Retirement Investment Digest

There’s an important deadline on the horizon if an employer has a SIMPLE in 2007 but would like a 401(k) in 2008. It’s November 1. The employer must provide notice to employees at least 60 days prior to the start of the next calendar year or no later than November 1, 2007 that the SIMPLE will not be maintained in 2008.

So why change from SIMPLE to 401(k)? A  SIMPLE retirement plan is called "simple" for obvious reasons. It’s easy to establish, relatively inexpensive, and also easy to maintain. But if an employer wants to:

• Not cover practically all employees
• Make larger contributions
• Favor owners and highly compensated employees
• Not have 100% vesting of employer contributions
• Maybe have better investment options
• Have the Roth option
• Allow for plan loans
• Be able to buy tax deductible life insurance
• Have better creditor protection

Then, the employer needs a profit sharing/401(k) plan. And yes, it is more complicated to maintain and accordingly more expensive. Retirement planning is a lot like life. It’s a series of trade offs.

Side Note: A SIMPLE can be rolled over to a 401(k) plan after a "2-year period" which begins on the date which the individual first participated in the SIMPLE.

That’s what Social Security Commissioner Michael Astrue is calling the expected avalanche of applications from the post-World War II generation. The "first" Baby Boomer, a retired school teacher from New Jersey, born one second after midnight on January 1, 1946 ,applied for Social Security benefits Monday, signaling the start of an expected avalanche of applications from the post World War II generation. An estimated 10,000 people a day will become eligible for Social Security benefits over the next two decades, Commissioner Astrue said. The Social Security trust fund, if left alone, is projected to go broke in 2041.

And now it’s up to the politicians.

Here is a link to the story carried by Yahoo with a hat tip to Mario Cinardi, World Financial Group.

A few days ago, I wrote about the Department of Labor’s new interactive website called elaws-ERISA Fiduciary Advisor which provides an overview of the basic fiduciary responsibilities applicable to retirement plans under the law.

The Internal Revenue Service adds to the tools to help retirement plan sponsors deal with common 401(k) mistakes. It’s a 43 page PDF document that includes hypertext links that take the reader from a particular item in a chart to a detailed discussion within the document about that item. In addition, the discussions include hypertext links that jump to other IRS documents on the web (if connected to the Internet), such as checklists and revenue rulings. The chart lists 11 common, potential mistakes in 401(k) plan operation and documentation.

Here is the link for you to download it.

The Department of Labor, the Federal agency responsible for overseeing the fiduciary aspects of ERISA, last week released an interactive website called elaws-ERISA Fiduciary Advisor. The website is designed to provide an overview of the basic fiduciary responsibilities applicable to retirement plans under the law. The intended audience is employers and third party service providers. Additional information for employees is listed in the Resource section. And it’s extremely well done.

Here is the link to it.

CPA firms - we’re aware - provide more than just traditional accounting and auditing services. And that includes providing investment and financial planning. So just how successful are they. In terms of money under management, pretty darn successful. You may be surprised to know that there are 11 firms that are have over $1 billion in assets under management and 41 more firms that have over $100 million in assets under management.

The October, 2007 issue of CPA Wealth Provider has its first ever ranking of CPA/financial firms by the amount of assets under their management. These are CPA firms that have financial planning practices and the financial planner in the office holds a CPA credential. Here those 11 members of The Billion Dollar Club:

1. Plante Moran Financial Advisors
2. Gilman Ciocia
3. RSM McGladrey
4. Wipfli Hewins Investment Advisors
5. Savant Capital Management
6. CBIZ/Mayer Hoffman McCann
7. Virchow, Krause & Company
8. HBK Sorce Financial
9. Moss Adams Wealth Advisors
10. Honkamp Krueger Financial Services
11. F&D Advisors

For the details, here is the link to the article that appears in the October issue of CPA Wealth Provider.

Back in the day - before the Boomers were called Boomers and before choice entererd the employee benefit lexicon- the standard retirement plan was a defined benefit pension plan. The employer was responsible for the investment of plan assets, and the employee received a monthly income at retirement.  Today the standard retirement plan is a 401(k) plan starting to embrace automatic enrollment, default funds, and an annuity distribution option. The more things change the more they look the same.

In a recent email, American Express pointed me to some good stuff about protecting against identity theft. What plan sponsors can’t protect against, however, is employee personal and financial information stolen from 401(k) providers. I’ve written about this in the…

In a June 20 memorandum dismissing a lawsuit against John Deere, Inc. and two subsidiaries of Fidelity Investments, the U.S. District Court for the Western District of Wisconsin ruled that ERISA does not require plan sponsors or service providers to…

401(k) plan focus is shifting from the accumulation phase to the distribution phase. The why is obvious. The first wave of Baby Boomers are reaching age 60 who have significant concerns about running out of money. The how is being…

Gone scrambling. Back in two weeks….