Understanding Corrective Distributions

August 21st, 2017 by Jonathan Leidy

RPM_Q3 2017_Pulse Images_Blog Article 1

Money Back is Good, Right?

Refunds can be great if you are referring to tax returns, or money back from an unfulfilling purchase. However, when it comes to your company’s retirement plan, refunds or corrective distributions are red flags indicating a deeper problem. They can be an administrative nightmare for plan sponsors and cause undue stress to highly-compensated employees who may be forced to refile their taxes.

What are Corrective Distributions?

Employees within your workforce are divided into two groups: highly-compensated employees (HCE) and non-highly compensated employees (NHCE).

HCE Table

Both groups have a desire to retire and contribute what they can to the company’s defined contribution plan, however their difference in pay will affect the amount which they can put away annually.

As a check on plan design equality, the IRS requires that both HCEs and NHCEs contribute to their 401(k) plans at similar percentages. If owners and managers contribute at far higher rates than their workers over the course of the year, the amount these executives have “over paid” will be refunded, which poses a problem for all parties involved. Read the rest of this entry »

Pulse Image_Article 1 - Benchmarking - Q2 2017_Ready

As people age, it becomes increasingly important that we all go to the doctor for regular checkups; checkups can lead to valuable changes in our lives… everything from the addition of a daily multivitamin to identifying the early stages of cancer. No one can make us go to the doctor, but it’s critical to prioritize monitoring and checking up on our health.

In the 401(k) industry, it is becoming more apparent that plans need to be reviewed regularly (at least annually) and more thoroughly in order to adequately address fiduciary responsibility and duties. However, many companies haven’t made benchmarking a priority even with recent 401(k) lawsuits.

If you have not yet made benchmarking your retirement plan a priority, here are four reasons why you should: Read the rest of this entry »

Portico Principal Jonathan Leidy Featured on HR Solutions

November 12th, 2014 by Jonathan Leidy

HR Solutions, a leading provider of best-of-breed services in human resource administration and management, featured comments from Jonathan Leidy, Portico principal, regarding the value to employers of offering a 401(k) match.

Of course, offering a match is universally valued by employees, often times more than increased current compensation.  However, it can have additional benefits for employers beyond  simple employee attraction and retention, not the least of which is an increased level of retirement readiness among their employees.

To see Leidy’s full comments and to read the rest of the article follow this link:


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Fiduciary News, a website that provides essential information and commentary regarding ERISA fiduciary/401(k) issues, featured comments from Jonathan Leidy, Portico principal, in its recent article on fee disclosure.

With the 1-year anniversary of fee disclosure upon us, Leidy provided commentary regarding the success of the undertaking to date. Read the rest of this entry »

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Larkspur, CA, December 14th, 2012 – Jonathan Leidy, a principal with Portico Wealth Advisors, LLC has earned the prestigious Chartered Financial Analyst® (CFA®) designation.

Labeled the “gold standard” of professional credentials within the investment community by The Economist, the CFA charter is recognized around the world as the definitive designation for measuring the competence, integrity, and dedication of an investment professional.

Recipients of the CFA charter have successfully completed the CFA Program, a graduate-level, self-study curriculum and a series of three intensive examinations taken sequentially, which, in total, takes candidates an average of 3 ½ years to complete. Preparation for the three exams typically requires more than 900 combined hours of study. Read the rest of this entry »

Landmark 401(k) Judgment Puts Plan Sponsors on Notice

May 1st, 2012 by Portico Wealth Advisors

In a recent ruling by the Missouri Federal District Court, ABB, Inc. (manufacturer of energy-harnessing and automotive plant technologies) and the members of its Pension Committee were found joint and severally liable for breach of their fiduciary duty as retirement plan sponsors.  The court opined that the company’s 401k, provided by Fidelity, was largely populated with mutual fund choices that were selected more for the opacity of their fee structure than for the underlying merits of the investments themselves.

In turn the court levied the following judgments in favor of the plan participants:

  • Failure to monitor recordkeeping fees and to negotiate rebates:    $13.4MM
  • Failure to prudently select and retain investment options:             $21.8MM
  • Improper use of “free float” interest on plan assets (Fidelity):        $  1.7MM

In all, the fines represent about 3% of the plan’s roughly $1.4B in assets.

Despite the landmark nature of this case (i.e. a judgment was issued, as compared to the preponderance of cases that end in settlements) plan sponsors in the small- and mid-sized markets, collectively $0-$100MM in plan assets, are likely to view these results as a concern limited to firms in the Fortune 1000.

However, even the sponsor of a $5MM plan should take note, as a proportional judgment against its plan ($150K) would likely be meaningful to that company’s bottom line. Read the rest of this entry »

Portico Wealth’s Leidy Featured in Fiduciary News

March 27th, 2012 by Portico Wealth Advisors

Portico Wealth Advisors principal Jonathan Leidy was recently published on fiduciary watchdog site, Fiduciary News. Fiduciary News is a website that provides essential information, blunt commentary, and practical examples for ERISA fiduciaries and 401(k) plan trustees.

The piece centers on 12-b1 fees in retirement plans. 12b-1 fees are marketing charges that are built into a mutual fund’s operating expense ratio (OER). Leidy’s article provides a brief history of 12b-1s as well as an exploration of the challenges and conflicts that can arise from using them.

Read the entire article by following this link:  401k Plan Sponsor Warning: DOL May Sacrifice Fee Purity for Fee Transparency

Read the rest of this entry »

Portico Principal Appears on KTVU Channel 2 News

March 22nd, 2012 by Portico Wealth Advisors

Following the declaration of Apple’s (AAPL) historic dividend on Monday, Portico principal, Jonathan Leidy, was interviewed by KTVU Channel 2’s Nicole Walker. Jonathan provided his opinion as to what the newly announced dividend might portend for AAPL shareholders, both now and in the future.

To view Jonathan’s appearance, follow this link:  http://www.ktvu.com/videos/news/palo-alto-apple-dividend-payout-signals-major/vGbj3/

Read the rest of this entry »

Portico Principal Leidy Contributes Feature Article to Marin Medicine

March 15th, 2012 by Portico Wealth Advisors

Founding Principal, Jonathan Leidy CFP®, recently authored an article for the Spring 2012 Issue of Marin Medicine. This publication is the quarterly circular of the Marin Medical Society and is read by approximately 2,000 physicians and other medical professionals.

The piece, entitled Retirement Remedies for Physicians, highlights the challenges that physicians face when attempting to save for retirement due to ERISA rules.  Through 2 fictional doctors, Dr. Salary and Dr. Freelance, Leidy compares and contrasts the opportunities that exist for physicians that work for a medical group/hospital foundation versus those who have ventured out into private practice.

Leidy’s article is located in the Practical Concerns section of the magazine’s print version (p25).

Or to read the article here in its entirety, follow this link:  http://ow.ly/9GiYL



Hockey Stick Growth: Good for the Wallet, Bad for the Globe

December 28th, 2011 by Jonathan Leidy

An old French riddle, “The 29th Day,” has become a very popular allegory for the potential perils of excessive population growth. It reads as follows:

Lily pads double once every day. There is a pond that, on the first day, has one lily pad floating in it. Assuming the pond will be completely covered by the 30th day, when is the pond half full with lily pads?

Although the knee-jerk reaction might be to blurt out the 15th day, the answer, as the name of the riddle implies, is the 29th day. The moral of the story is that exponential, or non-linear, growth is sneaky. One minute things appear manageable, even benign, when in fact we may be a mere “day” away from total saturation.

And with the world’s population toping 7 billion this year, it only seems fitting to future-cast a little, with a specific eye towards the effects that this global population explosion will likely have on investors’ portfolios. Read the rest of this entry »