Risk-based assets continued to rally from the fourth quarter, with both domestic and international equities posting strong double digit gains. U.S. equity markets posted a strong 13.1 percent return (DJW 5000 Index), slightly higher than international equity markets, which posted a strong 11.0 percent return (MSCI EAFE). Emerging markets, which include some of the riskier countries overseas, rallied with even stronger gains, posting a 14.1 percent return (MSCI EM). U.S. fixed income posted a more modest gain over the quarter, with a small positive 0.3 percent return (Barclays Aggregate Index). Yields edged higher over the quarter, limiting the gains across most traditional fixed income markets; however, riskier fixed income segments did quite well. High yield bonds, one of the riskier fixed income market segments, posted a strong positive 5.3 percent return (BC High Yield Corporate Bond).
Each year you receive a &"pass” or &"fail” from your service provider regarding required non-discrimination testing (the Actual Deferral Percentage test and the Actual Contribution Percentage test). The ADP/ACP tests govern the amounts of deferrals and/or matching contributions that highly compensated employees (HCEs) are allowed to make or receive in relation to those of non-highly compensated employees (NHCEs).
Van Gilder's Investment Due Diligence process places an important emphasis on a fund's style, employing a technique called "quadratic optimization."
Last October the Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for 2012
The Plan Sponsor Council of America (formerly called the Profit Sharing/401k Council of America) has released its 54th Annual Survey of Profit Sharing and 401(k) Plans.
U.S. equity markets tumbled over the third quarter, posting a negative 15 percent return for the broad U.S. equity market (DJW 5000 Index). This was one of the markets’ worst quarters since 2009, a time when a credit crisis was underway. International equities posted similar results, posting a negative 15.7 percent return for the quarter (MSCI EAFE Index). U.S. fixed income, however, made significant gains, no doubt helped by the rising equity volatility and the uncertainty that accompanied it. The broad U.S. fixed income market posted a strong positive 3.8 percent return (Barclays Aggregate Index). Yields, accordingly, sunk to record lows, as investors flocked to the safety of high quality investment grade debt (and to a large extent, U.S. Treasury Bonds).
Generally speaking, if 401(k) plans are meant to be used to augment retirement income they may be considered a success. However, if they are expected to serve as the primary source of retirement income (along with Social Security), success is proving to be elusive for most participants.
U.S. Equity markets were flat for the quarter (with the DJW 5000 index posting a zero percent return), but not without experiencing a roller coaster ride. The last month of the quarter saw equity markets heading significantly lower and well off their intra-quarter highs, and the last four trading days brought about a dramatic surge to the upside, erasing the quarter's intra-period losses and bringing U.S. equities back to levels they were at only three months ago. International equities posted slightly better results than their U.S. equity counterparts, returning a positive 1.8 percent for the quarter (MSCI EAFE Index), but also showing similar volatility. U.S. fixed income made significant gains, no doubt helped by the spike in equity volatility that was witnessed over the quarter. The broad U.S. fixed income market posted a strong positive 2.3 percent return (Barclays Aggregate Index).
Plan assets and average account balance are generally the two more significant demographic factors impacting total 401(k) plan costs, but plan services are also a primary driver of cost, especially when a plan sponsor takes the plan to market during an RFP Vendor Search.
The payment of expenses by an ERISA plan (401(k), defined benefit plan, money purchase plan, etc.) out of plan assets is subject to ERISA’s fiduciary rules. The &"exclusive benefit rule” requires a plan’s assets be used exclusively for providing benefits. ERISA also imposes upon fiduciaries the duty to defray reasonable expenses of plan administration.
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