November’s Employee Memo is a handout for employees to let them know the upcoming limit changes for the 401k plan. Please have them call us if they have any questions. November 2014 Employee Memo
November’s Employee Memo is a handout for employees to let them know the upcoming limit changes for the 401k plan. Please have them call us if they have any questions. November 2014 Employee Memo
Eight years have passed since the Pension Protection Act of 2006 virtually blessed automatic enrollment for defined contribution plans. Has automatic enrollment turned out to be the panacea intended?
In 2007, a financial services center whose plan participation languished below 50% began working with a retirement plan firm. Since the client had multiple branch offices of minimum wage-earning employees for whom English was a second language, it was difficult to meet effectively with everyone to encourage participation. As a result, the plan decided to add automatic enrollment with a default deferral at 1% into a target date fund. Participation, which started at 49% in 2007, ballooned to a whopping 84% just one year later. November 2014
The IRS indexed dollar limits to qualified retirement plans for 2015 are provided in the attached document. This update is provided for informational purposes to TP Investment Advisory’s clients and prospects. See 2015 limits
This month’s employee memo is a simple risk tolerance/life questionnaire. It’s a great handout for your employees as well as a reminder to periodically look at their investments to make sure they are properly allocated. October 2014 Employee Memo
In October, the Federal Reserve (the Fed), will wrap up its asset purchase program whereby it monthly purchased billions of dollars of bonds in the open market. The Fed believes enough recovery in key economic measures has occurred and the strength of the U.S. economy now warrants winding down these asset purchases. In addition to the end of bond buying, the Fed also stated that it expects to begin raising the Fed funds’ rate at some point in 2015. This key interest rate measure—what financial institutions that maintain deposits at the Fed can charge one another when they borrow and lend overnight—has effectively stayed near zero since the depths of the credit market crisis in late 2008. These current Fed actions create a “normalization” of Fed policy and will likely create a “normalization” of the asset markets. October 2014
Are we on the way back to normal? Do we even know what should be considered normal? A quick tour of the world around us presents a world that appears in chaos. The Middle East is the Middle East, Russia is Russia and Europe continues to be mired in economic malaise. Japan can’t seem to restart their economy, though they’ve been trying to for almost 20 years, and there are threats of global health pandemics. At least this year there has not been a major weather or disaster. Wars, rumors of wars, disasters and plagues seem to be what’s normal. Newsletter 9-30-2014
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 indexes and index funds is that index funds are exactly that – funds. Index funds manage obstacles that indexes themselves don’t face. The largest is that funds actually must transact in securities whereas indexes do not. September 2014
As you begin to think about your retirement, you might want to consider the following planning steps to help ensure a successful transition to your new lifestyle. September 2014 Employee Memo
To sue or not to sue your employer over your 401(k) plan? That is the question that a Forbes guest columnist poses to plan participants, providing red flags that participants should look out for when determining whether to sue or not.
Citing abuses like high fees charged to federal employees rolling out of the low-cost Thrift Savings Plan and Fidelity’s recent settlement with participants in their own plan, author John Wasik recommends that employees ask the following questions:
• Are low-cost index investments offered?
• Are various markets covered by the investments offered?
• Are fees excessive?
• What fees are paid to middlemen (suggesting that revenue sharing is a red flag)?
• Are there wrap fees, which Wasik says are a no-no?
• Does the record keeper only offer proprietary funds?
If employers don’t answer these questions with a promise to hire an independent fiduciary consultant, Wasik recommends consulting an attorney.
August’s Retirement Report opens with “The Importance of historical scores.” Historical scores are quickly forgotten when new scores are released, but are they really yesterday’s news? In the same respect that rolling period returns are deemed important,
rolling score history is equally if not more. Next “Fiduciary Liabilities: What are they? How can they be mitigated?
Also-The Investment Due Diligence process places an important emphasis on a fund’s style, employing a technique called “quadratic optimization.” A big word, and even bigger mathematical equation, which calculates the style of a fund, reflecting how a fund behaves, or what segment of the market the fund best represent. August 2014