Products May 29, 2012

SPARK Helps with Multivendor 403(b) Disclosures

The SPARK Institute created an Investment Provider Information Form for Multivendor 403(b) Plan Participant Disclosure.
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“As service providers prepare to comply with the 404(a)(5) participant disclosure regulations for multi-vendor 403(b) plans, it may be necessary for them to contact and coordinate disclosures with other investment providers,” noted Larry H. Goldbrum, general counsel of The SPARK Institute. “We have developed a short information form that will help recordkeepers and investment providers locate the appropriate contacts at other companies so their disclosures may be coordinated.”    

The information form also includes some basic information about the investment provider’s compliance approach and timing, he said.  

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The SPARK Institute has already collected contact information from many of the leading 403(b) plan vendors. The completed information forms are available upon request and free of charge to 403(b) plan recordkeepers and investment providers, including non-SPARK Institute members.     

Investment providers are asked to complete the form about their disclosure efforts before receiving the other investment providers’ information.  A blank form, including instructions for submission, is available on the SPARK Institute website.   

Recordkeepers and investment providers may request completed information forms by sending an e-mail to 403bmultivendorform@sparkinstitute.org.

 

Data & Research May 29, 2012

Executives Have Unique Retirement Planning Needs

Designing an employee benefits package to attract and retain people who drive profits makes sense, according to Bob Westbrook, financial planner at Strategic Wealth Associates.
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However, he said, creating offerings to prepare executives for retirement is complex, and this complexity increases for more highly placed executives. In the qualified plan space, employers quickly run out of room to benefit these employees because of maximum deferral limits, so many add supplemental benefits, including supplemental executive retirement plans or another nonqualified plan to benefit executives. If an employer has excess profits and is looking for a tax deduction itself, it can add a profit-sharing component to its defined contribution plan, allocated by salary. That will put more company profits into the hands of owners and executives.  

Employers should create a budget so they can create rewards for executives; just paying a higher salary does not generate loyalty, Westbrook said. Employers should put together a qualified plan, nonqualified plan and financial help. “You want an executive’s decision to leave to be a difficult one,” he said.

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Research shows the wealthy are as concerned about retirement security as the non-wealthy. In a survey from Nationwide Financial, nearly three in four say high health care costs is among their top retirement fears. (See “Wealthy Americans Terrified of Health Care Costs in Retirement.”)

Executives need education for retirement planning as much as middle- and low-income employees, not just because of their worries, but because they have different tax and life insurance considerations, Westbrook said. However, they may not want to admit this, so employers should offer separate education for this employee population. Topics should include stock option use, tax planning and Social Security optimization.  

Westbrook said employers and providers should start all retirement planning education for executives with knowledge about income protection, then how to maximize guaranteed retirement income flow and bridging the gap between income needed and Social Security, because the part Social Security will play in an executive’s retirement income is a mystery.

 

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