This month’s employee memo is a simple reminder/payroll stuffer that highlights the benefits of participating in a retirement plan. April 2014 Employee Memo
- Pretax dollars
- Potential Employer match
- Investment opportunities
- Convenient way to save
This month’s employee memo is a simple reminder/payroll stuffer that highlights the benefits of participating in a retirement plan. April 2014 Employee Memo
What is ERISA’s definition of a 3(16) Fiduciary? ERISA Section 3(16) states the definition for “plan administrator” as responsible for the daily operation of the plan. A plan administrator under ERISA 3(16) is identified in the plan document and if the plan document is not specific, the plan sponsor is considered to be the 3(16) fiduciary.
Part II talks about the challenges for participants in saving for retirement. Can peer influence help drive more people to save, with higher deferral amounts?
Part III-Pass or Fail? Each year you receive a “pass” or “fail” from your service provider regarding required non-discrimination testing (the Actual Deferral Percentage test and the Actual Contribution Percentage test). The ADP/ACP tests govern the amounts of deferrals and/or matching contributions that highly compensated employees (HCEs) are allowed to make or receive in relation to those of non-highly compensated employees (NHCEs).
And finally a deeper look at the scorecard system we can use to analyze the funds inside your plan. April 2014
“One of the core concepts of inter-market analysis is the idea that certain areas of the investable landscape lead or lag others, which allows one to exploit information which gradually diffuses to stocks, commodities, bonds, and currencies.
Not all areas of the market are predictive. Many focus on copper (JJC) under the idea that its relative behavior may be a tell on growth/inflation expectations. The collapse as of late, however, is not anywhere nearly as worrisome for equity investors as positioning into sector-deflation trades.” See Correction
March’s Retirement Report has four main topics. The first speaking to investment policy statements. And though a written investment policy statement (IPS) is not explicitly required by ERISA, it is considered a best practice to create, and update, one to assist in guiding fiduciaries in making plan-related investment decisions.
Part II simply lists plan participant perspectives on risk. Quite eye opening.
Part III defines the 6 categories of fiduciaries.
You may be eligible for a valuable incentive, which could reduce your federal income tax liability, for contributing to your company’s 401(k). If you qualify, you may receive a Tax Saver’s Credit of up to $2,000 ($4,000 for married couples filing jointly) if you made eligible contributions to an employer sponsored retirement savings plan. The deduction is claimed in the form of a non-refundable tax credit, ranging from 10% to 50% of your annual contribution. See Employee Memo
“This past year has seen a firestorm of criticism casting 401(k)s as mostly terrible. Their performance is too poor, and the fees too high, with poor investment choices built into most of them. Typical plans are complicated to manage and difficult to administer. Most people remain invested at levels far below their retirement needs.” See There’s Nothing Wrong
What happened to stocks in January and early February is nothing new. It’s happened quite a few times in the past four years and eleven months. Ever since mark-to-market accounting was fixed in March/April 2009, these corrections have been short-lived and relatively mild. And once they were over the market went higher. It’s been a very strong bull market.
Nonetheless, few investors truly understand why things turned around so abruptly in 2009 and every time the stock market declines there is a mad rush to believe this time the sky really is falling. See First Trust
As your trusted retirement plan consultant we are always happy to make retirement planning less puzzling. But if you’re the type who still enjoys a puzzle now and then, see if you can spot the eight retirement-related terms in our Retirement Word Search! Retirement Plan Puzzle
February’s Retirement Report includes some interesting topics. The first talks about 3 funds recommended for all retirement plans. Behavioral Economics teaches many lessons. First, sometimes less is more. Nowhere is this truer than in retirement plans, where offering fewer funds drives greater participation and less confusion. When building an optimal retirement plan, we continuously conclude the ideal number of investments to be three – three index-based fund options, that is.
The next topic talks about the importance of a qualitative review of the funds inside your plan. 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.
• Global markets remained tense this week as the continuing standoff between Russia and the West on the issue of Crimea weighed on sentiment.
• Chinese data on exports, industrial production and retail sales disappointed with the numbers for the January/February period painting a picture of an economy that’s decelerating at a worrying pace.
• Unless the geopolitical situation deteriorates rapidly early next week, the Fed is likely to continue to trim bond buying by $10bn to $55bn per month, remaining of the view that much of the weakness in recent economic indicators has been weather related and economic growth will accelerate with the spring thaw.
• The acceleration could be helped along should the recent Senate proposal to extend jobless benefits retroactively for another five months pass Congress. See Bottom Line