If you’re thinking about establishing a SIMPLE in 2006 for your small business, then you don’t have much time. It must be place by October 1. No doubt you’ve been told that it’s easy to establish – and relatively inexpensive – and also easy to maintain – and also relatively inexpensive. That’s true, or course. It’s … Continue Reading
Sizeable participant retirement accounts, the call of early retirement for the Baby Boomers, and retirement plan provisions that permit in-service distributions – all factors that are apparently attracting promoters to get at that cash. The NASD concerned about this danger to retirement plan participants issued an Investor Alert yesterday, Look Before You Leave: Don’t Be … Continue Reading
That ‘s the title of a just published study by The Center for Retirement Research (CRR) at Boston College. The study compared defined benefit pension plan investment returns with 401(k) plan investment returns. Using data from 1988-2004, the study reports that: Defined benefit plans outperformed 401(k) plans by one percentage point. Part of the explanation … Continue Reading
The picture above certainly does not represent today’s accountant. And in a similar vein the Department of Labor (DoL) wants to know whether its Interpretative Bulletin 75-9 published over 30 years ago relating to the independence of accountants who audit ERISA plans is still relevant. The DoL published a notice yesterday in the Federal Register asking … Continue Reading
In a recent post about the challenges in communicating employee benefits to employees, I included a Department of Labor stat: the average 34-year old has already worked for nine different companies in his or her brief career. So I got to thinking: what are these employees doing with their 401(k) account balances when they … Continue Reading
The answer to this question like answers to every question in Pensionland starts with, tell me more first. Here is how a financial columnist recently responded to this question. Paraphrasing the Q & A: Asked the reader: I’m going to remarry and how can I have my children inherit the money in my 401(k) account … Continue Reading
Max Goldman in his blog, The Performance & Talent Management Blog, writes about a recent survey by McKinsey that indicates HR executives overwhelmingly see employee benefits as being important in order to compete effectively. Particularly to be able to attract and retain top talent. However, says the study, most companies don’t understand what benefits employees … Continue Reading
They may already have arrived. Lost in the investment advice to 401(k) plan participant discussion has been the rapid growth of target maturity funds to 401(k) plan investment menus. According to Lipper Inc. approximately 55 fund families offer these types of funds with assets in excess of $50 billion. Don’t confuse target maturity funds with … Continue Reading
The sun will not be setting after all on the favorable retirement plan tax provisions that were part of the Economic Growth and Tax Reconciliation Act of 2001 (EGTRRA). For budget scoring purposes, the more than three dozen rules which included increases to contribution and benefit limits for IRAs and qualified retirement plans had “sunset” … Continue Reading
In a earlier post, I asked the question whether 401(k) loans were easy money and discussed both sides of the questions. Yesterday, Walter Updegrave, MONEY Magazine senior editor, in his Ask the Expert column responds to a reader who asks whether it’s a good idea to borrow money from your 401(k) account. Mr. Updegrave says … Continue Reading
Interesting post today in the Picking up Nickels blog about American kids lacking basic money management skills. Should we be surprised then that these same kids becoming like the college students at Wharton and Harvard about whom I recently wrote who can’t pick the lowest cost index fund. These same kids who grow up to … Continue Reading
I was feeling pretty good about that part of the Pension Protection Act of 2006 that will make investment advice more available to 401(k) plan participants. Even about that part that will allow 401(k) providers to offer advice since the Department of Labor will be providing regulations to avoid self-dealing. Feeling good that is until … Continue Reading
Former President Bill Clinton, whose birthday was yesterday, was heard last week lamenting the fact that he was about to turn age 60. Don’t feel bad, Mr. President, there are another 3 million who will join you this year – part of the first entrants of the baby boom generation. While few of them have … Continue Reading
The U.S. and Canada are alike in many ways, but according to a recent study, Mutual Fund Fees Around the World, mutual fund fees in the two countries vary widely. The study indicates that the U.S. is among the lowest cost countries and Canada is the highest fee country by far: 79 basis points versus … Continue Reading
That’s the amount of new money that Bloomberg estimates will go into 401(k) plans as a result of the Pension Protection Act of 2006 because the new law: Permits automatic enrollment of employees in 401(k) plans Allows small employers to establish combined defined benefit and automatic enrollment 401(k) plans Makes permanent higher contribution limits for … Continue Reading
The new Pension Protection Act of 2006 opens the door for ERISA fiduciaries – a registered investment advisor, bank, insurance company or broker/dealer – to be compensated for giving investment advice to retirement plan participants. The Act creates a prohibited transaction exemption to these fiduciaries subject to certain safeguards to protect participants from abuse. More … Continue Reading
On Thursday, August 3, the Senate passed significant pension reform legislation by a wide margin (93 to 5). The bill enacted by the Senate is identical to the one passed by the House of Representatives last week. The President is expected to sign the bill into law. The legislation, called the “Pension Protection Act of … Continue Reading
That old joke is actually not a joke these days when it comes to government resources for small business retirement plans. The two agencies with oversight responsibility for qualified plans, the Internal Revenue Service (IRS) for tax aspects and the Department of Labor (DOL) for reporting, disclosure, and fiduciary matters both provide excellent resources for … Continue Reading
Maybe so. Morningstar columnist Russel Kinnel reports that payouts from settlements from the mutual fund scandal of 2003 could be coming in December or in the first quarter of 2007. Remember the mutual fund scandal of 2003? This may refresh your memory: Several name brand mutual fund families were implicated in facilitating late trading and … Continue Reading
Sure, a 401(k) loan is a quick and easy way to borrow money, and likely to increase among 401(k) participants. Dan Lamaute of Lamaute Capital, Inc. tells us that the slumping housing market has reduced the use of home equity as a source of personal loans. The Fed reports that home equity loans fell by … Continue Reading
Yesterday’s post on missing the 60-day rollover deadline should have included an IRS provided one-page rollover chart (pdf) summarizing the rules with the usual caveat that it is not a substitute for professional tax advice. Sorry for the omission. This chart illustrates the portability of benefits that has resulted from recent tax law changes. While … Continue Reading
Recent rulings by the Internal Revenue Service make it easier for individuals who have missed the 60-day tax-free rollover deadline for individual retirement accounts and other tax-advantaged retirement plans to obtain a waiver and successfully complete the rollover. Generally, there are two conditions under which the IRS may grant a waiver: An automatic extension due … Continue Reading
Here is today’s Chicago Tribune article on the ordinance that passed the Chicago City Council today requiring "big box" retailers, i.e., Target and Wal-Mart, to pay workers more than the minimum wage including benefits. Time to move on.… Continue Reading
Pardon me for being a Homer but as a Chicago resident and business owner, I have a vested interest in the proposed "living wage" city ordinace I mentioned in my last post. The ordinance, of course, is being compared, correctly or incorrectly, with the recently struck down Maryland law that attempted to impose health care … Continue Reading
