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Wealth Control Advisors, LLC
60 William Street, Suite 200
Wellesley, MA 02481
781-235-8891 MA telephone
781-235-8890 private fax
866-235-8991 outside Mass.
10781 Waterford Place
West Palm Beach, FL 33412
561-691-1380 FL telephone
info@wealthcontrol.com
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Case Study 8: Retirement Plan Fiduciary Issue
Two recent business clients had very similar problems with their corporate retirement plans. Both firms had 401k plans that had not been actively reviewed by the company retirement plan trustees, nor had the plan investment advisor representing each firm actively made any recommendations to change any part of the plan. In addition, the third party administration firm for one of the company’s plan consistently was slow in performing the required ADP/ACP tests. The results of the tests were that the few of the lower compensated employees contributed any funds, resulting in the higher income employees over funding their contributions. Because of the delay in the testing results, the president (and two other management employees) for 2 consecutive years needed to re-file their personal income taxes in addition to having part of their 401(k) contribution returned as an excess contribution.
In both firms, the plans had been established years earlier and the annual fees being charged were nearly one half percent higher than necessary, and still included underperforming funds, and with limited investment choices for the employees.
As part of our Retirement Plan Investment Management service, where we review all aspects of a plans’ investment choices and fees, we performed the following:
We started by performing our Company Retirement Plans - Fiduciary Review where we:
- Evaluated the fees that the plan charged to determine efficiency or need for change
- Determined who, when, and how required testing was to be performed under the existing plan and make recommendations for the future
- Audited the funds in the existing plans for performance, fees, and diversification of investment offerings
After our audit, the plan trustees elected to have us implement appropriate changes in their company plans. Those services include:
- Assisting the employers to write an Investment Policy Statement for the 401(k) plans and schedule regular review meetings
- Helping the trustees take all necessary and appropriate actions to fulfill their fiduciary responsibility to the employees of their firm. (Including, annual review of fund performance and fees)
- Making certain that the fund choices being offered were diversified among all asset classes, and included pre-organized lifestyle funds (providing employees fund selection based on their retirement horizon with automatic asset class adjustments to rebalance their fund contributions.)
- Provide education to the employees about retirement planning needs during 401(k) enrollment meetings, encouraging enrollment, increases in savings for those already participating, and helping employees better prepare for retirement
You can read about our comprehensive Tailored Services, Our Clients, or How We Work, or Contact us to get started today.
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