INDUSTRY Resources

Definition of compensation in retirement plans

While most Plan Sponsors can tell you off the tops of their heads what their Plan’s eligibility requirements are, the formula for calculating employer contributions and the types of withdrawal features in their Plan; many can’t tell you what their plan’s definition of “Compensation” is. Using the wrong definition of compensation to determine contributions is among the top 5 most common mistakes Plan Sponsors make in operating their retirement plan according to the IRS.

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Beef up retirement savings with a cash balance plan

Imagine your 401(k) plan on steroids. Imagine being able to contribute four times more than your current 401(k) limit. Imagine having an balance where investments are managed for you and the investment return is guaranteed. And imagine, upon termination or retirement, taking your balance as a tax-free rollover into an IRA. Well, your imagination may turn to reality, as Cash Balance Retirement plans now provide the above advantages, while opening the door to those looking to sock away a lot more in pre-tax contributions into their ERISA protected retirement savings accounts.

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Opeb news and notes

Accounting standards and actuarial guidelines are subject to constant review and revision over time, with a focus on improving the clarity and accuracy of reporting. At Burke Group our commitment is to remain at the forefront of these changes. Recently two new guidelines have been published which could significantly impact the liabilities, reporting, and potentially how employers choose to structure their benefits in the future.

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Churn ‘n’ burn

I have been a big fan of Dilbert comic strips since my youth. There is something amusing about a micromanaged, white collar worker with a big head and his little pet dog who seems to know it all. Most everyone will agree that creator Scott Adams writes some pretty funny stuff.

Over the years, Scott’s comic strips have poked fun at financial advisors, mutual funds and the financial services industry as a whole. Here are a few examples in ascending order by date:

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Don’t celebrate too quickly

401(k) participants continue to demonstrate their inability to make wise investment decisions. I randomly sampled several 401(k) plans and found that average participant rate of return was 7% to 10% below the S&P 500’s 30% rate of return for 2013. Some of the individual investments in the plans sampled had 40% or greater returns for the year, yet participants still failed miserably.

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Same-sex marriage and qualified retirement plans

Recent changes have been made to the Defense of Marriage Act (DOMA) due to the United States V. Windsor Supreme Court decision in June, 2013, affecting the administration of qualified retirement plans. As of September 16, 2013, with guidance issued by the IRS and Department of Labor, plans must be administered such that same-sex couples are treated equally with opposite gender couples if a couple was married in a state where same-sex marriage is legal (“state of celebration”), regardless of where the couple resides. Therefore, all retirement plan provisions that refer to marital status or spousal benefits are to be considered gender-neutral and those benefits and rights previously applicable only to opposite-sex marriages are now applicable to same-sex marriages as well. These include spousal consents, qualified joint and survivor annuities and survivor benefits.

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CURRENT CUSTOMERS

Brian J. Schiedel

Principal – Retirement Plan Consulting

Brian Schiedel is responsible for monitoring daily valuation recordkeeping services, ensuring that transactions meet strict procedural guidelines, and providing compliance and other consulting services for Burke Group’s retirement plan clients. He serves as the direct Relationship Manager for more than 30 retirement plans.

Prior to joining Burke Group, he obtained his bachelor’s degree in management science from the State University of New York at Geneseo. He has also obtained the Qualified 401(k) Administrator (QKA) designation through the American Society of Pension Professionals and Actuaries (ASPPA).