Friday, January 22, 2010

BrightScope Ratings on 401k Plans

BrightScope quantitatively rates 401k plans and gives participants, plan sponsors, and advisors tools to make their plans better.

What is a BrightScope rating?
The BrightScope RatingTM is a quantitative 401k plan rating developed by BrightScope with the help of leading independent fiduciaries, finance professors and 401k experts. The BrightScope rating algorithm takes in 200+ unique data inputs per plan and calculates a single numerical score for every 401k plan in the country. The algorithm runs thousands of simulations for each plan in order to determine how quickly each 401k plan will get the average 401k participant to retirement. BrightScope believes that this rigorous approach is necessary to ensure that every factor that affects retirement outcomes - company contributions, fees, investment menu quality, vesting schedules, eligibility periods etc. - is accurately reflected in a company's rating.

The BrightScope RatingTM is designed to assist industry participants in determining the relative quality of a company's 401k plan when compared to a unique peer group of companies with employees of a similar demographic makeup. We believe that industry adoption of the BrightScope RatingTM will ultimately lead to more cost-effective plans, increased participation rates, higher employee satisfaction, and better outcomes for employees who depend on their 401k plan for retirement.


Media Coverage of BrightScope:
- The Wall Street Journal
- Business Week
- CNN Money
- USA Today
- Forbes
- CNBC


BrightScope rating of other companies’ 401k plans:
The BrightScope Rating measures the ability of your plan to get the average 401k participant to retirement and is calculated by running thousands of simulations on the plan. The "Plan Component Ratings" provide an easy-to-understand analysis of the health and performance of a 401k plan independent of its BrightScope Rating. What is your company’s BrightScope rating? Go to www.brightscope.com to find out.

Some sample ratings of local companies include:
Nordstrom 56
Amazon.com 59
Starbucks 45

BrightScope rating of our flagship 401k client:

Integrity Financial Corporation’s flagship 401k client is the Association of Washington Business (AWB) in Olympia. AWB is Washington state’s premier advocate for the business community and is recognized as The State’s Chamber of Commerce. The AWB 401k Plan is a defined contribution plan with a profit-sharing component and 401k feature. This plan has a BrightScope Rating of 76, placing it in the top 15% of all plans in its peer group. We are delighted to provide references for the quality of our service model. As a boutique consulting practice, we distinguish ourselves by tailoring solutions to the unique needs of our clients. Integrity Financial Corporation welcomes the opportunity to serve you. To learn more go to www.ifclegacy.com

Are You a 401k Participant? Look up your company in the search bar to see how it compares.
Are You a Plan Sponsor? Benchmark your plan against your competitors'.

Integrity Financial Corporation helps business owners and executives evaluate and make smart financial planning decisions on behalf of their business. Our firm specializes in 401k plans for local mid-size companies. Our flagship 401k client is the Association of Washington Business (AWB) in Olympia. Our state-of-the-art processes will provide greater employee satisfaction and participation, while reducing plan anxiety by the sponsors. As a boutique consulting practice, we distinguish ourselves by tailoring solutions to the unique needs of our clients. Integrity Financial Corporation welcomes the opportunity to serve you. To learn more go to www.ifclegacy.com

Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at
www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.

Source: brightscope.com

Thursday, January 21, 2010

Comparison of Roth 401k, Roth IRA, and Traditional 401k Retirement Plans

Since January 1, 2006, employers have had a new retirement savings plan to offer their employees--the Roth 401k plan, which combines features of Roth IRAs and traditional 401k plans.

The plan, commonly referred to as a "Roth 401k," is a hybrid that combines features of Roth IRA and traditional 401k plans but differs in important aspects. Some of the differences and similarities are outlined below.

Employees who already have a regular 401k plan can participate in a Roth 401k if the employer offers it. However, as of April, 2009, the combined total contributions cannot exceed the Internal Revenue Service limit set for individual plans--that is, $16,500 (or $22,000 for employees aged 50 or over). An employee who participates in both plans can designate the amount to be applied to each plan. Once a decision is made, the participant cannot switch money among the plans. (Roth 401k participants who change employers can roll over the proceeds into a Roth IRA.)

If an employer provides a matching contribution to a Roth 401k, two accounts are set up for each participant. The first contains the employee’s after-tax contributions that will be distributed tax free. The second account contains the employer’s before-tax contributions and any investment growth; these funds are taxable when distributed.

The National Compensation Survey (NCS) publication "Employer Costs for Employee Compensation" presents employer costs data for various employee benefits. Currently, information is available for defined contribution retirement plans that includes data for traditional 401k plans. When the NCS encounters the new Roth 401k plans, they will be included as defined contribution plans in the NCS benefits incidence and provisions estimates.

Roth 401k plan
- Employee contributions are made with after-tax dollars.
- Investment growth accumulates without any tax consequences.
- No income limitation to participate.
- Contribution limited to $16,500 in 2009 ($22,000 for employees 50 or over).
- Withdrawals of contributions and investment growth are not taxed provided recipient is at least age 59½ and the account is held for at least five years.
- Distributions must begin no later than age 70½. (This may change.)

Roth IRA
- Employee Contributions: Same as Roth 401k plan.
- Investment Growth: Same as Roth 401k plan.
- Income limits: married couples, $176,000, singles, $120,000 adjusted gross income.
- Contribution limited to $5,000 in 2009 ($6,000 for employees 50 or over).
- Withdrawals of contributions and investment: Same as Roth 401k plan.
- Distribution: No requirement to start taking distributions.

Traditional 401k
- Employee contributions are made with before-tax dollars.
- Investment growth is not subject to Federal and most State income taxes until funds are withdrawn.
- Same as Roth 401k plan. No income limitation to participate.
- Contribution Limit: Same as Roth 401k plan.
- Withdrawals of contributions and investment growth are subject to Federal and most State income taxes.
- Distributions: Same as Roth 401k plan.

Integrity Financial Corporation
helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at
www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.
Source: John E. Buckley and 401khelpcenter.com

Friday, January 15, 2010

Ten Fiduciary Duties

At the 2005 ASPPA 401k Summit, Marilyn Colister, National Director of Regulatory Policy for Great-West Retirement Services, spoke on the topic "Fiduciary Responsibility in the Spotlight." Ms Colister made the point that few plan sponsors really understand their fiduciary duties and responsibilities, but because of a number of factor including the recent corporate and mutual fund scandals, class action lawsuits and a new focus by the Department of Labor and Internal Revenue Service on a number of issues including fees, plan sponsors need to be more vigilant. They also should take proactive steps to ensure that all plan fiduciaries have a good understanding of their obligations in overseeing the companies retirement plans.

Here is a general overview of fiduciary duties and responsibilities. It is not intended to be a detailed or comprehensive list, but it will give you a starting point in understanding the issues.

  1. A fiduciary must act solely in the best interests and for the exclusive benefit of plan participants and beneficiaries.
  2. Must defray plan expenses in a reasonable manner. This implies that a fiduciary knows what all the plan expenses and costs are.
  3. Must comply with all plan documents and all applicable federal and state laws and regulations. This implies that fiduciaries will become familiar with them.
  4. Where a fiduciary is unsure of their expertise, they have a duty to seek the advice of experts and carefully evaluate the advice given.
  5. A fiduciary may not engage in certain transactions with parties providing services to the plan such as the sale or leasing of property, lending of money, furnishing goods, services or facilities, or the transfer or use of plan assets.
  6. Self-dealing is prohibited and therefore a fiduciary cannot use their position for personal gain.
  7. A fiduciary may not act on behalf of any party whose interests are adverse to the interests of the plan or the plan participants.
  8. A fiduciary must act with the care, skill and diligence that would be exercised by a reasonably prudent person who is familiar with such matters.
  9. Fiduciaries have an affirmative duty to diversify plan investment options.
  10. A fiduciary has an obligation to prudently select investment options for the plan, as well as an obligation to periodically evaluate the performance of such vehicles to determine, based on that evaluation, whether the vehicles should continue to be available as participant investment options.
Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.

Source: 401khelpcenter.com