Friday, October 19, 2012

Occasionally we post facts COLA - The 2013 Retirement Plan Limits

Below are some of the changes, the one's that are most useful for participants to know.

Internal Revenue Service cost-of-living adjustments applicable to dollar limitations for retirement plans.

* 401(k), 403(b) & 457 Elective Deferral Limit increases from $17,000 in 2012 to $17,500 in 2013

* Catch-Up Contribution Amount stays unchanged at $5,500

* 415 Defined Contribution Annual Additions Limit increases from $50,000 to $51,000

* Compensation Considered increases from $250,000 to $255,000

* Income Subject to Social Security Tax (Taxable Wage Base) increases from $110,100 to $113,700

There are others that are important for use with Non-Discrimination and Top-Heavy tests, but the above are the relevant ones to Plan Sponsors and participants.

Wednesday, October 10, 2012

"Plain English" in 408(b)-2 disclosures, hah, I've got a bridge I can sell you too!!!!

Every once in a while, someone else does my job for me.  In this case, I'll give the credit to the Wall Street Journal for saying in writing what many of us have been saying in person for quite some time now.  The attached article highlights a problem with the recent 408(b)-2 disclosures mandated to be distributed to Plan Sponsors (employers) earlier this year.

The gist of the article is this.  Many of the industry service providers weren't explicitedly clear in the way they disclosed their fees on the mandated 408(b)-2 disclosures despite that the rules have been very clear that they are to be written in "Plain English".  What a Shock!!! 

The article points towards Wall Street for burying the Plan Sponsors under a mountain of fine print, which is more of the same from what they've always done as the provider referenced in the article estutely points out.  However, to be fair, this wasn't really Wall Street as a whole.  There's probably less than 100 major retirement plan service providers out there and most are insurance companies, mutual fund companies or independent recordkeepers.  Let's keep the blame pointed squarely where it belongs. 

To expect an industry comprised of asset gatherers to be forthright in telling their clients they've been overcharging them for years unapologetically would be counterproductive to their goal, gathering assets.  It is very unsurprising to this author, that vendors are doing as little as possible to make fee clarity just that, clear. 

Kudos for WSJ for writing what a lot of us have been thinking.