The “I” word is back. Where you might ask? Have you booked a flight or hotel room recently? The price of gasoline has been consistently close to $4.00 a gallon. Commodities of all types from food to raw materials have seen upward price pressures. But is it a bad thing? I’m not referring to that persistent double digit variety that those of us of a certain age can still remember. Inflation has been essentially non-existent as an investment theme for several years. Central banks have been working hard the last few years to actually create inflation for fear that the alternative, deflation, would result in a serious contraction of economic activity. The economy stagnates or even contracts as everyone does less waiting for lower prices. Shoppers spend less, businesses invest and build less and government collects less taxes. Newsletter 6-30-2014
June Retirement Report
The determination of reasonableness of fees has always been a core fiduciary function for ERISA plan sponsors. ERISA Section 408(b)(2) regulations increased scrutiny on this responsibility. The Department of Labor (DOL) has taken this step to solidify specific requirements for plan sponsors and service providers, regarding communication of fee information. June 2014
The Weekly Bottom Line
HIGHLIGHTS OF THE WEEK
• The U.S. economy appears to be sustaining the robust economic momentum kick-started in the second
quarter. Labor market fundamentals continue to improve. Job openings from the JOLTs survey surpassed
their pre-recession peak, and details of the NFIB small business optimism survey were also encouraging.
• Economic news from across the Atlantic disappointed this week. The Eurozone’s economy stalled in Q2,
as none of the bloc’s largest economies – Germany, France nor Italy – posted any growth.
• Lack of growth in Europe alongside heightened geopolitical concerns over the situation in eastern Ukraine
have led to increased demand for the safest bonds, sending German, U.K. and U.S. yields lower. See Weekly Bottom Line
May Retirement Report
In today’s market environment, many people are asking themselves “where can I find opportunity in fixed income?” It is a fair question; as rising rates will inevitably hurt the performance of most fixed income sectors. Participants have been riding a massive wave of decreasing rates and have become accustomed to 8% annual rates of return to their retirement plans from their core fixed income fund. Since those days are likely over, where do you go from here? May 2014
1st Quarter Newsletter 3/31/2014
This past winter season’s weather has been the one of the worst on record. Snow covered a large portion of the United States from mid – December through the end of March. The Great Lakes were completely ice covered. Ice storms left large portions of the country without power for extended periods and have damaged roads and other infrastructure. Travel disruptions were widespread and persistent. Consumer’s shopping, dining and entertainment plans were disrupted as well. Employees lost work hours due to the inability to get to work and employers lost revenue, all due to the persistent grip of winter weather. Newsletter 3-31-2014
Explore your Options
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
April Retirement Report
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
“Are investors preparing for a correction?”
“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 Retirement Report
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.
And finally “what constitutes proper documentation of retirement plan committee meetings? With most retirement plans the fiduciary responsibility of selecting and monitoring the plan’s menu of investments is designated to a retirement plan investment committee. This committee usually includes financial officers and human resources officers of the employer. The committee meets periodically (anywhere from annually to quarterly) to consider agenda items including investment due diligence, fees and services of plan providers, status of plan goals, etc. From a fiduciary perspective it is just as important to properly document these meetings as it is to hold the meetings. March 2014
401(k) Plan Notice: Get the “Credit” you deserve!
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