Posts from the ‘Retirement’ Category

Apr 26

408(b)(2): The Never Ending Story, or Area of Opportunity?

For some financial professionals, changes to Section 408(b)(2) of ERISA may have seemed like a one and done effort—or even something someone else had to worry about. But, the story doesn’t end there.

The Department of Labor (DOL) has already added a question to their audit checklist asking plan sponsors for all their 408(b)(2) disclosures. This likely means we’ll be dealing with the ramifications for a long time.

So, what can financial professionals do to prepare for (and make the best of) this on-going requirement? Read more

Apr 22

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It’s Not Perfect—but the U.S. Retirement Evolution Remains a Model for the World

I would be the first to agree the U.S. retirement system is not perfect. More Americans need access to retirement plans and those who have plans, need to save more. There is no question improvements should be made. But that doesn’t mean we need to throw the baby out with the bath water.

Far too often, critics ignore the benefits of the current system. They instead point to losses during the financial crisis when equity values plunged; overlooking the fact that account values for the majority of those who have continued to contribute now exceed the highest balances prior to the market downturn[1].

Some critics argue the answer is to do away with defined contribution plans and go back to defined benefit pension plans—but that oversimplified and unrealistic answer ignores the fact that global competition puts great pressures on most employers today regardless of size. In this environment, defined benefit pension plans create financial obligations on employers that, for many, are just not sustainable. Read more

Apr 18

Clean Up the Clutter Legacy Assets Leave Behind

We all have to deal with clutter that piles up in our lives – whether it’s mail piling up on the kitchen counter, emails overtaking our inboxes or cell phone charger cords that tangle up our car consoles.

These days 403(b) plan sponsors face the task of cleaning up the clutter of “legacy assets” that threaten to clog up their plan administration efforts. Legacy assets are essentially the plan assets left at prior providers which plan sponsors still have to account for.

Finding the most efficient way to deal with these plan assets seems to be a recurring question lately. Employee Benefit Adviser recently asked me to offer some guidance on this confusing and concerning topic. Check out my answer in the video posted to their website. Read more

Apr 16

DB or not DB?

DB or not DB? That is the question!

Okay, I’m no poet, but if I were, I might want to adapt the iconic line “To be or not to be” from William Shakespeare’s Hamlet to open the first scene of my defined benefit (DB) play. (I wonder if any of my actuary friends can act? Probably not!)

I want to discuss a topic many companies are struggling with today – whether or not to continue to sponsor their DB plan. In other words “DB or not DB”?

Apr 15

Plan Ahead to Avoid Giant Cockroaches

In the 1997 movie, Men in Black, Agent K (played by Tommy Lee Jones) and Agent J (played by Will Smith) saved the universe from an intergalactic terrorist (which looked a lot like a giant cockroach). During an early exchange with J, K states:

“1,500 years ago, everybody knew that the Earth was the center of the universe. 500 years ago, everybody knew that the Earth was flat. And 15 minutes ago, you knew that humans were alone on this planet. Imagine what you’ll know tomorrow.”

Imagine what you’ll know tomorrow. If only business owners could answer that question today things would be much simpler for them. Read more

Apr 4

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6 Insights into Higher Education Retirement Plan Opportunities

With two daughters in college, I’ve come to appreciate that the three “R’s” continue into higher education. The traditional readin’, ‘rightin’, and ‘rithmatic, carry forward, but I’ve realized lately that a fourth “R” applies. Both my girls are in private colleges, and we’re starting to see an evolution with private higher ed in “R”etirement planning.

What is this evolution, and what do financial professionals need to know? Read more

Apr 2

Helping DB Plan Sponsors Sleep at Night

In my previous blog, I talked about risk as it relates to managing a defined benefit (DB) pension plan. The long and short of it is that risk is what happens when DB plan sponsors are busy making other assumptions.

Today, the combination of several factors—including market volatility, low interest rates and recent legislation—has created significant challenges for DB plan sponsors. Fortunately, the pension industry is helping plan sponsors manage these risks with a number of innovative approaches.