eliminate the current 10 percent deferral limitation for plans with qualified automatic contribution arrangements (effective for plan years beginning after 12/31/2018), and
  • require defined contribution plan benefit statements to include a lifetime income estimate at least once every 12 months (effective for statements provided more than 12 months after issuance of guidance by the Secretary of the Treasury).

Provisions Affecting IRAs and Employer Plans

Some provisions would affect participants or beneficiaries of both employer plans and IRAs, or would in some manner connect an employer plan and an IRA. These include provisions that would

  • require nonspouse beneficiaries of IRAs and employer plans to withdraw amounts that together exceed $450,000 within five years. Exceptions to this rule—allowing certain beneficiaries to distribute and be taxed over their life expectancy—would include the disabled, the chronically ill, and a beneficiary who is no more than 10 years younger than the participant. Minors would begin their required five-year distribution period upon reaching the age of majority (generally effective for payouts as a consequence of deaths after 12/31/2018);
  • treat custodial accounts of terminated 403(b) plans as IRAs, as of the termination date (effective for terminations after 12/31/2018); and
  • allow plan participants invested in lifetime income investments to roll over the investments to an IRA or to another retirement plan if a plan is no longer authorized to hold such investments (effective for plan years beginning after 12/31/2018).

IRA provisions

A limited number of RESA’s provisions would affect only IRAs, and would enhance either contribution or investment options. These provisions would

  • eliminate the end of Traditional IRA contribution eligibility at age 70½ (applies to contributions for taxable years beginning after 12/31/2018);
  • remove restrictions and allow any IRA owners to invest in S-Corporation bank securities (effective 1/1/2018); and
  • treat graduate student or doctoral candidate stipend, fellowship, and similar payments as “earned income” for IRA contribution eligibility purposes (effective for taxable years beginning after 12/31/2018).

Miscellaneous Provisions

RESA contains several provisions less high-profile in nature, provisions that chiefly deal with employer plans. Such provisions would

  • treat most retirement plan loans enabled through credit card programs as distributed from the plan (effective for plan years beginning after 12/31/2018);
  • increase the following retirement plan reporting failure penalties
    • Form 5500: $100 per day to a maximum of $50,000,
    • Form 8955-SSA (reporting deferred vested benefits): $2 per participant per day to a maximum of $10,000,
    • Withholding notices: $100 per failure to a maximum of $50,000 (effective for returns, statements, or notifications required to be filed after 12/31/2018);
  • accelerate PBGC defined benefit (DB) pension plan insurance premiums to improve the agency’s solvency (application date to be determined);
  • clarify PBGC insurance premiums for DB plans of cooperative and small employer charities (effective for plan years beginning after 12/31/2017); and
  • clarify that employees of church-controlled organizations may be covered by a 403(b) plan that consists of a retirement income account (effective for all plan years, including before RESA enactment).


RESA’s prospects for enactment appear enhanced by the fact that it is known to be a high priority of Sen. Hatch, who will retire after his current Senate term. Furthermore, there could be an opportunity to attach its provisions to congressional appropriations legislation that must be approved by March 23, 2018, in order to avoid another government shutdown. The legislation could also certainly move forward as a stand-alone bill. Visit for the latest developments.

How Financial Services Firms Can Safeguard Client Information

Financial services firms have a target on their back. Given the massive quantity of names, addresses, social security numbers, bank account numbers, credit card numbers, and other sensitive information kept on file, cyber criminals are going to continue to take aim at your businesses.

We’ve seen it countless times before in the financial services arena. A data breach in 2011 at Global Payments led to 1.5 million credit and debit card numbers ending up in the hands of cyber criminals, costing the company $90 million. In 2014, J.P. Morgan spent more than $1 billion to mitigate the damage resulting from compromised personal information of more than 76 million households. Last but not least, credit-reporting agency Equifax on September 7, 2017 revealed that cyber criminals had compromised the personal information of more than 143 million U.S. consumers, marking the largest data breach in history.

Experts say we’ve only seen the tip of the cyber-attack iceberg, and the treasure trove of sensitive information kept at your business will continue to attract cyber crooks to your company. The average cost of a data breach is approximately $4 million per incident, not to mention the priceless reputational damage. Can your business afford it?

What started out as a relatively minor issue has ballooned into perhaps the greatest threat facing our industry today. At Ascensus, we have over 30 years of experience in safeguarding our clients’ personal information. Here’s my advice for like-minded firms looking to avoid potentially disastrous data breaches.

Patch your systems

Perhaps the single most significant security flaw that led to the Equifax breach was the company’s failure to patch a vulnerability in its system, providing cybercriminals with an entryway into the personal information. Had Equifax patched this vulnerability within 48 hours of discovering it, the breach could have been prevented, according to Equifax CEO Richard Smith.

Patching vulnerabilities within your businesses security system as soon as they are identified may sound like a no-brainer, but you’d be surprised to hear how many companies fail to do so. The capital and manpower required to implement these patches sometimes deters executives from the job. But these decision makers must understand the potential financial and reputational damages resulting from a breach far outweigh the time and money spent maintaining your system today.

Administer employee cybersecurity training

One of the top causes of data breaches is human error. Cybercriminals have gotten very creative in how they enter your systems, and frequently use methods that involve deceiving an internal employee into letting them right in the front door.

Hackers are known to create phishing emails disguised as Amazon coupons or other retail giveaways. A quick click on a link within these phishing emails can provide the criminal with everything they need to break into your systems. Sometimes hackers pose as an existing client or representative from a third-party vendor on the telephone to get the information they need to break in. Considering your employees’ natural willingness to help, you might be surprised how easily an unsuspecting associate will unintentionally give up sensitive information to the wrong person.

Strong employee cybersecurity training designed to help your associates recognize these malicious attempts is imperative to any strong, company-wide cybersecurity system and can go a long way in thwarting attempted attacks.

Prepare, prepare, prepare

If a data breach does occur at your organization, an effective response plan will make or break your ability to mitigate the damage to your clients and key stakeholders. This might have been Equifax’s largest downfall.

Ask yourself the following: How will we eliminate the bad actor to mitigate the damage? Which third-party cybersecurity firm will we call for help? What is our internal communication plan, and how will we address the issue with our clients and the outside media? These questions just scratch the surface, but getting the answers is a great place to start when building a response plan.

Is your firm ready?

Given the sheer amount of sensitive data you have at your company, financial services firms of all shapes and sizes will continue to be targeted by cybercriminals. Constantly monitor and update your security measures and response plans. If a data breach hits your organization, you’ll be glad you did.


Four Strategies for Executives to Create a Successful Service Culture

Establishing a service culture at any organization is one of the most effective ways to boost client satisfaction, keep your employees happy, and create a healthy working environment that enables your teams to thrive.

But what is a service culture? For us, it means every activity is completed with the client in mind, regardless of whether they are directly impacted by the task at hand. In a service culture, employees should put people first, prioritize quality, and always maintain a high level of integrity. But it’s also so much more. It’s a state of mind, a set of beliefs, and a core value for employees to rally around.

Service cultures start with you, the executive, and trickle down to every single aspect of the business. As a member of the C-suite, your own actions reflect the company culture and you must work to be the unifying agent. Good leaders know that poor client service costs money and inhibits growth. But great leaders truly understand the power of service cultures, and how they can positively impact client satisfaction, employee well-being, and the company’s bottom line.

Understand (really understand) your client’s objectives

This may sound basic, but it’s the foundation for a solid service culture. Show a genuine interest in finding out what’s important to your clients and mold your culture around it. There should be nothing stronger than the voice of your client. Know them deeply and apply their wants and needs into your strategic vision. Not only will this enhance the partnership with your current clients, but prospective clients will recognize the team’s unique ability to hone in on their business.

Be consistent in how the culture is communicated

Culture starts at the top of your organization. The actions and words set at the leadership table establish the tone for the entire organization. The C-suite should be communicating a consistent and clear message related to the service culture in all aspects of the business. Every employee should know the vision, believe it, and execute on it. Keep in mind that culture is constantly evolving, but remain consistent with your core mission and cultural values no matter the environment.

Train and develop your employees to execute on core values

It’s imperative for every person in your organization – from the mailroom to the boardroom – to feel included in the culture and be able to articulate how they add to it. Your core values and service focus should be reflected in formal documents and communications, including the employee handbook. Once you establish these policies, train new associates to understand the standards and equip them with the resources to implement the service culture. This is especially important for recruiters so they can quickly and clearly recognize the core attributes in potential employee candidates.

Reward and recognize your employees

The benefits of positive reinforcement have long been studied. So recognize and reward employees who are embodying the values, and remind employees when they are not. This goes for leadership too. If you aren’t walking the walk, your employees will notice.

Building and maintaining a successful, positive and recognizable service culture is a challenge all executives face. Utilizing the steps outlined above will empower your team to embody the service culture and create positive experiences for your customers and employees. But leaders must understand that they must do more than just talk the talk. They must embody the core values of a service culture every day in order to make it stick.

Surveys Show Rising Health Care Costs Affect Retirement Savings—HSAs Are a Solution

Like many Americans, Gavin Smith’s employer is offering only a high deductible health plan (HDHP) next year. Having two active sons and knowing the HDHP has higher out-of-pocket amounts, he is worried about having enough money to pay the medical bills. Gavin decides to reduce the amount he saves for retirement to help free up more money for health care costs.

A recent survey by Employee Benefits Research Institute (EBRI)/Greenwald & Associates shows that Gavin is not the only worker making a choice like this. Some workers are sacrificing their retirement security to meet their potential medical expense obligations. Unfortunately, this only shifts the financial burden from health care to retirement readiness.

While HDHP enrollment continues to grow, some workers and employers may not realize how health savings accounts (HSAs)—a component of HDHPs—can reduce their financial concern. Workers save money using tax-free HSA distributions for qualified medical expenses. And similar to retirement plans, many employers help fund their workers’ HSAs to encourage HDHP enrollment, which is a cost savings for employers and workers alike.

Worker Dissatisfaction

The Employee Benefits Research Institute (EBRI)/Greenwald & Associates recently released the 2016 Health and Voluntary Workplace Benefits Survey (WBS), which shows that some workers are sacrificing their retirement security in response to rising health care costs. The survey included 1,500 workers between ages 21–64. The results show, among other things, that some workers are reducing their retirement plan contributions, taking loans and withdrawals from their retirement savings, or delaying retirement.

  • 28 percent of workers who reported an increase in health plan costs decreased their retirement plan contributions, and 48 percent have decreased their contributions to other savings.
  • 12 percent took a loan or withdrawal from their retirement plan.
  • 30 percent have delayed retirement as a result of rising health care costs.

HSAs Growing

Although the cost of health care seems to be having a negative impact on saving for retirement, it is shedding light on a possible solution—saving with an HSA. The number of HSAs and the amount of HSA contributions are at all-time highs, and are a clear reflection of growing enrollment in HDHPs. And expectations are that this trend will continue if employers continue moving to HDHPs.

Devenir, a national leader of customized investment solutions for HSAs and the consumer-directed healthcare market, conducts annual HSA market surveys of the top 100 HSA providers. Devenir’s 2016 Year-End HSA Market Statistics and Trends report shows that the number of HSAs exceeded 20 million at year-end 2016 (a 22 percent increase over 2015), holding almost $37 billion in assets (a 20 percent increase).

Of a total $25.5 billion HSA contributions made in 2016,

  • 26 percent came from employer contributions ($868 average employer contribution),
  • 46 percent from employees ($1,786 average employee contribution), and
  • 19 percent from individual contributions not associated with an employer ($1,713 average individual contribution).

The survey also shows that health plan partnerships are the largest driver of new account growth in 2016.

  • Health plan referrals account for 37 percent of new accounts opened.
  • Direct employer relationships accounted for 32 percent of new accounts.
  • The remaining drivers are insurance agent referrals (10 percent), administrator/TPA referrals (9 percent), and individuals (5 percent).

While HSA assets are withdrawn every year to cover medical costs, the amount that is retained in HSAs continues to grow every year. When looking at contribution and withdrawal activity, Devenir estimates that 22 percent ($5.7 billion) of HSAs assets were retained at year-end 2016.

HSA Solution

More Americans are moving to HDHPs—by choice or as driven by their employers—and the number of HSAs continues to rise. Employers and individuals should understand the benefits of HSAs.

  • Individuals can pay for current medical expenses or save for future expenses with an HSA—there is no use it or lose it rule.
  • Contributions reduce taxable income.
  • Earnings on the account build tax free.
  • Distributions are tax-free if properly used for qualified medical expenses.
  • Individuals who save on medical expenses may have more money in their budget to focus on other savings needs.

Educating employers and individuals about the tax benefits of an HSA will not only encourage HDHP/HSA participation, but can free up funds for IRA and retirement plan contributions.

HSAs and Medicare: What Savers Should Know

As I travel the country speaking about health savings accounts (HSAs), I am being asked more in-depth questions from financial services personnel on how consumers can benefit from HSAs. Many of our colleagues immediately discuss the triple tax benefit of HSAs: tax-deferred contributions, tax-exempt distributions for qualified expenses, and penalty-free distributions for nonqualified expenses beginning at age 65. These are key points and should continue to be discussed. But we should also expand the discussion by asking the following question.

“Can individuals still contribute to an HSA after age 65 and receive the same benefits?”

The answer is… yes!

HSA Contributions After Age 65

The rules for contributing to an HSA do not change once an individual turns age 65. Thus, an HSA owner

  • must be covered only under a qualified high-deductible health care plan,
  • cannot be eligible to be claimed as a dependent on someone else’s tax return,
  • is eligible for $1,000 catch-up contribution beginning at age 55, and
  • cannot be enrolled in Medicare.

The last bullet causes some confusion, so let’s explore that for a moment.

Medicare Enrollment

In our industry, it is common knowledge that someone in the United States is eligible for Medicare once they reach age 65. What most of us do not fully understand, but make certain assumptions about, is how an individual enrolls in Medicare.

There are essentially two ways individuals can enroll in Medicare.

  1. Automatic enrollment: The Social Security Administration automatically enrolls individuals in Medicare Parts A and B if they draw Social Security (either retirement or disability) benefits or Railroad Retirement benefits before reaching age 65. These individuals are automatically enrolled in the month of their 65th birthday.
  2. Active enrollment: Individuals must actively enroll in Medicare if they reach age 65 but do not draw their ocial Security benefits, or if they elect to delay Social Security benefits beyond their 65th birthday.

HSA owners can contribute a prorated amount to their HSAs based on their actual month of enrollment (assuming they still meet the other qualifying factors).

All of that seems fairly straight forward, but what if someone is still working after age 65? Can he delay Medicare enrollment, maintain his HDHP, and contribute to the HSA as he had before?

Again, the answer is yes.

Delaying Medicare Enrollment

Individuals who do not automatically enroll in Medicare at age 65 can delay enrollment if they meet certain requirements—including having qualified health insurance through their employers. But individuals who delay enrollment without proving they had qualifying health insurance at age 65 and beyond, may have to pay higher Medicare premiums or a “late-enrollment penalty”. In some cases, this penalty may apply for as long as they’re enrolled in Medicare.

Another issue to be aware of occurs when an individual delays enrollment and is covered under a qualified health plan with her employer, but that employer has less than 20 employees. In this case, the individual is treated as though she does not have qualifying coverage and must enroll in Medicare. If she fails to do this, the late-enrollment penalties will apply. The individual may elect to continue coverage under the employer’s plan if it makes financial sense, but once enrolled in Medicare, she can no longer contribute to an HSA.

These scenarios can also apply in unique ways for married couples where one spouse is enrolled in Medicare and one is not. That, however, is a topic best discussed in a separate article.

Now, let’s review one of the main benefits of having an HSA after age 65.

Paying Medicare Premiums

Before we discuss the benefits of having an HSA after age 65, let’s discuss how individuals pay their share of Medicare premiums. If an individual is drawing Social Security benefits while enrolled in Medicare, the premiums are deducted directly from his monthly payment. If an individual is enrolled in Medicare and not drawing Social Security benefits, he can either

  • submit payments (including automatic payments) directly from his bank account,
  • pay by check or money order, or
  • pay by credit or debit card.

So how does the payment of Medicare premiums relate to HSAs? Medicare premiums for Parts A, B, and D are qualified medical expenses for individuals age 65 and older. Medicare HMO premiums and an employee’s share of premiums for certain employer-sponsored health insurance are also qualified expenses after age 65.

To be clear, while Medicare premiums are qualified distributions and tax-exempt, other insurance policies that cover copays and deductibles against Medicare (sometimes referred to as Medigap policies) are not. Any Medigap premiums paid from an HSA are taxable but not penalized after age 65.

The Take Away

HSAs have a wide variety of benefits that most people simply do not know about or fully understand. It is this type of consumer education that can help people of all generations make better decisions both while saving for retirement and using assets wisely in retirement.

Washington Pulse: Budget Bill Broadens Disaster Relief, Rewrites Hardship Rules, and More – Plan Amendments Expected

On February 9, 2018, Congress approved and President Trump signed into law the Bipartisan Budget Act of 2018 (BBA-18). In addition to funding the federal government, it makes important changes to retirement plans. Specifically, it provides expanded tax relief for victims of natural disasters, relaxes the rules for hardship distributions from employer plans, makes slight changes to portability rules, and requires the IRS to create a simplified tax return for filers age 65 or older.

Relief for Victims of California Wildfires

BBA-18 provides relief to California wildfire victims consistent with previous legislation following major natural disasters, dating back to 2005 for Hurricane Katrina and, more recently, to October 2017 for Hurricanes Harvey, Irma, and Maria. The relief is provided to individuals who receive “qualified wildfire distributions.” A qualified wildfire distribution is a distribution to an individual whose principal residence is within the declared disaster area and who has suffered an economic loss as a result of the wildfires. The following relief is granted.

  • Individuals may distribute up to $100,000 from their IRAs and employer plans.
  • Qualified distributions must be received on or after October 8, 2017, and before January 1, 2019.
  • Individuals may evenly spread taxation of their qualified distributions over a three-year period.
  • Qualified distributions are exempt from the 10 percent early distribution penalty tax.
  • Individuals may repay qualified distributions to an employer plan or IRA over a three-year period.
  • Employer plan distributions are not subject to the mandatory 20 percent withholding requirement.
  • Employers may grant up to $100,000 in plan loans (increased from $50,000), and the usual 50 percent-of-vested-balance limitation is increased to 100 percent.
  • Employer plan loan repayments due between October 8, 2017, and December 31, 2018, may be delayed for one year.
  • Participants have until June 30, 2018, to repay hardship distributions taken for home construction suspended because of wildfires.
  • Employers have until the end of their 2019 plan year (2021 for governmental plans) to adopt any applicable amendments.

Softening the Hardship Rules

Participants in employer plans must have a distribution “triggering” event before they can receive a plan distribution. Plan permitting, certain hardship conditions qualify as such an event. BBA-18 alters the following restrictions on hardship distributions. (Effective for 2019 and later plan years.)

  • Elimination of six-month deferral suspension requirement: BBA-18 directs the Treasury Department to write new regulations eliminating the portion of the current safe harbor rule which requires participants to suspend deferrals for at least six months after receiving a hardship distribution.
  • Employer contributions eligible for hardship distributions: Qualified nonelective contributions (QNECs) and qualified matching contributions (QMACs)—and their earnings—are eligible for hardship distributions. In addition, earnings on elective deferrals will be eligible for hardship distribution.
  • Loans need not precede hardship distributions: Participants will not be required to take a plan loan before receiving a safe harbor hardship distribution.

Rollover of Wrongful IRS Levy

The IRS may levy (seize) IRA and employer plan assets in order to collect taxes it is owed. If the Treasury Department determines that a prior levy from an IRA or employer plan should not have occurred and returns assets to the taxpayer, the taxpayer may return the assets to an IRA or employer plan under the following terms. (Applies to amounts returned on or after January 1, 2018.)

  • The amount of money returned to the taxpayer, adjusted for earnings, may be rolled over to an IRA or employer plan (plan permitting).
  • The rollover must occur by the individual’s tax return deadline (not including extensions), for the year in which the amount is returned. For tax purposes, the rollover will be treated as if it occurred in the year the IRS levy resulted in the distribution.
  • A rollover to an IRA will not count towards the one-per-12-month IRA rollover limitation.
  • A non-Roth (generally pretax) amount rolled over to a Roth IRA or designated Roth account will be taxable.
  • Nonspouse beneficiaries with inherited IRAs may roll over returned amounts to such IRAs.

Simplified Tax Form for Seniors

Certain items of income have historically required taxpayers to file an income tax return other than simplified tax returns 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents, or 1040R, U.S. Individual Income Tax Return. BBA-18 directs the Treasury Department to draft a new, simplified income tax form (Form 1040SR) that any taxpayer age 65 or older may use.  (Available for 2019 tax year filings.)

  • Form 1040SR is to be as similar to Form 1040EZ as possible.
  • A taxpayer must be age 65 or older in the tax year for which the form is filed.
  • Form 1040SR may be used by individuals whose income includes capital gains and losses, interest or dividends, distributions from most retirement plan arrangements, and Social Security benefits.
  • Income limits will not apply to the use of Form 1040SR.

Solvency of Union Pension Plans and PBGC

BBA-18 establishes a Joint Select Committee on Solvency of Multiemployer Pension Plans. While defined benefit pension plans in general sometimes face solvency issues, the problem has been particularly acute among multiemployer (i.e., union) pension plans. The Committee is to make recommendations and propose legislation to improve the solvency not only of these plans, but also of the Pension Benefit Guaranty Corporation (PBGC). The mandate requires public hearings, approving a report, and proposing legislation by November 30, 2018.

A Foreshadowing of Things to Come?

2018 could be a year of significant legislative action for retirement plans.  As both the tax reform bill and the Bipartisan Budget Act of 2018 have demonstrated, retirement provisions can readily find their way into legislation that does not target them specifically. This appears to be especially true of concepts that are noncontroversial and have bipartisan support. It would not be a great surprise if we see more of the same in the months to come. Ascensus will continue to analyze the changes made by BBA-18 and their effect on retirement products, services, and operations. Visit for the latest developments.

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