WHO’S MY 401K OPERATIONS PERSON? WAIT…THAT’S ME STRATEGIES FOR MAINTAINING A SUCCESSFUL RETIREMENT PLAN MT SHRM – Williamson County 6/9/2016 Chris Boyd Julie Freeman Financial Advisor, Chartered Retirement Plans Specialist SM Chief Human Resources Officer The Fowler Group of Raymond James Martin Ventures 1033 Demonbreun Street, Suite 500 40 Burton Hills Boulevard, Suite 100 Nashville, TN 37203 Nashville, TN 37215 615-645-6717 615-829-7314 Chris.Boyd@Raymondjames.com Jfreeman@martinventures.com 1 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
AGENDA Evolution of the 401(k) & Plan Structures Today Common Myths Around 401(k) Plans Operational / Compliance Considerations Vendor Transitions Successful Plan for Your Employees 2 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
WHAT SOME EMPLOYEES ARE THINKING… 3 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
401(K) HISTORY & BASICS 4 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
THE 401(K) WAS CREATED IN 1978 AND CONTINUES TO EVOLVE 1978 1986 2001 2016 IRS Code Non- EGTRRA Permanent 401(k) PPA (2006) Discrimination Catch-Up & Deferred Comp Roth Auto Enroll Testing QDIA p.5 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
PLAN BASICS & CONSIDERATIONS • Pre-Tax / Roth Funding • Employee / Employer • Bundled / Unbundled Administration • Annual Compliance / Reporting • Portable Accounts Investments • Mutual Funds / Insurance 6 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
401K PLANS TODAY Insurance Companies Fixed Accounts Group Annuities Proprietary or Sub-Advised Registered Products Named Mutual Funds Open Architecture Administrative Price Structure Insurance or Registered Hybrid Fixed or Stable Value Funds Proprietary or Pure Mutual Funds 7 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
FOUR COMMON MYTHS AROUND 401(K) PLANS Myth1: Provider is Employer, Plan Committee, Advisor Trustee / Fiduciary Myth 2: Plan Design Plan Design Changes Have Impact is Plan Design Myth 3: Employees More Confusion Now Than Ever Understand Plan So Many More Considerations Now Myth 4: Investments Are the Same 8 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
COMPLIANCE & OPERATIONS 9 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
WHO’S INVOLVED AND WHAT IS THEIR ROLE / STATUS? Committees Investment Plan Advisor Trustees Sponsor Plan & Payroll Third Party Provider Administrator Investment Managers 10
AUDITS ON THE RISE ! Recent DOL audit survey 39% Major Deficiencies* CPA Firms 2015 Statistics Watch Out Areas Contributions Distributions Party-in-Interest / Prohibited Transactions Best Practices *Source: Department of Labor (www.dol.gov) 11 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
STAYING IN COMPLIANCE Top 5 Tips Making required plan document updates Correct definition of “compensation” and “eligible employee” Monitoring 402(g) contributions limits Remitting contributions on a timely basis Administering “hardship” and loan distributions 12 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
VENDOR TRANSITIONS File remission Timing issues (payroll and employee notices) Revenue/payment structure Fund surprises/ Fixed Account Termination fees 13 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
SUCCESSFUL RETIREMENT PLAN FOR YOUR EMPLOYEES 14 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
EMPLOYEES NEED SIMPLICITY & THEY VALUE GUIDANCE Average • Trims options at the margins plan • Median plan still offers 22 investment options Target Date funds “Do it for me” > Excellent • Thinks about the delivery of “Do it with me” > Balanced funds options to meet participant plan investor types Self-Directed Fund or “Do it myself” > Brokerage Window Fund Menu for illustrative purposes only. Raymond James & Associates, Inc., member New York Stock Exchange/SIPC p.15
BE A GUIDE TO EMPLOYEES Plan asset allocation Stable Value Average • A small percentage of Company Stock the plan invests in Bonds plan target date funds US Equity Non US Equity REITs Target Date • Asset allocation default solutions Excellent • Strives to find ways to increase the percentage • Targeted participant communications of participants in the plan asset allocation strategy • Full plan re-enrollment Asset Allocation does not guarantee a profit nor protect against a loss. Raymond James & Associates, Inc., member New York Stock Exchange/SIPC p.16
MOVE OUTSIDE THE PROVIDER’S “BOX” Average • Offers proprietary, single manager investment plan solutions Excellent • Embraces open architecture, best of breed investment solutions plan • 2008 Beijing Olympics (www.olympic.org) p.17 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
GET EVERYBODY INVOLVED 78% 78% 77% 77% 76% 76% Average • Participation is stagnant under 80% plan 2009 2010 2011 2012 2013 2014 82% Excellent • Strives for 90%+ participation and plan utilizes auto features Source: Vanguard How America Saves Report 2015 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC p.18
GIVE EMPLOYEES THE BEST CHANCE OF SUCCESS 7.30% 7.00% 6.90% Average 7.00% 6.90% 6.80% • Settles around 7% for employee savings rates plan 2007 2008 2009 2010 2011 2012 • Automatic escalation Excellent • Utilizes automatic • Target Replacement Income (TRI) features to drive savings drives design plan rates above 10% • Use of company match and defaults Source: Aon Hewitt Universe Benchmarks Research Report 2013 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC p.19
STEPS TO HELP MOVE YOUR PLAN FROM GOOD TO GREAT Plan Features • Pre-tax/Roth, Bundled/Unbundled, Insurance Roles & Responsibilities • Who serves what role to the plan • Revisit your process often and revise when Compliance/Operations needed Thoughtfully Design the • Identify participant profiles and tier Menu Best of Breed • Don’t settle for proprietary funds Investments Participation/ • Auto enroll, re-enrollment, auto increase Contribution Rates p.20 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
NOT ANYMORE… 21
THANK YOU 22 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
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