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Heartland Trust: Guiding Through Challenging Times

Brian Halverson

As Heartland Trust Company reaches its 30th year of providing 401(k) plans, IRA’s, Investment Accounts, and Trust Administration, personal relationships continue to drive business. Heartland Trust has an all encompassing perspective when it comes to wealth management as they are working with businesses to operate smooth 401(k) plans and helping individuals save for and prepare for retirement, live in a good understanding of the components that make up the retirement and leave a legacy for the next generation.

Depending on where someone is in their financial life, individuals may be experiencing uncertainty in different ways. We teamed up with Heartland Trust to take a look at some of the unique perspectives individuals are having due to the pandemic.

401(k) Standpoint:

Businesses are wondering how to maintain their retirement plan when they must temporarily close their doors, furlough employees, or worse yet, lay them off. They are wondering, “how do we navigate the CARES Act and make it work for us? What options are available to our plan participants to help them in these challenging times? What does our plan document currently allow for and are there plan amendments that can be made to make our plan more suitable for us and our employees?”

“In our current reality of the coronavirus pandemic and the implementation of the CARES Act, our goal is to stay on top of all regulations so that we can best guide the business leaders of the 401(k) plans we take care of and what options are available to them,” said President of Heartland Trust Brian Halverson.

There are timely and crucial questions that are worth thinking about. You also need to know where you should go with your questions. As a business owner or leader, you should have a good understanding of the components that make up the administration of your 401(k) plan and the different roles each player plays. Now is a great time to take a few minutes to immerse yourself in it and get a better grasp on how the pieces come together.

There are a lot of conversations revolving around plan highlights, which are extremely important, like:

  1. Automatic enrollments
  2. Having Roth Contributions available to participants
  3. Increasing deferrals
  4. Investment options
  5. Should we offer loans in our plan?

There are also some topics that are less frequently discussed, but of equal importance.

What does the Trustee do?
Did you know that a 401(k) plan is technically a trust, for the benefit of the beneficiaries (the participants)? The Trustee is responsible for ensuring that all aspects of your plan follow regulations.

What does the Third Party Administrator (TPA) do? What conversations or questions are appropriate to have with them?
The TPA plays a vital role in the day-to-day administration of the retirement plan, regulatory notice delivery, annual compliance testing and government filings. If your TPA is not having semi-annual or annual conversations with you about the annual testing or details of your plan document, ask them to! The success of your plan relies on the plan design and any plan amendments needed to keep your company competitive in this ever changing business environment.

Monica Millette, QKA VP Manager of Retirement Services

Our goal is to provide a service that is transparent and all encompassing, so that an employer can focus on running their business. Whether it is the CEO, President, HR person, or an employee, we want there to be no confusion on where they can go to find answers to their questions.

Monica Millette, QKA VP Manager of Retirement Services

Who is the Record Keeper and what are they responsible for?
The Record Keeper processes daily transactions and earnings for each participant. Keeping track of the types of contributions and money in accounts is extremely important.

The Record Keeper is usually the most recognizable component in 401(k) plans, as this is where participants go to log into their account to check balances, receive statements, make trades, etc.

Who is supposed to educate our employees about the highlights of the plan and the investment options? Who should I be directing our employees to if they want to make a change to their account?
The Plan Administrator is the organization that oversees the administration of the plan, which could be the business itself or a third party, such as Heartland Trust. The plan administrator should meet with participants to ensure they understand the options available to them and the value of this employee benefit. They should also be available to assist in the selection and monitoring of the investments offered in the plan and meet with participants to answer general questions about the investment options. At Heartland Trust, we meet with our plan sponsors semi-annually for an in-depth review of the investment menu and other pertinent topics. Throughout the year our team conducts all staff 401(k) education meetings as well as 1-on-1 meetings.

How does all this fit together?
There are some companies that do one or two pieces of what you need and another vendor is needed to bring it all together or you may be asked to play a bigger role than you anticipated. Heartland Trust is a bundled service provider and the primary contact for all aspects of the plan. This level of service is designed to streamline communications and provide immediate action when something needs to be done either from a business or participant standpoint.

This is just skimming the surface on understanding the major components that make up your 401(k) plans administration, but can be very helpful at times like these when you have a question or if an employee comes to you with a question.

Living In Retirement Standpoint:

A large segment of our accounts are IRA’s and Investment accounts. Helping guide individuals and couples live in retirement takes special care and constant monitoring. In challenging times like the dot-com bubble in the early 2000’s, the financial crisis of 2008, or the coronavirus pandemic of 2020, our clients primary concerns are very similar.

  1. When will my account be back to where it was?
  2. Have I saved enough money and invested wisely to maintain my lifestyle after I am done working?
  3. Should I sell out of equities?
  4. When should I buy equities?
  5. How can I best manage my taxes?

To answer these questions there is nothing better than working with a trustworthy resource in the wealth management industry that can help you develop a plan. Part of creating a sound plan is understanding that there will be good years and tough years. 2019 was wonderful for investing and the first quarter of 2020 has seen a drastic dip. So why not be prepared for it and know that it is bound to happen at some point! Find opportunities instead of having emotions drive spontaneous potentially detrimental decisions.

Recently, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to help support our economy. This bill provides direct assistance for American workers, families, and small businesses.

There are a few ways the CARES Act impacts “Retirement Accounts” that are an effort to help those in need.

Jon Benson, VP Trust Officer
Jon Benson, VP Trust Officer

We highly encourage everyone in 2020 to keep giving to the non-profits they hold dear to their heart. They need you now more than ever.

Jon Benson, VP Trust Officer

Required Minimum Distributions (RMDs) are suspended for the year 2020. You still have the flexibility to take money out of your IRA, Inherited IRA, or 401(k) (if you are eligible) but by leaving the RMD or a portion of it in your account can help the account balance recover from the recent market downturn.

In recent years we have been helping our clients fulfill their charitable giving by making those gifts straight from their Traditional IRA or Inherited IRA. This is called a Qualified Charitable Distribution (QCD) and is an option for people 70.5 years or older. It can be considered part of your RMD but when tax time comes around, the amount distributed is not considered taxable income. In 2020, you can still make these QCD’s and the amount will not be considered taxable income.

No 10% early withdrawal tax penalty for Coronavirus related distributions. If you are 59.5 or younger, you can withdraw up to $100,000 from your IRA or 401(k) (if your plan allows for it) if…

  • You or your spouse is diagnosed with COVID-19
  • If you experienced adverse financial consequences caused by the coronavirus, such as being laid off, having hours reduced, being quarantined or furloughed. Just check with your wealth advisor on what documentation they need to document the hardship.

You can repay the coronavirus-related distribution for up to three years after the day of distribution. The repayment would be treated as a rollover in 2020, so you might have to file an amended tax return for 2020 if you repay in a few years to get your taxes back.

As there are a lot of nuances to the CARES ACT and the game plan you have set up to live in retirement, you should consult with your advisor and CPA to understand the details in greater depth and how they affect you.

Trust Standpoint:

Trusts have many complexities to them and no two are the same. Some can be more flexible than others but at the end of the day there is a document that needs to be followed and doing so is of the utmost importance. If beneficiaries are to receive income on some sort of schedule, communicating with them on how the current market will affect them and what the plan is can help limit tougher conversations in the future, just like with any plan. 

At Heartland Trust Company, they believe that education along with good questions will lead to a better understanding and more consistent outcomes. Currently they have 23 professionals dedicated to serving those they work with and they are looking to add more people to their team. 

“Our Mission as a company is to provide a lifelong commitment to the well-being of those we serve,” said Halverson. “Those we serve are our clients, the non-profits we volunteer our time at, our team members, and our community.”

“Thank you for letting us play such an important part in your life!”

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