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
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
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
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.
February Retirement Report
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.
The Weekly Bottom Line
• 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
January Retirement Report
The first Retirement Report of 2014 includes some interesting topics, including an evolving investment option inside some 401k plans-Retirement Income Solutions (RIS) are retirement plan investment options designed to generate a post retirement income stream from participant accumulated retirement savings and include guarantees of minimum withdrawal amounts for life.The next topic is regarding specialty asset classes inside 401k plans which are those which do not fall into the “core” group of asset classes. Core asset classes include: U.S. domestic equities, international, and fixed income. Are they worth the fiduciary risk? And finally understanding different Fee methods inside plans. A plan fiduciary can elect to pay or allocate plan fees in a number of different ways. In fact, the DOL observed in Field Assistance Bulletin (FAB) 2003-03 that plan sponsors and fiduciaries have considerable discretion in determining, as a matter of plan design or a matter of plan administration, how plan expenses will be allocated among participants and beneficiaries. January 2014
4th Quarter Newsletter 12/31/2013
Diversification is the foundation of any sound portfolio. It’s how risk is controlled; a process of balancing potential negatives against potential positives and the tempering of uncertainty. Diversification buffers surprises, both good and bad. The financial media has coined the phrases “Risk-on” and “Risk-off” to identify positive and negative investment climates. “Risk-on” has certainly been an accurate description for the US stock market for 2013 and it appears, at least for now, 2014. Risk has its positive moments. Stocks just finished their best year since 1997. An allocation to bonds in a portfolio has been a way to balance risk as historically bonds have more consistent returns and more consistently positive returns. The last year bonds recorded a negative return was 1999; and now 2013. The stock markets have, as a rule, more consistently varied returns both positive and negative. Newsletter 12-31-2013
December Retirement Report
On behalf of the Management Team of TP Investment Advisory, it is my pleasure to extend you the greetings of this special season. It is certainly one of my favorite times of year, and the perfect opportunity to express our gratitude to you for selecting TP Investment Advisory as your committed consultant. As I look forward to a new year and the hope it brings, I look back as well on our achievements in 2013, and the degree to which we accomplished our primary goals – protecting you as a fiduciary and helping your plan participants prepare for a meaningful retirement. Congratulations for all that you accomplished in 2013. We remain fiercely proud of being your dedicated Retirement Plan Consultant.
As we do each December, this month’s Retirement Report highlights “excerpts” from issues published in 2013. Please contact us with any questions or feedback; we look forward to serving you in 2014! December 2013