The payment of expenses by an ERISA plan (401(k), defined benefit plan, money purchase plan, etc.) out of plan assets is subject to ERISA’s fiduciary rules. The “exclusive benefit rule” requires a plan’s assets be used exclusively for providing benefits. ERISA also imposes upon fiduciaries the duty to defray reasonable expenses of plan administration. General principles of allowable expenses include the following: The expenses must … Continue reading Allowable Plan Expenses: Can the Plan Pay?
One of the largest misconception about index funds is that their only distinguishing feature is their fees. It’s not uncommon to hear, “index funds are just holding the stocks or bonds in the index, so we don’t need to pay attention to them.” This assumption, however, is an oversimplification. Many investors don’t realize that all index funds are not created equally. A key difference between … Continue reading Index Funds – Passive or Passive Aggressive?
A common goal for successful business owners when designing a retirement plan is to provide a reasonable benefit level to their employees while maximizing the benefits to themselves. Most times this is accomplished with an aged-based or “cross-tested” design that allocates differing contribution levels based on an employee’s class. It is important to understand that changes in your clients’ employee demographics from year to year … Continue reading Changes in Employee Demographics May Impact Owner’s Percentage of Retirement Plan Contributions
According to plan sponsors, one of the most harrowing aspects of their fiduciary obligations is to ensure that plan fees are reasonable. From administration and recordkeeping to compliance and investment management, how can a plan sponsor feel assured that they are aware of all plan fees, understand them thoroughly and then determine their fair and reasonableness? It’s quite a task! Best practices dictate the use of … Continue reading Getting the Biggest Bang for Your Buck! – Negotiating Retirement Plan Fees with Your Provider
Imagine you own an independent coffee shop and Starbucks offers you a franchise with no upfront costs and a healthy revenue share going forward. Well, you could continue to figure out where to buy your napkins, how long to roast the beans, and a thousand other operational details, or you can implement a proven business model where much of the marketing, operations, and client deliverables … Continue reading Competing with Starbucks / Franchising of 401(k) Advisory Services
The qualitative review of a mutual fund helps support the quantitative analysis within the Scorecard System™ by providing color and insight into the portfolio and the investment performance. The qualitative review process is structured in its approach and designed to identify the factors that will ultimately drive future investment performance. The three primary factors include: People, Process and Philosophy. The baseline criteria are set for … Continue reading The Importance of Qualitative Review
The thought of moving from one service provider to another may be intimidating and overwhelming. It doesn’t have to be. If you work with an experienced conversion team, the process should be seamless. If a plan sponsor is unhappy with its current provider’s services and technology, it may very likely want to switch providers. Furthermore, if the plan sponsor feels it or its participants are not … Continue reading What to Expect When Transitioning Providers
The Internal Revenue Service (IRS) allows distributions to be excluded from income if they are rolled over to an eligible retirement plan or Individual Retirement Account (IRA) within 60 days. Revenue Procedure 2016-47 offers additional guidance, as well as a self-certification process that details how a taxpayer could accomplish a rollover that does not meet the 60-day requirement under certain circumstances. Conditions for Written Self-Certification … Continue reading Waiver of 60-Day Rollover Requirement
I began my investment career in 1995 as an Equity Analyst at AIM Investments and later managed the Invesco Large Cap Growth fund for 12 years. During that time I had exposure to and was judged by many investment scoring systems. I always had questions about their methodology and was often frustrated by their shortcomings. “Why doesn’t this scoring take risk into consideration?” “Why are … Continue reading The Scorecard – A Former Portfolio Manager’s Perspective