Everyone is pushing lifetime income options for retirees because the fear is that there will be nothing left for retirees as they live longer.
T. Rowe Price announced the launch of Managed Lifetime Income (MLI), a new retirement solution designed to provide retirees in a defined contribution plan with stable and predictable monthly income for life.
MLI combines a managed payout investment from T. Rowe Price with a Qualifying Longevity Annuity Contract (QLAC) from Pacific Life.
I work (outside of plan audits) on a flat fee basis. What I say is the price is the price. If I misjudged the value of a service, the fault lies with me. I still live up to the bargain I made.
As an attorney and fiduciary on many plans requiring audits, I’m amazed by the courage of audit firms that want additional sums of payment after quoting a flat fee. Where I come from, we call that “chutzpah.” If you say that the audit would cost $15,000, don’t ask for another $5,000. The chances you’re going to get clipped and replaced by another firm are substantially high.
Live with the deal you made.
Over the last few years, we’ve seen the proliferation of companies offering ERISA §3(16) services. This is a natural growth of advisors offering ERISA §3(38) services, so 3(16) was a great way for third-party administrators (TPAs). Like 3(38), TPAs and other providers could offer 3(16) as an outsourcing solution where employers can outsource the headache of plan administration to a 3(16) named fiduciary.
The “Plan Administrator” of a qualified retirement plan is defined in section 3(16) of ERISA. The Plan Administrator should not be confused with a “Pension Administrator” or a TPA.
Unlike the TPA, the Plan Administrator has the following primary responsibilities:
◦ Ensures all filings with the federal government (form 5500, etc.) are timely made;
◦ Makes important disclosures to plan participants;
◦ Hires plan service providers if no other fiduciary has that responsibility; and
◦ Fulfills other responsibilities as outlined in plan documents.
A TPA has delegated these responsibilities, but the plan sponsor bears the responsibility. The §3(16) fiduciary/administrator assumes that responsibility, as the plan sponsor outsources it.
This is great, isn’t it? While I have been working with TPAs and financial advisors in trying to help them offer these services (cheap plug), I do see an issue. Unlike a §3(21) or §3(38) fiduciary that requires some sort of registration as a financial advisor, a §3(16) administrator much like a TPA does not need any accreditation. So nothing would stop someone from coming in out of nowhere and proclaiming themselves as the king or queen of 3(16) fiduciaries without having either the competence and/or honesty to be one. This industry has had its share of incompetent and/or fraudulent plan providers and without any requirement to be one, there will be an issue when a 3(16) administrator does go badly. Just look at the Vantage Benefits fiasco where a Dallas-based TPA offering 3(16) stole millions in plan assets.
Another issue is that there is a wide variety of services that ERISA §3(16) may offer from a heavy 3(16) where they offer support with payroll reports and a light 3(16) where they may not even sign the Form 5500. So as a plan sponsor searching for 3(16) providers, you need to vet them as well as understand what services they may provide.
I was against Automatic Enrollment before I was for it. When it finally became part of the Internal Revenue Code, plan sponsors got liability protection through using the QDIA. While I like that plan sponsors under SECURE 2.0 will have to offer it, if they have a new plan, it will lead to a lot of errors.
The errors will deal with forgetting to automatically participants who fail to opt-out. Add the addition of long-time, part-time, employees, and you will find a lot of plans with errors. Hopefully, we can have some easy fixes for plan sponsors in these situations that won’t require the opening of the employer’s checkbook.
Wealth Enhancement Group, a wealth management firm with more than $94.7 billion in client assets, acquired FinTrust Capital Advisors LLC, which has more than $2.39 billion in client assets.
FinTrust Capital Advisors is registered investment advisory headquartered in Greenville, South Carolina, with additional office locations in Anderson, South Carolina, and Athens, Georgia.
Wealth Enhancement Group’s acquisitions in 2024 include Gavin Financial Group in June, Peak Financial Management and Levy Wealth Management.
A research paper from the Wharton Pension Research Council states that 401(k) contributions are “remarkably stable” after loans and hardship withdrawals. Quite honestly, I always saw loans as a non-issue since it would be a participant-directed investment and the issue with hardship distributions is that they’re leakage.
It seems that thanks to auto enrollment and auto escalation Being so prevalent, loans and hardship distributions don’t negatively impact savings behavior.
A long-time advisor-client called with a chuckle that both he and I were right and a partner at a law firm admitted that we were.
I said it’s better to be right than wrong, but too many providers out there will make excuses, claim the earth is flat, blame the client, or do anything, but other than apologize. To many, like my parents, they would rather die than apologize.
Good providers make a few mistakes and when they do, they apologize.
Company A wants to buy Company B and everyone wants to terminate Company B’s 401(k) Plan. In an ideal world, this should be done before the closing date of the deal. If A has a plan and wants to terminate B’s plan, that successor plan rule could be a problem since if you terminate B’s plan and distribute assets, barring a very minor exception, A can’t have a plan for a year.
That’s why with any stock purchase with existing 401(k) plans, an ERISA attorney needs to be contacted.
For those aged 55-64 the average 401(k) account balance is $244,750. The median account balance is $87,571. No matter the occupation, that amount of money isn’t enough for retirement. It shows that no matter, we still have a retirement crisis in this country where people don’t have enough money to last retirement.
Sure, there is Social Security, but it’s clearly an amount that isn’t enough for retirees, even if they retired in their 70s these days.
Nvidia Corp. has reached a proposed settlement with former participants of the company’s 401(k) plan over claims that they were forced to pay exorbitant administrative fees
The participants had claimed that the size of Nvidia’s 401(k) plan should have entitled participants to significantly lower fees. They alleged that plan participants paid between $53 and $63 to for recordkeeping, but should have paid about half that amount.
