Best Practices: Compliance With Retirement Issues. Marcia S. Wagner, Esq. 1. Recent Updates to ERISA 2. IRC 4975 and IRA Beneficiaries 3. Annuities, TDFs & Stable Value Funds 4. Sales Practice Issues. Priority Objectives from Washington. Outlook on U.S. Private Retirement System
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Marcia S. Wagner, Esq.
(e.g., equity funds pay higher 12b-1 fees to advisor, creating incentive to steer participants to them)
(1) level fees that cannot vary as a result of advice, or
(2) advice from computer model certified by expert.
(a) Individualadvisor must have level compensation.
(b) Advisoryfirm must have level compensation.
(c) Firm’s affiliates may receive variable compensation.
Recent Updates to ERISA - Fee Disclosures from Providers Interim Final Reg’s Under ERISA Section 408(b)(2)
- First tier excise tax of 15% per year
- Second tier excise tax of 100%
TIP: Ensure advisors do not encourage employers to assume role which triggers fiduciary liability.
TIP: Ensure advisors do not assume fiduciary role.
Popular default investment vehicle for 401(k) plans.
Typically, formed as open-end investment companies registered under the Inv. Co. Act.
Defining characteristic – “glide path” which determines the overall asset mix of the fund.
Performance issues in 2008 raise concerns, especially for near-term TDFs.
TIP: Use Report as guide for evaluating your policies.
TIP: Ensure supervisory procedures comply with state laws or model rules as “best practice.”
TIP: Review current and pending state law, and evaluate compliance policies accordingly, especially for fixed annuities.
TIP: Review policies regarding suitability of indexed annuities for senior investors.