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Complying With ERISA 404(c)

Complying with 404(c)

According to ERISA, plans intending to comply with 404(c) must provide that participants: Have the opportunity to choose from a broad range of investment alternatives (which are adequately diversified); may direct the investment of their accounts with a frequency which is appropriate; and can obtain sufficient information to make informed investment decisions. The plan sponsor must provide annual written notification to participants with its intent to comply with 404(c), and be able to provide the following: Information about investment…

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To Bond or Not to Bond

Over the last few years, there has been a fair bit of concern in the market over the general impact of rising bond interest rates. “You shouldn’t be holding bonds because rates will rise soon” goes the logic. But what does this really mean for investors? If interest rates rise, what will ultimately be the impact on investors’ portfolios? To understand this, we first need to understand how all of the moving pieces fit together. At a high level,…

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The Department of Labor Fiduciary Rule

Sometimes the rest of the world finally catches up with your thinking. Last week the Department of Labor published a document which explains a new rule that goes into effect on April 10 of this year. (a link to the referenced document is at the bottom of this email, but don’t read ahead 🙂 ) The new rule says that a financial advisor who gives you advice about your retirement account must give that advice in your best interest….

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What a Year

In 2016, the US market reached new highs and stocks in most developed and emerging market countries delivered positive returns. The year began with anxiety over China’s stock market and economy, falling oil prices, a potential US recession, and negative interest rates in Japan. US equity markets were in steep decline and had the worst start of any year on record. The markets began improving in mid-February through midyear. Investors also faced uncertainty from the Brexit vote in June…

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Allowable Plan Expenses: Can the Plan Pay?

The payment of expenses by an ERISA plan (401(k), defined benefit plan, money purchase plan, etc.) out of plan assets is subject to ERISA’s fiduciary rules. The “exclusive benefit rule” requires a plan’s assets be used exclusively for providing benefits. ERISA also imposes upon fiduciaries the duty to defray reasonable expenses of plan administration. General principles of allowable expenses include the following: The expenses must be necessary for the administration of the plan. The plan’s document and trust agreement…

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Index Funds — Passive or Passive Aggressive?

One of the largest misconceptions about index funds is that their only distinguishing feature is their fees. It’s not uncommon to hear, “index funds are just holding the stocks or bonds in the index, so we don’t need to pay attention to them.” This assumption, however, is an oversimplification. Many investors don’t realize that all index funds are not created equally. A key difference between indexes and index funds is that index funds are exactly that – funds. Index…

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Changes in Employee Demographics

Changes in Employee Demographics May Impact Owner’s Percentage of Retirement Plan Contributions. A common goal for successful business owners when designing a retirement plan is to provide a reasonable benefit level to their employees while maximizing the benefits to themselves. Most times this is accomplished with an aged-based or “cross-tested” design that allocates differing contribution levels based on an employee’s class. It is important to understand that changes in your clients’ employee demographics from year to year may have…

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Getting the Biggest Bang for Your Buck!

Negotiating Retirement Plan Fees with Your Provider According to plan sponsors, one of the most harrowing aspects of their fiduciary obligations is to ensure that plan fees are reasonable. From administration and record-keeping to compliance and investment management, how can a plan sponsor feel assured that they are aware of all plan fees, understand them thoroughly and then determine their fair and reasonableness? It’s quite a task! Best practices dictate fee bench-marking as a valid method of determining fee…

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The Importance of Qualitative Review


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 qualitative review process is structured in its approach and designed to identify the factors that will ultimately drive future investment performance. The 3 primary factors include: People, Process and Philosophy. The baseline criteria are set for each: People: Is there an experienced team with the ability to manage both philosophy…

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What to Expect When Transitioning Providers


The thought of transitioning from one service provider to another may be intimidating and overwhelming. It doesn’t have to be. If you work with an experienced conversion team, the transitioning process should be seamless. If a plan sponsor is unhappy with its current provider’s services and technology, it may very likely want to switch providers. Furthermore, if the plan sponsor feels it or its participants are not receiving sufficient value for the fees being charged, it may explore the idea…

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