C O N T E N T SPAGE 2Swerdlin Service Spotlight:Deadline for Making Employer Contribution

PAGE 4 - Holiday Wishes

PAGE 6(Ir)rational Behavior Results in More Secure Retirements

In Every Issue

DORN’SCORNER

Dorn Swerdlin

PAGE 1Dorn’s Corner

PAGE 7What’s Happenin’

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Fourth Quarter 2017 • Volume 23 • Issue 4

s e r v i c e s

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It’s time for my 2018 Declaration.

I declare 2018 to be The Year of Beliefs.

Why would I make a declaration about beliefs? Because what we believe affects our lives more than you might think. Our beliefs can limit us in our thinking, as well as our health and wellbeing.

Let’s take a look at how beliefs have evolved over our history.A long time ago, we all believed the earth was flat, and that if you

traveled far enough you’d fall off the edge. So what happened to change that belief? Someone traveled really far and never fell off. Columbus, by his experience, eliminated that false belief. Now people can travel without the worry of falling off. The limitation of that old belief is gone.

For a long time, we all believed that the sun, planets, and stars revolved around the earth. Scientists proved otherwise. The change in that belief opened new possibilities for the evolution of science.

In the 1850’s, the speed record for running the mile was approaching 4 minutes. People got really close, but no one ever broke 4 minutes. The whole world believed that the 4-minute mile was a limit that humans could never exceed. This belief lasted for over 100 years, until May 6, 1954, when Roger

Bannister ran the mile in 3 minutes and 59.4 seconds. Then, less than 8 weeks later, John Landy ran the mile in 3 minutes and 57.9 seconds. This is a great example: once one person breaks through an old belief, others soon begin to exceed that limit.

Classical science, often called Newtonian science, left us with the idea that everything is separate. Space and time are separate; matter and energy are separate; we are separate from the earth; and we are separate from each other, and on and on. This belief encourages an “us versus them” thinking. This leads to judgment and even hatred of others, leading to terrorism and wars.

Is this belief of separateness and powerlessness valid? I think not. Recent developments in science prove, beyond a shadow of a doubt, we are not sepa-rate and we affect the “outside world.”

Women currently make up 47% of the work force. However, on average, their retirement plan account balances are only about two-thirds of their male counterparts’ balances. Why is this true? For one thing, the gender pay gap still exists. For every dollar a man brings home, a woman earns 78 cents. Women also tend to leave the workforce earlier than men. They take time off to raise children, and are more likely than men to be the ones who take time off to care for aging parents.

The gender gap becomes more significant when we consider that women tend to retire earlier and live longer than men—an average retirement for women could be five years longer than for men. This means women will need more retirement savings. A recent survey by Prudential found that 25% of women indicated that they don’t think they will ever be able to retire, compared to 14% of men. Nearly 2.9 million women lived in poverty in 2013, more than twice the number of men, according to the National Women’s Law Center.

The Gender Gap in Retirement Savings

Deadline for Making Employer ContributionSome employers think their contributions to cefined contribution (DC) plans are due by December 31. This is a misinterpretation. Employer contributions to a DC plan may be made as late as the due date of the employer’s tax return. This deadline includes extensions, despite when the tax return is actually filed.

For example, an employer’s 2017 calendar-year corporate tax return is due on March 15, 2018 but is extended to September 15, 2018. The return is actually filed in June, 2018 with a deduction for the employer’s 2017 DC plan contribution, even though the employer has not actually made the contribution yet.

As long as the 2017 DC plan contribution is made by September 15, 2018, all is well, but if it is not deposited timely, it is no longer deductible on the 2017 tax return. The employer will have to amend the 2017 tax return and pay the additional tax and interest, as well as any penalties that may apply.

Remember: The employer contributions can be made until the extended due date of the tax return for that year if:• The plan was established by the end of the calendar year; and• The plan treats these contributions as though it had received them on the last day of the calendar year.

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WE CAN HELP YOUWITH THE FOLLOWING:

1. Actuarial services, including: • Defined Benefit • Cash Balance • Supplemental Executive Retirement Programs (SERPs) • Actuarial Expert Witness • Medicare Part D Actuarial Attestation • Post-retirement medical calculations: ASC 715-60 • Actuarial studies for Health & Welfare Plans • Compliance testing for self-funded plans

2. ESOP administration, including: • Publicly traded • Privately held • Leveraged • Non-leveraged • KSOPs • Repurchase Liability Studies 3. Other Defined Contribution Plans, including: • 401(k) • TPA & Recordkeeping Services • Cross-tested & age-weighted • 403(b), 401(a), 457

4. Cafeteria (Section 125) Plan Administration, including: • FSAs • POPs • HRAs • QTPs

5. Other consulting services, including: • Comprehensive Employee Benefit Statements • Plan Design • Employee Communication • Regulatory Compliance • Special Studies

Each retirement plan must retain anoutside broker or investment advisor.We are not investment advisors.

S W E R D L I N S E R V I C E S P O T L I G H T

How is our service? Communication is critical to any successful relationship. It is our goal to ensure you receive quality, timely service. If you have any comments concerning the service you have received from Swerdlin’s staff, or if you have suggestions for improvement, please contact us at suggestions@swerdlin.com

Give us a call at 770-396-6601 or800-507-9373 or visit swerdlin.com

Pension Plan Limits for the 2018 Tax Year

SELECTED LIMITS

Plan Limits for Plan Year

401(k) Elective DeferralsCatch-Up Contribution LimitAnnual Defined Contribution LimitAnnual Compensation LimitHighly Compensated Employee

Non-401(k) Related Limits

DB Plan Annual Benefit LimitESOP: 5 Year Distribution FactorESOP: Account Balance403(b)/457 Elective DeferralsSIMPLE Employee DeferralsSIMPLE Catch-Up DeferralsKey Employee (officer compensation)

Social Security Wage Base

2018 2017

$18,500$6,000

$55,000$275,000$120,000

$220,000$220,000

$1,105,000$18,500$12,500$3,000

$175,000$128,400

$18,000$6,000

$54,000$270,000$120,000

2018 2017

$215,000$215,000

$1,080,000$18,000$12,500$3,000

$170,000$127,200

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The retirement savings gender gap is a reason women need to save more and at a faster pace than men. This article offers a few suggestions for employers to help their employees prepare for retirement.

In general, women are less confident than men when it comes to personal financial matters. Employers can provide financial wellness programs that provide financial knowledge and therefore improve financial confidence. Financial wellness programs can include educational topics that match the interests and goals of the participants. For example, women tend to have more interest in cash and debt management. Improving their money management skills can greatly improve their financial wellness and reduce their financial stress.

The financial guidance should come from a third party investment advisor, with an easy-to-understand program. Employees need to feel comfortable to ask questions. Women prefer taking advice from someone they trust. Only about 20% of women believe the financial services industry truly hears their needs.

Employers can also design their retirement plans to promote savings. They can encourage their employees to save more for retirement by offering automatic enrollment and automatic contribution escalation. Studies have shown that participants in plans with automatic enrollment and automatic contribution escalation generally do not notice a significant reduction in their take home pay. They generally elect to leave their contribution rates where they have been automatically set, allowing them to accumulate more retirement savings.

Research shows that educating and providing employees access to a financial wellness program, along with overall benefit improvements, elevates the confidence level among your employees. Results indicate that absenteeism is reduced, productivity and morale is higher, healthcare costs are lower, and fewer employees delay retirement.

The Gender Gap in Retirement Savings

Best Wishes for a Happy Holiday Season!

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Penret Christmas Party

Joanne Swerdlin, Dorn Swerdlin, Susan Bertolino,

Jean Macdonald, Joan Lennox, Laura Bourassa,

Michael Ouellette, Sandi Vriesema, Stacey Moquin,

Graeme Hefner, Kenny Knapke

Michael Ouellette, Susan Bertolino

Dee McKnight’s son Justin’s Wedding

Atiya Riley-Hart, Dee McKnight, Lorene Pierre,

Kim Hall, Adrian Farnon

Leah McNamara, Nick Wilson, Elaine Dotson, Glenda Gine,

Scott Foreman, Janet Wadlington

Jan Smith, Craig Lindenlauf, Tianna Barrett, Ricky Cox,

Dee Sidney, Kathy Latour

Joanne’s Birthday Cake

Marjorie Cade

Dorn and Joanne Swerdlin

Joanne and Dorn Swerdlin

Joanne and Dorn’s Daughter Allison and

JC Fulkerson at their Wedding Shower

Marjorie Cade, April Hooper, Catie Smith,

Glenda Gine, Rich Strom, Kristin Shealy

Jan Smith, Rita Teague, Keyayna Castle-Rollins

Kristin Shealy’s Baby Shower

The Swerdlin Family celebrating Dorn’s 70th Birthday

Joanne, Avery, Dorn, Allison, Graham, Ellen, Lee

Michael McHugh,

Adrian Farnon

Kara Ely & Mitch Ely

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Richard Thaler, a professor at the University of Chicago, was awarded the 2017 Nobel Prize for his years of work showing that homo economicus, the always rational and well-informed people that inhabit economic models, don’t really exist in the real world.

Most of us, including economists, know that people can make economic decisions in strange ways—it was just hard to build irrationality into complex mathemati-cal models. Dr. Thaler’s study of behavioral economics helped nudge his profession into taking more account of how people really behave.

In 2004, the Journal of Political Economy published his paper, Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving, co-written by Shlomo Benartzi of UCLA. The study behind it went back a few years and had already been subject of a 2001 UCLA paper.

And what was their big discovery? That auto-enrollment and auto-escalation really work. If you automatically sign up employees to contribute to their 401(k) plan, allowing them to opt out if they want, you get more employees par-ticipating than if you ask them to sign up to contribute.

People know they should save for retirement, but it is harder to decide to contribute money you have than it is to decide to stop contributing money you weren’t used to having. Dr. Thaler called this the endowment effect. For hundreds of years, the rest of us have called it the “a-bird-in-the-hand-is-worth-two-in-the-bush effect.”According to a US Department of Labor survey, 38% of all US workers who were covered by a 401(k) plan in 2015 were in a plan with auto-enrollment. The most common default employee contribution rate was 3%, with some plans as high as 6%, others as low as 1%.

The DOL reports that most of these auto-enrollment plans also had auto-escalation, with annually increasing employee contribution rates. In most cases, they top out at 6% of pay, but in some industries and regions going as high as 10%.

This is a good thing, saving more for retirement, but is it enough?

Financial planners know that saving 3% of your pay is nowhere near enough: 15% is more likely what is needed. Morningstar’s David Blanchett, in an April blog on the Wall Street Journal website, states that auto-enrollment might actually be keeping employee contribution rates too low. Although plans with auto-enrollment had greater par-ticipation than those without, employees in plans without auto-enrollment actually had higher contribution rates.

It’s behavioral economics again: “If my employer tells me that 3% is the automatic contribution, then that’s probably the right contribution.” This is the anchoring effect, making a decision about something based on the first information (the “anchor”) you have about that thing.

Blanchett ran an online survey testing different default rates of 3% to 12% and found that about 50% of respondents would participate no matter what the contribution rate. This is an online survey with pretend money, not real employees with real money. However, it does suggest that higher default contribution rates could be acceptable to employees and lead to higher retirement savings.

In a nutshell, behavioral economics tells employers they can nudge their employees to save more by clev-erly presenting plan options and choices. Auto-features in 401(k) plans have done a lot to help employees prepare for retirement, and these features are continuing to evolve to improve retirement savings.

It’s the last Swerdlin Quarterly for 2017, so what better issue to end on a cliff-hanger? Behavioral economics has improved retirement savings but, once retired, how will they stay healthy? Studies show that patients do not take their medication properly, do not monitor their chronic diseases, and do not comply with their doctor’s orders. The recent emer-gence of high-tech personal devices hasn’t made much difference yet. Can behavioral economics help? I’m not sure we’ll have the answer by next quarter.

Please let us know if you have any particular topic you would

like us to discuss in a future newsletter article.

We Need Your Help

(Ir)rational Behavior Results in More Secure Retirements

3% Automatic Contribution

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WHAT’S HAPPENIN’

1919CYNTHIA ALLEN

& LEE SWERDLIN

Anniversaries We Celebrate this Quarter:

Ricky Cox – 15 yearsAdrian Farnon – 15 yearsAlicia Turner – 14 years

Janet Wadlington – 10 years Catie Smith – 8 years

David Brown – 6 yearsKenneth Knapke – 6 years

Nick Wilson – 6 yearsElaine Dotson – 3 yearsTammie Jones – 3 yearsCinthia Garcia – 2 yearCarla Klingler – 2 year

Allison Swerdlin – 2 yearTom Behrend – 1 year

3% Automatic Contribution

Dorn Swerdlin & Kim Hall “After Hours”

Pictured: Katrina Reustle, Atiya Riley-Hart, Melissa Spencer

Adrian Farnon, David Benoit, Lee Swerdlin, Graham Swerdlin, Avery Swerdlin,

Brian Bradley, Linda Brown, Catie Smith, Gayle Howard, Kim Hall, Scott Foreman,

Stacie Greene, Katrina Reustle, Katie Miller, Atiya Riley-Hart, Kristin Shealy,

Mike Raker, Nick Wilson

Carla Klingler, Scott Foreman, and Susan Petrirena attended the NCEO Conference in Tampa on October 2-4. This was the first NCEO Conference to be held in Florida and had a fabulous turnout!

Connie Woodmansee, Donna Martin, and Michael Ouellette attended the New England Chapter ESOP Conference in Killington, VT on October 4-6.

Congratulations to Allison Swerdlin and JC Fulkerson who were married at a small beachside wedding in Destin, FL on October 14.

On October 18, Swerdlin had an “After Hours Cocktail Party” to cele-brate the completion of the October 15 Form 5500 filing deadline.

Alicia Turner, Katie Miller, Linda Brown, and Mike Raker attended the Conference of Consulting Actuaries Retiree Medical Seminar held in Orlando on October 22.

The ESOP Association Las Vegas ESOP Conference and Trade Show was held November 9-10 at the Paris Hotel. Swerdlin had a booth at the trade show which gave us an opportunity to meet with many of our ESOP clients and partners throughout the confer-ence. Those attending from Swerdlin were Carla Klingler, Dorn and Joanne Swerdlin, Emily Spencer, Michael Ouellette, Susan Petrirena, and Vicki Graft. Several of our ESOP consultants presented at the conference which highlighted a variety of topics, such as ownership culture, legislative updates, and fiduciary and trustee responsibil-ities. Swerdlin also hosted an evening cocktail reception at the Eiffel Tower Restaurant where we visited with our clients and friends.

On December 7, Adrian Farnon and Katrina Reustle attended the WEB Atlanta Annual Holiday Social at Maggiano’s.

Swerdlin held their Annual Holiday Party on December 8. To start off this special annual event, Dorn will perform as Elvis in his custom-made Hawaiian jumpsuit along with his back-up sing-ers, The Swerdlinaires: Connie Wood-mansee, Dee McKnight, Kim Hall, and Melissa Spencer. Following the perfor-mance, we will enjoy a wonderful lunch followed by games and prizes.

With our Charity Fund, which includes contributions made throughout the year for various events sponsored by our em-ployees, we are able to donate gifts to families in need at the Holiday Season.

Our DC Recordkeeping Team hosted a charity breakfast on October 23. The breakfast raised money for the Swerdlin Charity Fund to be used for families in need during the holiday season.

The 2017 ASPPA Annual Conference was held October 23-25 in National Harbor, Maryland. As a Board Member of the local chapter of ASPPA, Lee Swerdlin attended the event held for retire-ment plan professionals.

On October 31, Swerdlin employees celebrated at our Annual Halloween Party by dressing up in costumes, participating in games and activi-ties, and enjoying a special catered lunch. Some of our employees made cakes and “yummy” desserts to be given for prizes. Our First Prize Winner for best costume went to Katrina Reustle who was dressed as a “Mermaid.”

Swerdlin employees kicked off the 2017 College FootballSeason by dressing in their team colors.

See the book, The Biology of Beliefs, by Bruce Lipton for the details of this phenomenon.

Does this mean that we have the ability to change our world and our bodies for the better? I believe so. There are many instances of spontaneous healings that are good examples of this belief.

So how can we be more open minded to stop limiting our beliefs? Stay tuned for the next quarter’s Dorn’s Corner. I have some ideas to share about how to do this.

Best wishes for a Happy Holiday Season!

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Newsletter CoordinatorSusan Petrirena

Editorial Assistance:Dee Robbins

Actuaries and Employee Benefit Consultants5901 Peachtree Dunwoody RoadBuilding B, Suite 170Atlanta, GA 30328

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C O N T R I B U T O R S

p: 770.396.6601 • f: 770.396.0067 contact@swerdlin.com

swerdlin.comSwerdlin & Company is taking an active role in conserving the world’s resources by printing on FSC®-certified paper with environmentally-friendly ink. Please recycle this newsletter.

Newsletter Committee Members:Donna Martin, Dorn Swerdlin, Jeffery Groves, Joanne Swerdlin,

Kim Hall

Additional Contributors:Adrian Farnon, Elaine Dotson

DORN’SCORNER

I use the term New Science to refer to science devel-oped since the early 1900’s – quantum theory is one of these. Quantum physics provides a concept called the “observer effect.” This concept has been proven to be a scientific fact. When we observe things, we cause things to change. For example, our observation has proven to change a wave into a particle – just by looking!

Rather than believing the universe is a separate world “out there” independent of us, why not consider the fact that we participate in creating our own world. If we be-lieve this, we must take responsibility for what we create rather than being the victim. We are more connected to our world than previously believed.

New proven concepts in biology also validate our par-ticipation in our world. Scientists have proven that our beliefs can actually change our physical DNA.