Capital Markets Review: Q1 2013

April 16, 2013 by Pension Consultants in Individuals, Investment Updates

The positive momentum of the stock markets during 2012 continued during the first quarter of 2013, as fears surrounding the fiscal cliff and sequestration fizzled. Problems in Europe were largely shrugged off as central banks in the U.S, Europe, and Japan continue to keep interest rates low. This backdrop led to record returns for stock indices, with the broad based S&P 500 Index returning 10.61% for the first quarter ending 03/31/2013. The Russell 2000 Index posted a 12.39% gain for the first quarter reflecting investor appetite for growth that has historically come from smaller companies.

International stock markets did not fare as well due to continued concerns regarding the Euro and increased geopolitical risk. However, the MSCI EAFE did manage a positive return of 4.38% during the first quarter. Emerging markets were Read full article »

Why Pension Consultants Believes it is Important to be Research Intensive in Retirement Plan Management

April 11, 2013 by Pension Consultants in Company News, Education

A retirement plan is intricate; every decision you make pertaining to its operation requires careful consideration. Yet, many advisers base their recommendations on purely quantitative information, which may leave you unable to see the whole picture. Pension Consultants does things differently.

The retirement plan industry is riddled with miscommunications and missed expectations between plan sponsors and record keepers. As a research-driven firm, we emphasize prudent process to our clients, establish realistic expectations and monitor vendors to see whether or not they adhere to the plan we outline. Read full article »

Pension Consultants to Sponsor 17th Pension Focus Conference

March 20, 2013 by Pension Consultants in Company News, Education

The 17th Pension Focus Conference, sponsored by Pension Consultants, Inc., will be held May 2-3 at Chateau on the Lake in Branson, Missouri. The conference gives sponsors of 401(k), 403(b) and DB retirement plans insight into various retirement plan industry topics. This year’s highlights include hot-button issues like the new 408(b)(2) disclosures, what it means to maximize participant behavior, correction procedures, how to avoid common plan mistakes and Department of Labor enforcement initiatives.

A past conference attendee noted that Pension Focus stands out as, “The one conference each year [where] some of the best talent in the country talk about where we are currently in the area of retirement plans and what the future may hold.” The conference offers break-out sessions for plan fiduciaries and plan administrators, including benefits managers, HR directors and CFOs. Attendees will also have the opportunity to earn various Continuing Education credits for CFP®, accounting, and HR designations, and will have the opportunity to network with peers during a welcome reception.

For more information, or to register, visit pensionfocus.org.

View this year’s conference brochure.

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What are the risks of being a plan fiduciary?

March 19, 2013 by Melissa Travis, J.D., LL.M., ERISA Analyst in ERISA Updates

In our previous blog in the Guide to Fiduciary Prudence series, we discussed the many roles and responsibilities involved in one’s role as a plan fiduciary. This post will discuss the risks inherent in this fiduciary position. Someone may be a fiduciary because of the role he/she in fact plays for a plan, even though he/she:

  • May not know he/she is a fiduciary and did not intend to become one; and
  • Within his/her contract with the employer or the plan administrator, stipulates that he/she is not a fiduciary.

It is clear that whether an ERISA fiduciary named within the plan or one deemed as such through his/her actions, various duties are required to be followed. Failure to comply with these duties—whether a failure by action or omission—may result in personal liability or maybe co-fiduciary liability, and if egregious enough, may even result in criminal liability. These forms of liability have been laid out, below: Read full article »

Looking Behind the Curtain of Vendor Benchmarking

March 4, 2013 by Chris Thixton, QPA, Director, Vendor Services in Vendor Updates

There seems to be a lot of talk in the industry about benchmarking retirement plans. This may be attributable to the new disclosure requirements under 408(b)(2), or the recent wave of retirement plan litigation related to fees. Whatever the reason, retirement plan vendor* benchmarking is all the buzz.

Why benchmark? 
Furnishing goods or services between a party in interest and a retirement plan is usually a prohibited transaction under section 406(a)(1)(C) of ERISA.  However, 408(b)(2) provides for a prohibited transaction exemption so long as the goods and services are necessary for the operation of the plan and no more than reasonable compensation is paid. Read full article »

IRS Updates the Employee Plans Compliance Resolution System (EPCRS)

March 4, 2013 by Chase Tweel, J.D., LL.M, Consultant, ERISA Services in ERISA Updates

Introduction
On December 31, 2012 the Internal Revenue Service (IRS) updated the Employee Plans Compliance Resolution System (EPCRS), the comprehensive system of correction programs for sponsors of qualified retirement plans to improve and clarify some of its features, and issued Revenue Procedure 2013-12. The new EPCRS program supersedes the prior version from Revenue Procedure 2008-50 and makes a variety of important changes that continue to the Self-Correction Program (SCP), the Voluntary Correction Program (VCP) and the Audit Closing Agreement Program (Audit Cap).

Background on Plan Corrections and EPCRS
In 1992, the IRS introduced the voluntary compliance and resolution program, which provided a temporary means by which plan sponsors could address qualification failures. The idea was that some qualification errors are so minor that it’s not worth the IRS’s time to disqualify the retirement plan. Thus, this temporary program was based on the idea that, in exchange for revealing and correcting failures, the IRS would issue compliance statements and not pursue disqualification. Read full article »

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American Taxpayer Relief Act: What the In-plan Roth Conversion Feature in Retirement Plans Means

February 6, 2013 by Chase Tweel, J.D., LL.M, Consultant, ERISA Services in ERISA Updates

The American Taxpayer Relief Act (aka “fiscal cliff” legislation) signed by President Obama on January 2, 2013,  includes a significant expansion of the opportunities to perform “in-plan” conversions of pretax dollars to Roth “after-tax” dollars of funds held in qualified defined contribution plans, such as 401(k) and 403(b) plans as well as governmental 457(b) plans. To understand the full content of the new Act, it is helpful to recall the Small Business Jobs and Credit Act of 2010. 

Background: The Small Business Jobs and Credit Act
The Small Business Jobs and Credit Act, signed in September 2010, included several provisions that affected the use of Roth IRA features in certain qualified retirement plans. For example, the bill allowed for Roth contributions to 457(b) plans maintained by state or local governments, a feature that at the time was limited to 401(k) and 403(b) plans. The Act also permitted certain amounts in 401(k), 403(b) and governmental 457(b) plans to be converted to Roth accounts within the same plan (i.e., an “in-plan” conversion option). Read full article »

Pension Consultants included in PLANADVISER’s Top 100

January 10, 2013 by Pension Consultants in Company News

Pension Consultants, Inc. was recently announced as one of PLANADVISER’s Top 100 Advisers of 2013. PLANADVISER, a nationally recognized and leading resource for advisers and consultants in the retirement planning industry, compiles the Top 100 listing annually. The listing is made up of advisers and adviser teams competing for the annual PLANSPONSOR Retirement Plan Adviser and Adviser Team of the Year awards who stand out in terms of a series of quantitative measures such as dollar value of qualified plan assets under advisement and the number of plans under advisement.

Being named as one of the Top 100 Advisers in the nation is a huge accomplishment. Of the 52 adviser teams included in the Top 100 listing, Pension Consultants is proud to have made the list in the top 22 teams in terms of Assets Under Advisement. Collectively, these 52 adviser teams serve approximately $113 billion in plan assets.

Brian Allen, president and founder of Pension Consultants, commented, Read full article »

Quarterly Capital Markets Review: 4Q12 and 2012 Year-end Review

January 10, 2013 by Terry Daniels, CFA, Investment Analyst in Investment Updates

Investment returns ended the year in positive territory as concerns about the fiscal cliff, the deficit, and the European Union were offset by optimism that progress was being made both in Washington and abroad.  The fiscal cliff was averted by adopting tax increases while putting off any decision on spending cuts until February.  The relief rally led to returns for the broad based S&P 500 Index of -0.38% for the fourth quarter, and 16.00% for the year ending 12/31/2012. Small Cap equities slightly outperformed large cap equities with a quarterly return of 1.85% and 16.35% for the year, as measured by the Russell 2000 Index.

International equities had a strong finish as well. The MSCI EAFE returned 6.60% during the three months ending 12/31/12 and 17.9% for the year.  Most foreign countries Read full article »