Updated Loan Interest Rates

PLAN LOAN INTEREST RATE INCREASED FROM 8.50% TO 8.75%

The Dauphin County, PA Deferred Compensation Plan offers participants the opportunity to take loans against their account value.  So that you do not fall behind with your retirement income goals, you are required to pay interest on the loan.  The plan's loan interest rate is 1%+ the prime interest rate. The key point is that you are paying yourself the interest.  Essentially, you are acting as your own bank.  Below is more information on how the loan interest rate is calculated and the plan's loan provisions. These new rates take effect on February 2, 2023.

THE PRIME INTEREST RATE

You might have heard that the Federal Reserve Bank (Fed) increased its Federal Funds Target Rate (Target Rate) recently.  The Target Rate is the suggested range of interest which one bank may charge another for overnight lending.  The Fed does not set the prime interest rate. However, once the Fed establishes the Target Rate, then U.S. banks take action to set the rate for their best or "prime" customers. Generally, a bank's prime rate is linked to the Target Rate and moves in lockstep with it. Each U.S. bank can determine its own "prime" rate that it offers customers. However, there is no central authority which sets "prime."

The loan interest rate is based upon the prime interest rate.  The Wall Street Journal (WSJ) publishes the prime rate, which is determined by surveying the thirty largest banks in order to come up with a consensus amount.  The WSJ reports changes to the prime rate when the surveyed banks have adopted a new rate, which occurred when the Fed changed its Target Rate.

The Wall Street Journal (WSJ) published a change in the prime interest rate increasing it from 7.50 percent to 7.75 percent, effective February 2, 2023.

PLAN LOAN PROVISIONS

Any active employee may borrow money from his/her account for any reasonable purpose. Provisions of the loan program are as follows:

• You may borrow up to half of your total vested account balance for any purpose, with a minimum loan of $1,000 and a maximum loan of $50,000.

• The maximum number of loans a participant may leave outstanding at any time is two.

• You may choose a repayment schedule of up to five years, except if the loan is used to acquire your principal residence (up to 15 years). All loans will be paid back through payroll deduction.

• The interest rate charged on your loan will be 1% above the prime interest rate. All interest that you pay on your loan is credited to your account.

• A one-time, non-refundable fee of $75 plus a $25 per year administrative fee will be deducted from your loan proceeds.

• It may take three to four weeks to process your loan application, so plan accordingly.

If you have questions regarding the plan loan provisions, Contact Us.

Upcoming Changes to the Plan

It is our goal to make the Dauphin County, PA Deferred Compensation Plan a great option for you to save for retirement.  In addition to the pension plan that you are required to participate in, as a voluntary benefit we offer the Dauphin County, PA Deferred Compensation Plan.  For those of you not participating in the plan, we want to remind you that Dauphin County makes a $4 per pay additional contribution to the plan when you contribute $10 or more.  To learn more about the plan, please visit the Dauphin County intranet site / voluntary benefits / deferred compensation plan or you can access the plan’s participant portal (an informational website for the plan) at www.dauphincountydcplan.com. 

Attached are three memo’s detailing changes to the plan.  As part of our due diligence process, the Dauphin County Voluntary Employee Benefits Committee (VEBC) works with the investment advisory firm Retirement Collaborative LLC to review the investment options available in the plan.  When a fund is underperforming its peers, it is put on a watch list and if it does not improve, it is replaced with a fund that is meeting the due diligence criteria and outperforming our peers.  “The Notice of Change in Investment Options” outlines these fund changes. 

When reviewing this memo, you will notice the addition of the American Funds Target Date Retirement Funds.  These funds provide a simple way of selecting a diversified investment portfolio designed around a target retirement date.  As an investor draws closer to their retirement date, the investment strategy changes automatically.  The plan is also making these target date funds a Qualified Default Investment Alternative (QDIA).  During the enrollment process, if a participant does not select an investment option, then the participant’s contributions will be invested in the target date fund corresponding to their age range listed in the memo.  We feel that the ideal process is for a participant to select an investment strategy that meets their specific goals and objectives.  If you would like assistance with this, please contact Stephen Hetrick (the Retirement Collaborative LLC investment advisory representative) at hetrick@retirementc.com; but as Dauphin County moves to online processing, we wanted to make sure there was a QDIA so that an employee’s enrollment would not be delayed should they not select an investment option during the enrollment process.  The “Qualified Default Investment Notice” memo reviews these details.

Late last year the plan document was updated for the SECURES and CARES acts.  We also elected to add two optional amendments.  The first amendment lowers the age for In-Service Distributions to 59 ½.  This means that after reaching age 59 ½, a participant can take an in-service distribution without cause.  Also, the plan added the Qualified Birth or Adoption Distribution (QBAD) that allows distributions up to $5,000 per child when certain conditions are met.  Please read the “Summary of Material Modifications” memo for details.

Lastly, we added the ability to take distributions on the Alerus participant website.  If you are a participant and are not accessing the Alerus participant website, you should.  There are links to the website on the Dauphin County intranet site and there are more details on how to access the Alerus site on the plan participant portal - https://dauphincountydcplan.com/access-account.  The Alerus participant website now allows for online enrollment, loan processing, distributions, and changes to beneficiaries.  You can also make changes to your contributions and investments online.  We recommend that you access the Alerus participant website; review your beneficiaries, contributions, and investment options; and if you have questions on any of them, we recommend you contact Stephen Hetrick at hetrick@retirementc.com or 717-545-1447 or Dauphin County HR.

2023 Q1 Tactical Model Report

This report contains the 2023 Q1 quarterly allocations for your retirement plan’s tactical models.   As of this quarterly review, the U.S. equity trend indicator was negative, the international trend indicator was positive, and the Balance of Strength Signal was negative.  The Bond Bull-Bear Indicator remains negative.   The models will be moving from their minimum high risk exposure to a little above their minimums and will add to their fixed income exposure.  Model changes will take place in January.  Please read the full report for details.

If you are uncomfortable with your selected model maintaining its currently low High Risk Category exposure, we recommend that you look at other plan investment options or a more aggressive tactical model.  You can also contact your investment advisor representative, Stephen Hetrick at Hetrick@retirementc.com or 717-545-1447 to discuss your concerns and alternative options.  Feel free to jump right to the model pages or first read our model and market commentary.  As always, if you have questions regarding these models, your deferred compensation account, or retirement planning; do not hesitate to contact us.

Updated Loan Interest Rates

PLAN LOAN INTEREST RATE INCREASED FROM 8.00% TO 8.50%

The Dauphin County, PA Deferred Compensation Plan offers participants the opportunity to take loans against their account value.  So that you do not fall behind with your retirement income goals, you are required to pay interest on the loan.  The plan's loan interest rate is 1%+ the prime interest rate. The key point is that you are paying yourself the interest.  Essentially, you are acting as your own bank.  Below is more information on how the loan interest rate is calculated and the plan's loan provisions. These new rates take effect on December 15, 2022.

THE PRIME INTEREST RATE

You might have heard that the Federal Reserve Bank (Fed) increased its Federal Funds Target Rate (Target Rate) recently.  The Target Rate is the suggested range of interest which one bank may charge another for overnight lending.  The Fed does not set the prime interest rate. However, once the Fed establishes the Target Rate, then U.S. banks take action to set the rate for their best or "prime" customers. Generally, a bank's prime rate is linked to the Target Rate and moves in lockstep with it. Each U.S. bank can determine its own "prime" rate that it offers customers. However, there is no central authority which sets "prime."

The loan interest rate is based upon the prime interest rate.  The Wall Street Journal (WSJ) publishes the prime rate, which is determined by surveying the thirty largest banks in order to come up with a consensus amount.  The WSJ reports changes to the prime rate when the surveyed banks have adopted a new rate, which occurred when the Fed changed its Target Rate.

The Wall Street Journal (WSJ) published a change in the prime interest rate increasing it from 7.00 percent to 7.50 percent, effective December 14, 2022.

PLAN LOAN PROVISIONS

Any active employee may borrow money from his/her account for any reasonable purpose. Provisions of the loan program are as follows:

• You may borrow up to half of your total vested account balance for any purpose, with a minimum loan of $1,000 and a maximum loan of $50,000.

• The maximum number of loans a participant may leave outstanding at any time is two.

• You may choose a repayment schedule of up to five years, except if the loan is used to acquire your principal residence (up to 15 years). All loans will be paid back through payroll deduction.

• The interest rate charged on your loan will be 1% above the prime interest rate. All interest that you pay on your loan is credited to your account.

• A one-time, non-refundable fee of $75 plus a $25 per year administrative fee will be deducted from your loan proceeds.

• It may take three to four weeks to process your loan application, so plan accordingly.

If you have questions regarding the plan loan provisions, Contact Us.

Alerus Money Market Rates are Increasing

With the Federal Reserve raising short term rates again, it is translating into higher rates in money markets and bank rates. Effective January 1st, the Alerus Money Market interest rate will increase to 3.82% (3.89% APY). As of December 31st, the 1-year yield on the Alerus Money Market is 0.77% and the 5-year yield is 1.10%. Alerus benchmarks and sets this rate on a quarterly basis, however, the rate is subject to change at any time.  

In 2022 bond yields have been rising, which can and has caused a decline in the prices in existing bond prices. Most bond funds are negative for the year. In a rising rate environment, a money market fund can be a good option for investors seeking capital preservation and/or low to medium risk investors.

If you have questions regarding your account, please CONTACT US.

Updated Loan Interest Rates

PLAN LOAN INTEREST RATE INCREASED FROM 7.25% TO 8.00%

The Dauphin County, PA Deferred Compensation Plan offers participants the opportunity to take loans against their account value.  So that you do not fall behind with your retirement income goals, you are required to pay interest on the loan.  The plan's loan interest rate is 1%+ the prime interest rate. The key point is that you are paying yourself the interest.  Essentially, you are acting as your own bank.  Below is more information on how the loan interest rate is calculated and the plan's loan provisions. These new rates take effect on November 3, 2022.

THE PRIME INTEREST RATE

You might have heard that the Federal Reserve Bank (Fed) increased its Federal Funds Target Rate (Target Rate) recently.  The Target Rate is the suggested range of interest which one bank may charge another for overnight lending.  The Fed does not set the prime interest rate. However, once the Fed establishes the Target Rate, then U.S. banks take action to set the rate for their best or "prime" customers. Generally, a bank's prime rate is linked to the Target Rate and moves in lockstep with it. Each U.S. bank can determine its own "prime" rate that it offers customers. However, there is no central authority which sets "prime."

The loan interest rate is based upon the prime interest rate.  The Wall Street Journal (WSJ) publishes the prime rate, which is determined by surveying the thirty largest banks in order to come up with a consensus amount.  The WSJ reports changes to the prime rate when the surveyed banks have adopted a new rate, which occurred when the Fed changed its Target Rate.

The Wall Street Journal (WSJ) published a change in the prime interest rate increasing it from 6.25 percent to 7.0 percent, effective November 2, 2022.

PLAN LOAN PROVISIONS

Any active employee may borrow money from his/her account for any reasonable purpose. Provisions of the loan program are as follows:

• You may borrow up to half of your total vested account balance for any purpose, with a minimum loan of $1,000 and a maximum loan of $50,000.

• The maximum number of loans a participant may leave outstanding at any time is two.

• You may choose a repayment schedule of up to five years, except if the loan is used to acquire your principal residence (up to 15 years). All loans will be paid back through payroll deduction.

• The interest rate charged on your loan will be 1% above the prime interest rate. All interest that you pay on your loan is credited to your account.

• A one-time, non-refundable fee of $75 plus a $25 per year administrative fee will be deducted from your loan proceeds.

• It may take three to four weeks to process your loan application, so plan accordingly.

If you have questions regarding the plan loan provisions, Contact Us.

Increase to 2023 Contribution Limits

The IRS announced the 2023 contribution limits for tax-advantaged retirement plans last week. Because limits are adjusted for inflation and inflation has been very high, there are significant increases to the limits.

For participants under the age of 50, the 2023 contribution limit increased from $20,500 to $22,500, and for participants age 50 or older, they can utilize the catch-up contribution of $7,500 for a maximum annual 2023 contribution of $30,000.

You can adjust your contribution limits on the Alerus participant website. If you have questions about accessing the site, see - Access Alerus Website.

Remember, when computing the maximum annual contribution limit, you need to factor in the additional contribution made by Dauphin County. Below are examples of how to compute the maximum per pay amount:

$22,500 - $104 (Dauphin County Contribution of $4 * pay periods ex. 26) = $22,396 / 26 (pay periods) = $861.38

$30,000 - $104 (Dauphin County Contribution of $4 * pay periods ex. 26) = $29,896 / 26 (pay periods) = $1,149.84

Remember, you can make either or both Roth and Pre-Tax contributions.

If you have questions regarding your contributions or other aspects of your account, please Contact Us.

2022 Q4 Tactical Model Report

This report contains the 2022 Q4 quarterly allocations for your retirement plan’s tactical models.   As of this quarterly review, the U.S. equity trend indicator was negative, the international trend indicator was negative, and the Balance of Strength Signal was negative.  The Bond Bull-Bear Indicator remains negative. 

If you are uncomfortable with your selected model maintaining its currently low High Risk Category exposure, we recommend that you look at other plan investment options or a more aggressive tactical model.  You can also contact your investment advisor representative, Stephen Hetrick at Hetrick@retirementc.com or 717-545-1447 to discuss your concerns and alternative options.  Feel free to jump right to the model pages or first read our model and market commentary.  As always, if you have questions regarding these models, your deferred compensation account, or retirement planning; do not hesitate to contact us.

Updated Loan Interest Rates

PLAN LOAN INTEREST RATE INCREASED FROM 6.50% TO 7.25%

The Dauphin County, PA Deferred Compensation Plan offers participants the opportunity to take loans against their account value.  So that you do not fall behind with your retirement income goals, you are required to pay interest on the loan.  The plan's loan interest rate is 1%+ the prime interest rate. The key point is that you are paying yourself the interest.  Essentially, you are acting as your own bank.  Below is more information on how the loan interest rate is calculated and the plan's loan provisions. These new rates take effect on September 22, 2022.

THE PRIME INTEREST RATE

You might have heard that the Federal Reserve Bank (Fed) increased its Federal Funds Target Rate (Target Rate) recently.  The Target Rate is the suggested range of interest which one bank may charge another for overnight lending.  The Fed does not set the prime interest rate. However, once the Fed establishes the Target Rate, then U.S. banks take action to set the rate for their best or "prime" customers. Generally, a bank's prime rate is linked to the Target Rate and moves in lockstep with it. Each U.S. bank can determine its own "prime" rate that it offers customers. However, there is no central authority which sets "prime."

The loan interest rate is based upon the prime interest rate.  The Wall Street Journal (WSJ) publishes the prime rate, which is determined by surveying the thirty largest banks in order to come up with a consensus amount.  The WSJ reports changes to the prime rate when the surveyed banks have adopted a new rate, which occurred when the Fed changed its Target Rate.

The Wall Street Journal (WSJ) published a change in the prime interest rate increasing it from 5.50 percent to 6.25 percent, effective September 21, 2022.

PLAN LOAN PROVISIONS

Any active employee may borrow money from his/her account for any reasonable purpose. Provisions of the loan program are as follows:

• You may borrow up to half of your total vested account balance for any purpose, with a minimum loan of $1,000 and a maximum loan of $50,000.

• The maximum number of loans a participant may leave outstanding at any time is two.

• You may choose a repayment schedule of up to five years, except if the loan is used to acquire your principal residence (up to 15 years). All loans will be paid back through payroll deduction.

• The interest rate charged on your loan will be 1% above the prime interest rate. All interest that you pay on your loan is credited to your account.

• A one-time, non-refundable fee of $75 plus a $25 per year administrative fee will be deducted from your loan proceeds.

• It may take three to four weeks to process your loan application, so plan accordingly.

If you have questions regarding the plan loan provisions, Contact Us.

Alerus Money Market Rates are Increasing

With the Federal Reserve raising short term rates, it is translating to higher rates in money markets and bank rates. Effective October 1st, 2022, the Alerus Money Market interest rate will increase to 2.25% (2.27% APY). As of September 30th, the 1-year yield on the Alerus Money Market is 0.20% and the 5-year yield is 1.04%.

In 2022 bond yields have been rising, which can cause a decline in the prices in existing bonds. Most bond funds are negative for the year. In a rising rate environment, a money market fund can be a good option for investors seeking capital preservation and/or low to medium risk investors.

If you have questions regarding your account, please CONTACT US.