New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Is a Rollover into an IRA the Right Move for You as a Automatic Data Processing Employee?

Healthcare Provider Update: Healthcare Provider for Automatic Data Processing Automatic Data Processing (ADP) typically partners with several healthcare providers for their employee health benefits. Since ADP is a large company providing payroll and HR services, they may work with established health insurance entities like UnitedHealthcare, Aetna, or Anthem, among others, to facilitate affordable healthcare solutions for their employees. Specific information about the current provider might depend on the state and employee plan offerings. Potential Healthcare Cost Increases in 2026 As 2026 approaches, healthcare costs are projected to surge significantly, influenced by a myriad of factors. Record increases in health insurance premiums for Affordable Care Act (ACA) marketplace plans are anticipated, with some states seeing hikes of over 60%. Projected factors include the expiration of enhanced federal premium subsidies and rising medical costs, with the Kaiser Family Foundation highlighting that up to 92% of marketplace enrollees may face premium increases exceeding 75%. Insurers, many of which reported record revenues in 2024, are expected to implement aggressive rate hikes to address these financial pressures. Click here to learn more

Choosing an IRA rollover means that your money remains tax-advantaged and capable of growth, as in a Automatic Data Processing-sponsored plan. You may also gain more investment options than what may have been available in your Automatic Data Processing-sponsored plan. You may also gain oversight of managing these important retirement assets from your trusted Advisor.

If you roll your retirement plan assets over into an IRA account that you already own through your Advisor, you also receive the benefit of combined statements and holistic investment planning, making it easier to track your overall financial situation.

'Receive the benefit of combined statements and holistic investment planning, making it easier to track your overall financial situation.'

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Some of the benefits of rolling your money into an IRA include:

Tax-deferred growth potential: This generally avoids current income tax and distribution penalties when removed from a Automatic Data Processing-sponsored retirement plan.

More investment choices: This allows for additional contributions, if eligible. IRAs can be combined and handled by one provider, thereby reducing trustee costs and consolidating statements. Protection from creditors in federal bankruptcy proceedings. The combined amount of your required minimum distributions (RMDs) can be taken from any of your Traditional, SEP or SIMPLE IRAs.

However, there are also some important considerations that Automatic Data Processing should make before rolling over their money into an IRA, these include:

Internal management fees might be higher than in a Automatic Data Processing-sponsored retirement plan.
Fees and expenses depend largely on the investments you choose.
Loans from an IRA are not allowed.
Early distributions may be subject to a 10% IRS tax penalty in addition to income tax.
RMDs begin April 1 following the year you reach 70½ and annually thereafter; leaving the money in the former Fortune-500 plan may allow RMDs to be delayed until separation from service.
IRAs are subject to state laws governing malpractice, divorce, creditors (outside of bankruptcy), and other lawsuits; leaving the money in the former Automatic Data Processing-plan may provide additional protection against creditors.
Net unrealized appreciation (NUA) is the difference between what you paid for employer securities and their increased value. You lose favorable tax treatment of NUA if the funds are rolled into an IRA.

Hopefully, these insights will be helpful as you plan your retirement from Automatic Data Processing.

For more information about this topic, view our e-book here: https://retirekit.theretirementgroup.com/will-your-retirement-plan-retire-with-you-e-brochure-offer

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What type of retirement plan does Automatic Data Processing offer to its employees?

Automatic Data Processing offers a 401(k) retirement savings plan to its employees.

How can employees of Automatic Data Processing enroll in the 401(k) plan?

Employees can enroll in the Automatic Data Processing 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.

Does Automatic Data Processing match employee contributions to the 401(k) plan?

Yes, Automatic Data Processing provides a matching contribution to employee 401(k) accounts, subject to certain limits.

What is the maximum contribution limit for the 401(k) plan at Automatic Data Processing?

The maximum contribution limit for the Automatic Data Processing 401(k) plan follows the IRS guidelines, which are updated annually.

Are there any vesting requirements for Automatic Data Processing’s 401(k) matching contributions?

Yes, Automatic Data Processing has a vesting schedule for its matching contributions, which employees should review in the plan documents.

Can employees of Automatic Data Processing take loans against their 401(k) savings?

Yes, Automatic Data Processing allows employees to take loans against their 401(k) savings, subject to specific terms and conditions.

What investment options are available in the Automatic Data Processing 401(k) plan?

The Automatic Data Processing 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and stable value funds.

How often can employees change their contribution amounts in the Automatic Data Processing 401(k) plan?

Employees can change their contribution amounts to the Automatic Data Processing 401(k) plan at any time, subject to payroll processing timelines.

Is there an automatic enrollment feature in the Automatic Data Processing 401(k) plan?

Yes, Automatic Data Processing may offer an automatic enrollment feature for new employees, which allows them to start saving for retirement without having to opt-in manually.

What happens to the 401(k) savings if an employee leaves Automatic Data Processing?

If an employee leaves Automatic Data Processing, they have several options regarding their 401(k) savings, including rolling over to another retirement account or cashing out, subject to taxes and penalties.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

ADP announced layoffs across various business units, with significant cuts expected to continue through 2024. Employees in roles such as small business support and HRO HRSS have been affected, with many positions moved to India. Some offices are closing as part of a restructuring effort.

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For more information you can reach the plan administrator for Automatic Data Processing at 1 ADP Blvd Roseland, NJ 7068; or by calling them at +1 800-225-5237.