Posts Tagged ‘fiduciary’

Headline Image - Pros and Cons of Taking Coronavirus-related Distributions from Retirement Savings

The COVID-19 pandemic has undoubtedly shaken our economy to the core. Many businesses have struggled to keep their doors open which has caused unemployment claims to soar. Record unemployment, coupled with a populous that has an average household savings account of about $8,800[1], has many people looking to their retirement savings as a “piggy bank” for necessary funds to keep their heads above water.

Withdrawing retirement savings should be carefully considered, even in view of the loosening of restrictions around withdrawals as a result of the Coronavirus Aid, Relief, and Economic Security (CARES) Act because any withdrawal can have a multiplying impact on long-term retirement goals. Read the rest of this entry »

Top 10 COVID-19 FAQs – Retirement Plan Sponsors

April 1st, 2020 by Jonathan Leidy

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The rapid worldwide spread of the novel coronavirus, COVID-19, has radically changed the way we live and do business.  It has also given rise to multiple pieces of legislation designed to combat the economic effects of the virus.

Over the past several weeks, we have fielded many COVID-19 retirement plan-related questions, and thought it would be worthwhile to consolidate them here in a list of frequently asked questions (FAQs). Read the rest of this entry »

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Test – the word alone is enough to make even the most studious among us sweat. 

Now place it in the context of your 401(k) plan, i.e. determining whether your plan passes non-discrimination tests, and anxiety levels can easily go through the roof!

This article will take a brief look at ways to correct a failed Average Deferral Percentage (ADP) test, the non-discrimination test mandated by the Internal Revenue Code to determine whether 401(k) elective deferrals unfairly favor highly-compensated employees as well as how to use corrective distributions, a method available to fix a failed test.  It also outlines a few changes that can be made mid-year to improve test results and explains how to avoid the ADP test altogether. Read the rest of this entry »

Headline Image - Lawsuits Over the Years and What it Means for Plan Sponsors - Resized

Formation of Lawsuit Trends

The barrage of excessive fee lawsuits filed in 2006 started a trend that continues to this day. At first, plan sponsors saw early signs of success in getting cases dismissed.

However, this changed after a few years when participants started honing in on claims of self-dealing, i.e. the plan’s fiduciaries benefitting themselves at the expense of the plan’s participants. Dozens of additional lawsuits have been brought, and plan participants have won both trials and settlements, totaling over $6.2 billion to date.[1] Read the rest of this entry »

Headline Image - Should You Include ESG Funds in Your Retirement Plan

Should You Include ESG Funds in Your Retirement Plan? Maybe, Maybe Not.

Environmental, Social and Governance funds (ESGs), can be appealing to many investors, particularly millennials. These funds may be viewed as a proactive way to encourage this often reluctant and under-prepared constituency to save for retirement. But is it a good idea to include ESG funds in your plan’s investment menu, at least in part, to entice investment “do-gooders” to boost their retirement savings? The short answer: It depends. Read the rest of this entry »

New Study on Employer Contribution Trends from Fidelity

March 28th, 2019 by Jonathan Leidy

The 2019 Facts and Insights piece from Fidelity highlights common trends in Employer Contributions to 401(k) and other defined contribution plans.

Three primary takeaways:

  1. The overwhelming majority of employers is making an employer contribution of some sort to their plan.
  2. The most common match formula is the Standard Safe Harbor Formula, or “5% gets you 4%.”
  3. Employers are now taking a hard look at their contribution rates and how to best marry them with recommended long-term savings rates as well as programs like auto-enrollment.

Read the full report by clicking the link below.

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Read the rest of this entry »

Retirement Plan Share Classes: Understanding the Basics

February 27th, 2019 by Jonathan Leidy

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Share Class ABCs: Choose Wisely

Choosing mutual funds for your retirement plan’s investment lineup can feel like wading through a sea of alphabet soup. Fund companies typically offer multiple share classes, each sporting its own unique letter: A-shares, C-shares, I-shares, R-shares — what does it all mean? Here’s a brief primer to help you to better understand the basics.

ABCs of Fees

Before diving into this topic headlong, first, a brief word about fees. Each share class of a particular mutual fund owns the same exact underlying securities (stocks, bonds, etc.); they are identical. The only difference is the cost associated with each class. These costs come in two basic varieties: expense ratios and sales “loads.”

Expense ratios are the percentage of a fund’s assets used to cover administration, marketing and distribution (or 12b-1 fees), and all other costs. Typically paid by participants, these fees are calculated annually as a percentage of an investor’s assets. For example, a participant would pay $150 for a $10,000 balance invested in a share class with a 1.5% expense ratio.

Additionally, certain share classes charge significant sales loads. These fees are typically waived for mutual funds purchased through 401k plans.[1] If this is the case, neither the plan nor its participants pay these fees. Read the rest of this entry »

Hacked! Is Your Retirement Plan at Risk for a Cyber Attack

November 4th, 2018 by Jonathan Leidy

RPM Q4 2018_Pulse Image_Blog Article 3_ Hacked! Is your plan at risk for a Cyber Attack

Is cyber-crime on the rise?

You bet. In 2015, IBM’s chair, president and CEO Ginni Rometty said, “Cyber-crime is the greatest threat to every company in the world.”[1] Last year, billionaire investor and businessman Warren Buffett echoed that sentiment, claiming that “cyber-attacks are a bigger threat to humanity than nuclear weapons.”[2] In short, cyber-crime is extremely dangerous, and many businesses are vulnerable to cyber-attacks — some without even knowing it.

As a result, growing numbers of organizations are taking critical steps to protect their valuable data and PII (Personally Identifiable Information) from hackers and other cyber criminals. Cybersecurity is serious business, and retirement plan sponsors and committees should be aware of the trends and best practices surrounding it. Read the rest of this entry »

Retirement Readiness: A Marathon, Not a Sprint

August 29th, 2018 by Jonathan Leidy

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Training for the Financial Marathon

For many people, their ultimate financial goal is to reach a comfortable retirement with enough reserves to enjoy it. In many ways, achieving Retirement Readiness is just like running a marathon; it’s a long-term undertaking that takes loads of preparation and persistence.

As the sponsor of your company’s retirement plan, you play a crucial role in helping your employees reach these long-term financial goals. Imagine yourself as a trainer; you are there to build a training regimen that enhances your employees’ ability to achieve their goals and keeps them motivated along the way. Read the rest of this entry »

RPM Q3 2018_Pulse Image_Blog Article 1_ A Guide for Employers Dealing with Missing Participants

Locating missing plan participants can be a headache for any employer, but simply ignoring them is not an effective solution either. With the increase in the number of “pre-retired” missing plan participants, governmental bodies are now taking additional measures to provide solid guidance and solutions to help streamline this arduous process for plan sponsors.

The Background

Plan sponsors must understand why locating missing plan participants is important.  First, ERISA requires that plan fiduciaries (e.g., plan sponsors, employers) have a duty of prudence and loyalty to all plan participants and beneficiaries—whether or not the participant is actively contributing to the plan. Read the rest of this entry »