Technical Competence

This station houses posts and commentary about the challenges facing state and municipal DB pension plans — funding, municipal bankruptcies, litigation, etc.

Technical Competence

Technical Competence

By NAPA Net Staff3/27/2013 • 1 Comments

On the heels of this week’s Stockton, CA, bankruptcy case, which was caused in large part by the city’s growing pension liabilities, there are reports that an Alameda county administrator will retire at 63 with an estimated $423,664 per year package. Along with her $301,000 annual salary, she will get equity pay to make sure she is paid more than anyone else in the county (even in retirement), a $24,000 performance bonus, $9,000 to serve on a county board and an additional $54,000 for working more than 30 years. And don’t forget her $8,292 annual car allowance. READ MORE

By NAPA Net Staff3/26/2013 • 0 Comments

According to research by Aon Hewitt, about half of participants with account balances of less than $5,000 were forced out of their plans in 2011, up from just one-third of such participants in 2005. Plan sponsors are realizing that maintaining low account balances from terminated employees raises their costs. For example, a $10 million plan with an average account balance of $10,000 pays 144 BPs, while a similar sized plan with an average of $50,000 balance pays 122 BPs. READ MORE

By NAPA Net Staff3/25/2013 • 0 Comments

What’s the fastest-growing advisory channel? According to research by Cerulli involving 8,000 investors age 35-64 with over $100,000 in income, online firms are the leading channel, increasing AUM from $3.4 trillion in 2010 to $3.7 trillion in 2011. These brokerage firms have beefed up their advice offerings and have more advanced mobile and online access, as well as client portals, than do traditional advisors. READ MORE

By NAPA Net Staff3/20/2013 • 0 Comments

Sponsors of 401(k) plans experience a great deal of Section 415 compliance problems due to the many types of contributions being made at various times during and after the plan year. As noted in a recent Technical Update from Sungard Relius, if a 401(k) plan is in violation of Section 415, a correction method is no longer provided under the IRS regulations. Rather, plans are directed to use the IRS’s correction program, EPCRS, which provides a five-step ordering rule for correcting the plan. READ MORE

By NAPA Net Staff3/15/2013 • 1 Comments

While the debate about whether advisors should be selling proprietary funds seems to be all but over, with many broker dealers like Merrill Lynch and Morgan Stanley selling off their asset management groups, Alicia Munnell has used the debate to question whether IRAs and 401(k) plans should be forced to sell index funds only. The debate about pushing proprietary funds was restarted with a New York Times report that JP Morgan Advisors are being pushed to sell house products. READ MORE

By NAPA Net Staff3/15/2013 • 0 Comments

While it may appear simple, it’s important to know about the investment guidance that the DOL’s Employee Benefit Security Administration (EBSA) is providing to workers in participant directed retirement plans. One interesting point made by EBSA is that fees should not be considered in a vacuum, but by taking into account the types and quality of the services provided and the potential returns. Not mentioned: the fact that a portion of the investment fee can be used to offset record keeping and administrative costs. READ MORE

By NAPA Net Staff3/11/2013 • 0 Comments

Once again, the SEC is going to take a look at 12(b)1 and other distribution fees, making it a priority in the next few months. According to a Deputy Director from the Commission’s Office of Compliance Examinations and Inspections, the fees under scrutiny will include 12(b)(1), Sub TA, revenue sharing and conference support. READ MORE

By NAPA Net Staff3/1/2013 • 0 Comments

In the last in a series of posts by speakers at the 2013 NAPA/ASPPA 401(k) Summit, March 3-5, 2013 in Las Vegas, Jonathon Dues, Senior Vice President, Business Development/Investment Strategies, Mesirow Financial Investment Strategies, offers insights into how institutional fiduciary solutions can be built to be complementary resources to a financial advisor’s business. READ MORE

By NAPA Net Staff2/27/2013 • 1 Comments

A Brookings Institution report released Feb. 26 recommends curtailing the benefits for top earners to boost tax revenues. Defined contribution plans reward higher earners who would save anyway while not providing enough incentive for low and middle-income earners, according to Karen Dynan, co-director of the economic studies program at Washington-based Brookings and author of the proposal, “Better Ways to Promote Saving through the Tax System.” One proposal to cap the value of tax deferral in retirement accounts at the 28% bracket drew immediate fire from the retirement plan industry, starting with Brian Graff, Executive Director/CEO of NAPA and ASPPA. READ MORE

By Rick Meigs2/21/2013 • 1 Comments

It’s the age-old issue of how to increase employee participation in a 401(k) plan. We know how crucial it is to the overall success of the plan – particularly to the highly compensated employee group. High participation also helps in creating a positive attitude towards the company and helps greatly in employee retention. So, how can you increase participation? READ MORE

By NAPA Net Staff2/21/2013 • 0 Comments

With age comes wisdom, but so does debt. According to research by LIMRA, few Gen X and Gen Y investors believe they’re very knowledgeable about making financial decisions — though more than twice as many of them who have an advisor say they’re more confident. READ MORE

By NAPA Net Staff2/19/2013 • 0 Comments

A Feb. 17 Washington Post article highlights the plight of Americans who are unprepared for retirement. The article enumerates several factors driving this, including social changes, the continued decline in the number of DB plans, and a stalled economy at a time when the federal government, struggling under massive debt, ponders whether it can afford to continue the estimated $80 billion tax break for retirement plans. READ MORE

By Brian Graff, Esq.2/19/2013 • 4 Comments

The Washington Post on Feb. 17 published yet another article attacking the 401(k) system. Fueled by academic studies with a clear anti-401(k) agenda, these articles seem to revel in the entirely unsubstantiated failure of current workplace retirement plans. Not sure who is more to blame: the academics who reach the outrageous conclusions based on either irrelevant or incomplete data, or the media who perpetuate them. Either way, the anti-401(k) agenda is founded on a series of persistent myths, continued in this most recent article, that simply do not reflect the reality of America's retirement plan: the 401(k). READ MORE

By NAPA Net Staff2/15/2013 • 0 Comments

The latest installment in Milliman's “Insight” series, “Ten things your 401(k) wants you to know,” lays out some good, solid facts and simple advice about saving for retirement via a DC plan, like the importance of diversification and understanding plan fees, how compounding interest works, the impact of early distributions, and more. It even summarizes the possible impact of tax reform on DC plans. Written for the average investor, this is a nice, concise educational resource to pass on to plan participants. READ MORE

By NAPA Net Staff2/14/2013 • 2 Comments

401(k) plans don't work for low- and middle-income Americans, Jack Lew, President Obama’s nominee to replace Timothy Geithner as Treasury Secretary, said yesterday. Lew’s comment came in response to a question posed by Sen. Rob Portman (R-Ohio) about the tax incentive and effectiveness of 401(k) plans during a hearing of the Senate Finance Committee to consider Lew’s nomination. READ MORE

By NAPA Net Staff2/13/2013 • 1 Comments

Christopher Carosa of FiduciaryNews notes that two years ago, the SEC’s botched proposal for a uniform fiduciary standard was greeted with a uniform chorus of derision from both Congress and the brokerage industry. The biggest complaint was the alleged “cost” to investors should the SEC hold brokers to the same standard as it holds RIAs under the 1940 Investment Advisers Act. Carosa notes that a research study released last month may have finally supplied the much anticipated evidence of this cost — but with a surprising twist. READ MORE

By NAPA Net Staff2/7/2013 • 0 Comments

Currently, about one-third of eligible employees don’t participate in the 401(k) plan their employer offers, according to the DOL. One proven solution, of course, is automatic enrollment. But while auto enrollment has become widespread in the last few years, there are still plan sponsors out there who are reluctant to add the feature to an existing plan. READ MORE

By NAPA Net Staff2/5/2013 • 0 Comments

Plan participants learn in different ways, so one-size-fits-all education programs are less likely to work. According to research with over 6,000 participants, OneAmerica found that there’s a distinct digital divide on how they want to learn and interact with their retirement plans. READ MORE

By NAPA Net Staff1/30/2013 • 0 Comments

Will the American Taxpayer Relief Act’s scheme to raise tax revenue by allowing 401(k) participants to more easily convert to Roth plans actually net the government the amount projected — $12 billion over the next 10 years? READ MORE

By NAPA Net Staff1/28/2013 • 0 Comments

While it may be a marketing advantage to be a named fiduciary, many advisors aren’t permitted to do so, and there are instances where it doesn’t make sense. The law firm Lewis and Roca lays out guidelines on which activities make an advisor a fiduciary and how advisors can avoid liability if they desire. The definition is certainly in flux — the DOL plans to try to change the definition this year. READ MORE

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