Fiduciary Tips from RWM Financial Group

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In the world of financial advice, discovering reliable guidance can seem as challenging as finding a needle in a haystack. Amidst a myriad of conflicting opinions and concealed motivations, individuals often feel overwhelmed and uncertain. However, there’s a beacon of integrity in this chaos: fiduciary responsibility.

At RWM Financial Group, we hold ourselves to the highest standard of fiduciary duty, prioritizing the interests of our clients above all else. We believe that financial success is built on a foundation of trust, transparency, and expert guidance. As part of our commitment to empowering individuals with the knowledge they need to make informed decisions, we’re excited to share some valuable fiduciary tips to help you navigate the complexities of personal finance.

Tip 1: Choose Your Advisor Wisely

When it comes to selecting a financial advisor, not all are created equal. It’s crucial to choose an advisor who is held to a fiduciary standard, meaning they are legally obligated to always act in your best interests. This ensures that their advice is unbiased and free from conflicts of interest. Before entrusting someone with your financial future, be sure to ask if they are a fiduciary and inquire about their qualifications, experience, and approach to financial planning.

Tip 2: Understand Fees and Compensation Structures

Transparent fee structures are a hallmark of fiduciary advisors. Before engaging the services of a financial advisor, make sure you clearly understand how they are compensated. Fiduciaries typically charge fees based on a percentage of assets under management or a flat fee for financial planning services. Beware of advisors who earn commissions or receive kickbacks for selling specific products, as these incentives may influence their recommendations.

Tip 3: Establish Clear Goals and Objectives

Successful financial planning begins with a clear understanding of your goals and objectives. Whether you’re saving for retirement, planning for your children’s education, or building wealth for the future, articulating your priorities is essential. A fiduciary advisor can help you define your goals, develop a customized financial plan, and provide ongoing guidance to keep you on track.

Tip 4: Diversify Your Investments

Diversification is a cornerstone of sound investment strategy. By spreading your investments across a variety of asset classes, sectors, and geographic regions, you can help mitigate risk and improve your chances of achieving long-term returns. A fiduciary advisor can help you construct a diversified portfolio tailored to your risk tolerance, time horizon, and financial goals.

Tip 5: Stay Informed and Engaged

Financial planning is not a one-and-done activity but an ongoing process requiring regular review and adjustment. Stay informed about changes in the market, tax laws, and economic trends that may impact your financial situation. Schedule regular check-ins with your fiduciary advisor to review your progress, reassess your goals, and make any necessary course corrections.

Conclusion

Navigating the complexities of personal finance can be daunting, but with the guidance of a valued fiduciary advisor, it’s entirely achievable. At RWM Financial Group, we’re dedicated to helping our clients achieve their financial goals with integrity, transparency, and expertise. By following these fiduciary tips and partnering with a fiduciary advisor, you can take control of your financial future and unlock new opportunities for success. Contact us today to learn more about how we can help you on your journey to economic well-being.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Writing Your Company’s Retirement Plan Goals

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Guess what? Your company’s retirement plan is like a superhero cape for your organization’s goals. But hold up, before you dive into the superhero action, let’s figure out what you really want to achieve.

So, you know how employers sometimes feel a bit lost when setting up those retirement plan goals? Well, no worries! We’re here to change that and lead your team on a path towards a retirement that screams confidence.

Ready for some questions?

What’s the grand goal of your company’s retirement plan?

Your company’s retirement plan isn’t just a financial tool; it’s the cornerstone of your employees’ future. Are you aiming for financial security, early retirement options, or perhaps a plan that fosters a strong company culture? Clarifying these goals ensures your plan aligns with your company’s vision and the well-being of your team.

How are you handling those fiduciary responsibilities?

Fiduciary responsibilities aren’t just a checkbox; they’re a commitment to your employees’ trust. Beyond legal obligations, it’s about ensuring your investment decisions, communication strategies, and plan management prioritize the best interests of your workforce. Regular assessments guarantee you’re not just meeting requirements but exceeding them.

Are your plan fees playing fair?

Uncover the true cost of your retirement plan. Beyond the surface, scrutinize fees, and explore whether there are more cost-effective options. This not only saves money for both the company and employees but also enhances the overall value of your retirement offering.

And hey, what about the latest legislation – how’s that affecting your retirement game?

The retirement landscape is ever-evolving, influenced by legislative changes. Stay ahead by understanding how new laws impact your plan. This knowledge not only ensures compliance but opens opportunities to optimize your strategy and keep your plan in sync with the latest regulations.

Any room for improvements in the plan design?

Don’t settle for the status quo. Explore innovative plan designs that could potentially enhance outcomes for your employees. From investment options to contribution structures, a proactive approach to design ensures your plan evolves with the needs of your workforce, fostering financial wellness.

Conclusion: Don’t let your company’s retirement plan wander.

Now armed with a more profound understanding of your goals, fiduciary responsibilities, fees, legislative impacts, and potential design enhancements, it’s time to take charge. Set a clear direction, map out a strategy, and ensure your company’s retirement plan isn’t just a benefit but a dynamic force propelling your team toward a secure and confident future.

And guess what? We’ve got your back every step of the way. Reach out to us today, and let’s give your retirement plan a well-deserved checkup. Your company’s retirement plan isn’t just a plan-it’s a journey, and RWM Financial Group is here to make it a remarkable one. Contact RWM Financial Group

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

2024 Compliance Calendar

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Stay ahead of deadlines with help from our annual Compliance Calendar. If you have any questions about deadlines or the information requested, please get in touch with us to review today!

Download the 2024 Compliance Calendar

RWM Financial Group is committed to providing solutions and support for yours and your employees’ retirement. Here’s a handy checklist to keep your retirement plan running smoothly:

  • Review plan documents: Ensure all information is up to date and compliant with current regulations. Don’t let any outdated policies slip through the cracks!

  • Communicate with participants: Engage your employees by sharing important updates, educational resources, and reminders about upcoming deadlines. Let’s keep them informed and motivated!

  • Evaluate investment options: Take a close look at your plan’s investment lineup. Are there any adjustments needed to align with participants’ goals? Let’s ensure a diverse and appealing selection.

  • Assess plan fees: Scrutinize the fees associated with your plan. Can any be renegotiated or reduced? It’s time to optimize your plan’s cost-effectiveness!

  • Conduct plan audits: Regular audits are crucial to maintaining compliance and identifying any potential issues. Stay ahead of the game and ensure your plan is in tip-top shape.

  • Enhance financial education: Empower your employees with financial literacy tools and resources. Help them make informed decisions for a secure retirement future.

RWM Financial Group takes pride in our roles as your Plan Advisors; we are dedicated to you, your plan, and your employees. We are here to support you every step of the way.

Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

Checking Under the Hood

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How to Perform a Six-Step Maintenance Checkup on Your Retirement Plan

Does your retirement plan make curious noises when it travels over a few market bumps? Are you getting enough mileage out of your savings rate? Is your diversification strategy as energy-efficient as it should be? Performing annual maintenance on your 401(k) can help make the road to retirement as smooth as possible. Here’s a six-step checkup that can be performed in just a couple of hours over a weekend.

STEP 1: Review Your Goals and Plans

Each year you should ask yourself if you’re on track to reach your retirement goals. Part of that process is imagining (in detail) what you would like to be doing during that stage of your life. Are your goals and plans realistic? Has your thinking changed at all — and why? The American Savings Education Council (www.asec.org) has a wealth of resources to help you review and adjust your goals and plans as needed, including their “Savings Goal Calculator” and other tools that can help you determine how much money you need to save for retirement.

STEP 2: Maximize Your Contributions

If you’re not contributing the maximum possible to your plan, increase your contributions by at least 1% each year, with a general goal of eventually reaching around 15% of your salary. Try to contribute at least enough right now to get the full employer match (if offered). It’s one thing to read this and say to yourself “yes, I can definitely increase by 1%.” But it’s only going to happen if you stop everything you’re doing right now, log into your account on your recordkeeper’s website and make the change!

STEP 3: Review Your Investment Strategy

Given all the market turmoil over the past few years, including inflation and economic events beyond our control, it’s smart to ask yourself each year if your asset allocation is still appropriate. Or, if your tolerance for risk has fundamentally changed. Your plan recordkeeper likely has a risk tolerance assessment exercise you can access on their website. In addition, consider working with a financial advisor to help you determine if your investment strategy is in sync with your current personal situation.

STEP 4: Rebalance

Rebalancing is the process of adjusting your portfolio’s investments so they match your original allocation. When your portfolio gets out of balance, you may stray from your original risk comfort zone. For example, due to ongoing market volatility, your portfolio may have drifted toward either a more aggressive or conservative allocation than you are comfortable with. Rebalancing keeps your portfolio risk within your tolerance limits.

STEP 5: Check Beneficiaries

Your spouse is automatically the primary beneficiary of your 401k plan. But, if you are divorced, widowed or remarried, you should review your beneficiary designations to make sure the correct person is named. Also, if you want to name someone else (such as a child) as your primary beneficiary, and you are married, your spouse needs to sign a waiver of rights to your 401(k) benefits.

STEP 6: Check on Retirement Plan Changes

Does your retirement plan offer any new plan features, tools, or resources? What can you do to take advantage of these opportunities? Also, be sure you have a copy of the Summary Plan Description for your plan (available for free from Human Resources). The Summary Plan Description defines, in plain language, how your plan works and what its features are.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com

©2023 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.

RP-840-0523 Tracking #1-05376250

Exciting Announcement: Introducing Our New Chief Investment Officer and Operations Team

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We have some thrilling news to share! Brahm Rossiter is stepping into the role of Chief Investment Officer (CIO). Brahm Rossiter will be overseeing all investment strategies and decision-making processes, ensuring the utmost level of expertise and attention to detail in managing your accounts. Brahm will be working with each team member behind the scenes. As always, Brahm is available by phone and in person.

To ensure a seamless transition and uninterrupted day-to-day operations, we’ve assembled a powerhouse team. They will be responsible for handling all administrative tasks, client inquiries, and operational aspects of your accounts. Allow us to introduce you to the members of our operations team:

Jake Taylor

Jake brings a wealth of experience in financial operations and client service. He will be a key point of contact for your account-related inquiries and will work diligently to ensure your needs are met promptly and efficiently.

Marcus Sasaki

Marcus is a seasoned professional with a strong background in investment management. He will play a crucial role in supporting the execution of investment strategies and monitoring market trends to optimize your portfolio.

Kirby Moreno

Kirby is a highly organized individual with a keen eye for detail. She will be responsible for the administrative aspects of your accounts and facilitating smooth operations.

Desiree Jacobs

Desiree is a dedicated professional with extensive experience in business operations. She will work closely with our team to ensure streamlined processes and effective communication, ultimately enhancing your overall client experience.

Rest assured, Brahm Rossiter will lead with unparalleled expertise, and our team will guide you toward financial success.

RWM Financial Group consultation
401K INVESTMENT ADVISORY SERVICES Brahm going over papers

Our team remains dedicated to understanding your unique financial goals and tailoring strategies to help you achieve them.

If you have any questions or concerns regarding this transition, or if you would like to schedule a meeting to discuss your portfolio, please do not hesitate to reach out to us. We are here to address any queries and provide you with the support you need.

We are thrilled about this positive change and the enhanced capabilities it brings to our firm. Thank you for entrusting us with your financial journey, and we look forward to continuing our partnership with you.

Addressing Common Employee Questions and Concerns about 401(k) Plans

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As an employer offering a 401(k) plan, it is important to provide your employees with the necessary information and support to help them make informed decisions about their retirement savings. In this blog, we will address common questions and concerns that employees often have regarding 401(k) plans. By proactively addressing these issues, you can promote employee engagement, boost participation rates, and enhance overall satisfaction with your retirement benefits program.

What is a 401(k) plan, and how does it work?

We’ll start by providing a clear and concise explanation of what a 401(k) plan is and how it functions. We’ll cover topics such as employee contributions, employer matching contributions, vesting schedules, investment options, and the tax advantages of participating in a 401(k) plan.

How much should I contribute to my 401(k) plan?

This section will guide employees on determining an appropriate contribution level based on their individual circumstances and financial goals. We’ll explain concepts like the power of compounding, maximizing employer matching contributions, and the potential long-term benefits of consistent contributions.

What investment options are available in a 401(k) plan?

Employees often have concerns about choosing the right investments within their 401(k) plan. We’ll provide an overview of common investment options such as mutual funds, target-date funds, and individual stocks. Additionally, we’ll emphasize the importance of diversification and the benefits of consulting with a financial advisor for personalized investment advice.

Can I access my 401(k) funds before retirement?

This section will address common questions about accessing 401(k) funds in case of financial emergencies or other unexpected circumstances. We’ll explain the rules and potential implications of early withdrawals, loans, and hardship distributions. It is crucial to educate employees about the potential impact on their long-term retirement savings and encourage them to explore alternative options before tapping into their 401(k) funds prematurely.

What happens to my 401(k) if I leave my job?

Employees often express concerns about their 401(k) funds when changing jobs. We’ll explain the available options, such as leaving the funds in the current plan, rolling them over to a new employer’s plan, or transferring them to an individual retirement account (IRA). By providing clear guidance, employees can navigate these transitions and make informed decisions regarding their retirement savings.

​​What is the difference between a traditional 401(k) and a Roth 401(k)?

Employees may have questions about the distinction between these two types of 401(k) plans. In response, explain that a traditional 401(k) allows pre-tax contributions, reducing taxable income in the year of contribution, while a Roth 401(k) allows after-tax contributions, with tax-free withdrawals during retirement. Discuss the advantages and considerations of each option to help employees determine which is more suitable for their needs.

How can I monitor and track the performance of my 401(k) investments?

Employees may express concerns about tracking the performance of their 401(k) investments. Provide guidance on accessing online portals or tools offered by the plan provider for monitoring account balances, investment performance, and contribution history. Explain the importance of regularly reviewing investment performance and making adjustments as needed to align with long-term goals.

What are the penalties for early withdrawals from a 401(k) plan?

Discuss the penalties associated with early withdrawals from a 401(k) plan. Explain that if funds are withdrawn before the age of 59 ½, they are generally subject to income tax and a 10% early withdrawal penalty. Emphasize the long-term impact of early withdrawals on retirement savings and encourage employees to explore other options, such as loans or hardship distributions, only as a last resort.

Are there any limits on annual contributions to a 401(k) plan?

Inform employees about the annual contribution limits set by the IRS. Explain that for 2023, the limit for employee elective contributions is $19,500, with an additional catch-up contribution of $6,500 for individuals aged 50 and older. Discuss the benefits of maximizing contributions up to these limits to take full advantage of the tax benefits and potential employer matching contributions.

Can I roll over funds from a previous employer’s retirement plan into my current 401(k) plan?

Explain the process of rolling over funds from a previous employer’s retirement plan into the current 401(k) plan. Discuss the benefits of consolidation, such as simplified account management and potential access to a broader range of investment options. Encourage employees to consult with their plan administrator or a financial advisor for guidance on the rollover process.

Final Notes

Addressing common employee questions and concerns about 401(k) plans is essential for fostering a sense of financial security and well-being among your workforce. By providing clear and accessible information, you empower your employees to make informed decisions about their retirement savings. Remember to encourage employees to seek professional guidance from financial advisors and periodically review their retirement strategies to ensure they stay on track towards a financially secure future.

By proactively addressing these questions and concerns, you can create a positive and supportive retirement benefits program that helps your employees achieve their long-term financial goals.

Learn More About RWM

There are many moving parts when designing, implementing, and administering a retirement plan. However, when you focus on the key areas in your initial design or partner with a professional specializing in retirement plans and administration, you can strive to avoid the common challenges and unnecessary costs while helping your employees succeed.

At RWM Financial Group, we help commercial businesses and governmental agencies design and oversee well-managed retirement plans in non-tribal and tribal organizations. Learn more about building a custom, cost-effective strategy that is compliant and promotes success for you and your employees.

This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation. In no way does the advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

The Inflation Reduction Act’s Impact on 401(k) Plans

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The Inflation Reduction Act (IRA) was signed into law by President Joe Biden on August 16, 2022. It addresses various important topics like healthcare, climate change, corporate taxation, and retirement plans. This blog specifically focuses on how the IRA affects 401(k) plans, providing an overview of the key provisions and offering insights for employers to ensure they comply with the new rules.

Understanding the Inflation Reduction Act:

The IRA was created to deal with the increasing inflation rates and minimize their negative impact on the economy and individuals’ financial well-being. The Act includes specific measures that directly affect retirement savings plans, such as 401(k) plans. It recognizes the importance of retirement planning, especially in an environment with rising prices.

In simpler terms, the Inflation Reduction Act was passed to address inflation’s effects and how it impacts people’s ability to save for retirement. It introduces changes to retirement plans, including 401(k) plans, to help individuals cope with inflation and secure their financial future.

Impact on 401(k) Contributions:

One notable effect of the IRA on 401(k) plans is the adjustment in contribution limits. To preserve the purchasing power of retirement savings, the legislation introduces changes that align with the effects of inflation on the economy. Typically, these changes result in an increase in contribution limits, allowing individuals to save more for retirement and protect their financial security from erosion due to inflationary pressures.

Tax Advantages and Withdrawals:

The IRA maintains the tax advantages of 401(k) plans while introducing adjustments to align with changing economic conditions. Individuals can continue to enjoy tax-deferred growth on their contributions, and the benefits of pre-tax contributions and potential tax-free growth remain intact. However, the Act may introduce changes to the tax treatment of withdrawals to strike a balance between preserving retirement savings and addressing inflationary pressures. This may include penalties for early withdrawals and the potential expansion of options such as Roth 401(k) plans, which offer tax-free withdrawals.

Additional Minimum Tax on Corporate “Book Income”:

The Act introduces an additional minimum tax of 15% on corporate “book income” for companies with income exceeding $1 billion. To determine if a company meets the “book income test,” its average annual adjusted financial statement income (AFSI) for the past three taxable years must exceed $1 billion. Corporations must exclude qualified retirement plan asset and income changes when calculating AFSI. Employer retirement plan deductions for 401(k) contributions and plan-related expenses should be subtracted, but if 401(k) assets revert back to the employer, they must be included in the AFSI calculation.

Additional Tax on Corporate Stock Repurchases:

The Act imposes a 1% excise tax on the fair market value of corporate stock repurchases that are not contributed to a 401(k) plan. When a company repurchases its stock from shareholders for cash, the excise tax applies. However, if the repurchased stock is contributed to an employer-sponsored retirement plan like a 401(k), the excise tax does not apply.

Compliance Considerations for Employers:

Employers, particularly large corporations, need to understand how to calculate “book income” and exclude relevant 401(k) plan expenses and deductions to ensure compliance with the additional minimum tax provisions. It is crucial to accurately calculate AFSI and evaluate potential tax consequences. Employers engaging in stock repurchases should be aware of the excise tax implications and carefully assess their strategies.

Financial Planning Considerations:

The IRA’s impact on 401(k) plans highlights the importance of thoughtful financial planning. Individuals should reassess their retirement savings strategies considering the adjustments to contribution limits, tax treatment, and potential penalties. Maximizing savings potential and taking advantage of tax benefits require collaboration with financial advisors to determine appropriate contribution levels aligned with long-term financial goals. Retirees must understand potential changes in withdrawal rules and engage in comprehensive retirement planning to navigate complexities and make informed choices.

Final Notes

The Inflation Reduction Act’s impact on 401(k) plans represents a significant development for retirement savings in an inflationary economic environment. By adjusting contribution limits, preserving tax advantages, and addressing withdrawal rules, the legislation seeks to protect individuals’ long-term financial security. As with any major policy change, it is vital for individuals to stay informed, evaluate their financial strategies, and seek guidance from professionals to optimize their retirement planning in light of the IRA’s provisions. By staying proactive and adaptable, individuals can navigate the evolving landscape and ensure a solid foundation for their future retirement.

Learn More About RWM

There are many moving parts when designing, implementing, and administering a retirement plan. However, when you focus on the key areas in your initial design or partner with a professional specializing in retirement plans and administration, you can strive to avoid the common challenges and unnecessary costs while helping your employees succeed.

At RWM Financial Group, we help commercial businesses and governmental agencies design and oversee well-managed retirement plans in non-tribal and tribal organizations. Learn more about building a custom, cost-effective strategy that is compliant and promotes success for you and your employees.

This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation. In no way does the advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

Retirement Planning: Q&A For Employers

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Ah, retirement. It’s that magical time in life where you can finally kick up your feet and relax after years of hard work. But let’s face it, retirement planning can be a bit overwhelming, especially for employers who want to ensure their employees are taken care of.

Retirement planning, in a nutshell, is the art of squirreling away some of your hard-earned cash into investments that will provide financial security when you decide to call it quits. It may not sound like the most exciting thing in the world, but trust us, it’s important!

As an employer, offering retirement benefits is not only a way to attract and retain top talent, but it also shows that you care about the financial well-being of your employees. Plus, it’s a win-win situation since it can also have tax benefits for you as the employer.

So, whether you’re an employee dreaming of the day you can retire to a beach somewhere, or an employer wanting to do right by your staff, understanding retirement planning is key. Let’s dive in and learn more about retirement plans, obligations, and all the fun stuff that goes along with it!

Types of Retirement Plans

Retirement plans come in all shapes and sizes, but don’t worry, we’ll break them down for you in a fun and easy-to-understand way!

Defined Benefit Plans

First up, we have defined benefit plans. These are the granddaddy of retirement plans and have been around for ages. They’re typically offered by government entities or large corporations and provide a fixed, monthly benefit to retirees based on a formula that takes into account factors like salary and years of service.

Defined Contribution Plans

Next, we have defined contribution plans, which are a bit more common these days. These plans allow employees to contribute a portion of their paycheck into an account that is then invested in a variety of options. The two most popular defined contribution plans are the 401(k) and the IRA.

401(k) Retirement Savings Plan

The 401(k) is a retirement savings plan that is offered by employers. Employees can contribute a portion of their pre-tax income into the plan, and in some cases, employers will match a portion of those contributions. The funds in a 401(k) plan are invested in a variety of investment options, such as stocks, bonds, and mutual funds.

IRA

An IRA, or individual retirement account, is a personal retirement savings account that individuals can set up on their own. There are two types of IRAs – traditional and Roth. Traditional IRAs allow individuals to contribute pre-tax income, while Roth IRAs allow individuals to contribute after-tax income. Both types of IRAs provide tax benefits and offer a range of investment options.

Others

Last but not least, there are other retirement plans that employers may offer, such as profit-sharing plans, employee stock ownership plans, and cash balance plans. These plans are a bit more specialized, but can be a great option for some employers.

Understanding Employer Retirement Plan Obligations

Employers have certain obligations when it comes to offering retirement plans to their employees. Let’s dive into these obligations and break them down into four sections:

Eligibility and Participation

Employers must establish eligibility requirements for their retirement plans, such as age and length of service. Once an employee meets the eligibility requirements, they must be allowed to participate in the plan.

Vesting

Vesting refers to the amount of time an employee must work for an employer before they are entitled to the employer’s contributions to their retirement plan. Vesting can be immediate, where an employee is immediately entitled to all employer contributions, or it can be graded, where an employee becomes increasingly vested over time.

Contribution Limits

Contributions to retirement plans are subject to limits set by the IRS, and employers must ensure that they are adhering to these limits. Exceeding contribution limits can result in penalties for both the employer and employee, so it’s important to stay on top of this.

Fiduciary Responsibilities

Employers who offer retirement plans are considered fiduciaries and have a legal obligation to act in the best interests of plan participants. This means employers must carefully choose investment options, monitor plan fees, and provide regular communication about the plan to participants.

By understanding these obligations, employers can ensure they are providing their employees with a valuable benefit while avoiding any potential legal issues. It may seem like a lot to handle, but with proper planning and management, offering a retirement plan can be a win-win for both employers and employees.

Common Retirement Planning Questions for Employers: What Employers Need to Know

As an employer, you play a key role in helping your employees plan for retirement. Here are some common retirement planning questions that employers should be aware of.

What retirement plans should I offer my employees?

The retirement plans you offer will depend on your business and budget. Common options include 401(k) plans, pension plans, and SIMPLE IRAs. It’s important to do your research and choose the plan(s) that work best for your employees.

How do I encourage my employees to save for retirement?

One way to encourage retirement savings is to offer an employer match. This means that you contribute a certain percentage of your employee’s salary to their retirement plan, which can incentivize them to save more. You can also provide education and resources about retirement planning to help your employees make informed decisions.

What are my obligations as a retirement plan sponsor?

Employers who offer retirement plans are considered plan sponsors and have certain obligations under ERISA (Employee Retirement Income Security Act). These obligations include providing plan information to employees, adhering to contribution limits, and acting in the best interests of plan participants.

How do I monitor the performance of our retirement plan?

It’s important to regularly review and evaluate the performance of your retirement plan. This includes monitoring fees, investment options, and participation rates. You can work with a third-party administrator or investment advisor to help with this process.

What happens if our retirement plan is not compliant?

If your retirement plan is not compliant, it can result in penalties and legal issues. It’s important to stay up-to-date on any regulatory changes and to work with a professional to ensure your plan is in compliance.

How do I handle employee turnover and their retirement accounts?

When an employee leaves your company, they may have vested funds in their retirement account. As an employer, it’s important to have a process in place for handling these funds, such as allowing the employee to keep the funds in the plan, rolling them over into a new retirement account, or distributing the funds.

How can I help employees who are behind on retirement savings?

Some employees may be behind on their retirement savings, which can lead to financial stress and uncertainty. As an employer, you can provide education and resources on catch-up contributions, encourage them to meet with a financial advisor, and explore offering financial wellness programs.

Can I make changes to my retirement plan?

Yes, employers can make changes to their retirement plan, but it’s important to follow certain guidelines and procedures. Changes should be communicated to employees in advance and should not violate any legal requirements or affect employees’ accrued benefits.

Should I offer a Roth option in my retirement plan?

A Roth option allows employees to contribute after-tax dollars to their retirement account, which can be withdrawn tax-free in retirement. It’s a good option for employees who expect to be in a higher tax bracket in retirement. Employers should consider whether a Roth option would benefit their employees and be feasible for the business.

By understanding these common retirement planning questions, employers can help their employees save for their future while also meeting their obligations as plan sponsors. It’s important to stay informed and seek professional guidance when needed to ensure your retirement plan is a success.

Learn More About RWM

There are many moving parts when designing, implementing, and administering a retirement plan. However, when you focus on the key areas in your initial design or partner with a professional specializing in retirement plans and administration, you can strive to avoid the common challenges and unnecessary costs while helping your employees succeed.

At RWM Financial Group, we help commercial businesses and governmental agencies design and oversee well-managed retirement plans in non-tribal and tribal organizations. Learn more about building a custom, cost-effective strategy that is compliant and promotes success for you and your employees.

This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation. In no way does the advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

How Not to Get Sued 101: Fiduciary Responsibility For Business Owners

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As a business owner, you’re the captain of your ship, and fiduciary responsibility is like the lighthouse that guides you through the treacherous waters of legal liabilities.

Just like how a captain must always act in the best interest of their ship and crew, you have a duty to always act in the best interest of your company and its stakeholders.

If you fail to uphold your fiduciary responsibility, you could face legal action and criminal charges. That’s like running your ship aground on a reef – not a good situation!

So, make sure you understand and practice fiduciary responsibility like a seasoned sailor navigating the high seas. It’ll keep your business sailing smoothly and your stakeholders happy!

In this blog, we’ll discuss some of the key concepts related to fiduciary responsibility and provide some tips on managing it effectively. By the end, you should have a solid understanding of the basics of fiduciary responsibility and how to navigate it in the world of business. So let’s get started!

What is Fiduciary Responsibility for Business Owners?

A fiduciary is someone who has been given the authority to act on behalf of another person or entity. This person or entity has a legal obligation to act in the best interests of the person or entity they represent and to avoid any situation where their personal interests might conflict with the interests of the person or entity they represent. They must make decisions with great care, loyalty, and honesty when acting on behalf of the person or entity they represent.

In simple terms, a fiduciary is a person or entity that is trusted to act in someone else’s best interests.

The Three Main Duties of Fiduciary Responsibility

Duty of Care: The fiduciary has a duty to exercise reasonable care, skill, and diligence when managing their client’s finances and investments. This includes developing an investment strategy that aligns with the client’s goals and risk tolerance, selecting appropriate investments, monitoring performance, and making adjustments as needed. 

The fiduciary must also be aware of any potential conflicts of interest and take steps to avoid them. This means disclosing any conflicts of interest and ensuring that all investment decisions are made solely in the client’s best interests.

Duty of Loyalty: The fiduciary must remain loyal to their client, always acting in their best interests. This means putting the client’s interests before their own and avoiding any actions that could benefit themselves or others at the expense of the client. For example, a fiduciary cannot recommend investments that provide them with a higher commission or fees if those investments are not in the client’s best interests.

Duty of Good Faith: The fiduciary must act with honesty, integrity, and transparency when making decisions on behalf of their client. This means disclosing all material information that could affect investment decisions and avoiding any misrepresentations or omissions of material facts. The fiduciary must also act in a timely manner, keeping the client informed of any changes or updates. Finally, the fiduciary must be accountable for their actions, keeping accurate records and promptly addressing any concerns or complaints raised by the client.

Overall, these duties of fiduciary responsibility are designed to ensure that the fiduciary always acts in the client’s best interests, with care, skill, loyalty, and good faith. By following these duties, the fiduciary can help their client achieve their investment goals and build trust and confidence in their relationship.

How Can Business Owners Practice Fiduciary Responsibility?

To practice fiduciary responsibility as a business owner, it is important to prioritize the best interests of the company and its stakeholders. This involves maintaining high ethical standards and making decisions that align with the company’s mission and values.

One way to do this is by minimizing financial risks through responsible financial management. This includes being mindful of expenses, budgeting effectively, and seeking out potential opportunities for growth while weighing the associated risks.

Transparency is also key to practicing fiduciary responsibility. Business owners should make financial information readily available to stakeholders, including employees, investors, and customers. This includes being transparent about decision-making processes, financial reporting, and any potential conflicts of interest.

To protect the company from legal liabilities, business owners should consult with legal and financial experts when making important decisions. They should also educate themselves on relevant laws and regulations that apply to their industry.

In addition to personal responsibilities, business owners should ensure that their employees understand their own fiduciary duties and have the necessary resources to make informed decisions. This can include training programs, access to financial experts, and clear guidelines on how to handle financial matters.

By prioritizing fiduciary responsibility, business owners can build trust with stakeholders, ensure the long-term success of their company, and contribute to a healthier business ecosystem.

In Summary

Overall, understanding and practicing fiduciary responsibility as a business owner is of the utmost importance. Fiduciary responsibility is a legal obligation that must be taken seriously, and a breach of fiduciary responsibility can lead to legal action. By understanding and practicing the duties of care, loyalty, and good faith, business owners can protect themselves and their businesses from potential legal action.

There are many moving parts when designing, implementing, and administering a retirement plan. However, when you focus on the key areas in your initial design or partner with a professional specializing in retirement plans and administration, you can strive to avoid the common challenges and unnecessary costs while helping your employees succeed.

At RWM Financial Group, we help commercial businesses and governmental agencies design and oversee well-managed retirement plans in non-tribal and tribal organizations. Learn more about building a custom, cost-effective strategy that is compliant and promotes success for you and your employees.

This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation. In no way does the advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

Benchmarking: Guidance for Retirement Plan Sponsors for 2023 and Beyond

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Every retirement plan has fees – that’s a given. When 401(k) plans are provided by employers as part of their employee benefits, it becomes their duty as a fiduciary to ensure that the fees are maintained at reasonable levels.

Why? As an employer offering a 401(k) plan to your employees, it’s important to ensure that the fees associated with the plan are reasonable and competitive. Not only is this a fiduciary responsibility, but it also affects the overall success of the plan and the financial well-being of your employees.

In 2023, there are new fee benchmarking requirements that employers need to be aware of to ensure compliance and avoid potential penalties.

What Does it Mean to Benchmark a 401k?

401k benchmarking involves reviewing and assessing a company’s retirement plan to ensure that it complies with industry and ERISA standards, thereby serving as a due diligence process to verify that the plan provider is fulfilling their fiduciary responsibilities.

Moreover, given the evolving landscape of investing and retirement planning, it’s crucial to keep a 401k plan current. This involves evaluating the plan’s design, different service providers, investment options, and associated fees.

How 401(k) Benchmarking Works

401(k) benchmarking is a critical process for ensuring that a company’s retirement plan remains competitive and meets the necessary standards. While a 401(k) plan offers convenience and is a popular option for retirement investing, it is the company’s responsibility to ensure that the plan is performing well. 

Through an annual check-up, the firm assesses the plan’s design, evaluates its fees, and reviews the services provided by the plan provider. 

Preventing Costly Mistakes in 2023: Your 401(k) Benchmarking Checklist

This process reduces the risk of violating ERISA rules, protects plan participants and beneficiaries, and can ultimately save the firm money. The Employee Retirement Income Security Act (ERISA) mandates minimum standards for retirement plans and requires the plan sponsor to verify that the 401(k) plan has reasonable fees.

Review the Plan’s Fees 

Employers should review the fees associated with their 401(k) plan to determine if they are reasonable and competitive. This includes investment-related fees, administrative fees, and any other fees associated with the plan.

Benchmark the Fees 

Employers should benchmark the fees associated with their plan to those charged by other similar plans in the marketplace. This can be done using a third-party benchmarking service or by conducting a survey of other plans.

Evaluate of Plan Features

While the primary goal of any 401(k) plan is to help employees meet their retirement goals, recent years have seen a shift in what employees want from their benefit plans. Conducting a full review of your plan will allow you to evaluate current plan features and make changes as necessary based on your employee demographic. Analyze plan participation numbers and engagement rates, and consider implementing automatic enrollment or offering an employer match, Roth, and additional after-tax contributions to incentivize employee participation. 

Additionally, ensure that employees can easily access information on how to take full advantage of the retirement plan, such as financial wellness resources and access to licensed representatives who can help with investment selection, debt management, home buying, and saving for college education.

Ensure You Maintain Proper Documentation

When faced with an audit, how can you prove that you’ve met your fiduciary obligations? The answer lies in having documented processes based on facts.

As an employer, it’s your responsibility to offer a variety of investment options to your employees, each with different cost levels, in their best interests. Active funds, for instance, are usually more expensive than passive index funds. However, it’s important to assess the overall benefits to your company and employees before making a decision.

Your plan must have an investment policy statement that directs investment decisions. After the IPS is established, you can select a list of fee-friendly investment options that align with the IPS. As a sponsor, you must document this process, as well as the following aspects as they relate to fees:

  • What is the total cost?
  • What is the record keeper’s fee?
  • What is the advisor’s fee?
  • What is the fee charged by individual investment companies?

Employers have often been penalized or required to reimburse employees for mismanaged fees due to a lack of documentation and process in litigation. As an employer, you don’t have to have the cheapest fees; you just need to ensure that you’re “acting with loyalty and prudence” and that the fees are justified.

Review Compliance Procedures

The effects of inflation are being felt across the board, including by plan sponsors and advisors who are experiencing rising costs for managing and operating retirement plans. In anticipation of increased Employment Retirement Income Security Act (ERISA) penalties due to inflation, plan sponsors and advisors should take action now to prevent and mitigate potential impacts. This involves a review of compliance procedures, such as automated collection of funds and information, notifications, and compliance report filing. 

With penalties for non-compliance on the rise, ensuring that automated systems are functioning properly can help prevent unexpected and unwelcome penalties. It’s important to budget accordingly for the possibility of having to pay inflation-increased penalties in case mistakes occur.

Provide Fee Disclosures 

Employers should provide fee disclosures to plan participants annually. These disclosures should be clear and concise and include the investment-related fees and administrative expenses associated with the plan.

Take Action as Needed 

If the benchmarking process reveals that the fees associated with the plan are not reasonable or competitive, employers should take action to address the issue. This may include renegotiating fees with service providers, changing service providers, or taking other steps to reduce plan costs.

An Approach to Benchmarking 401(k) Plans

Benchmarking 401(k) plans is an essential step in ensuring that you offer a competitive package to your employees. An independent review can help you compare your plan with other similar plans and provide recommendations if necessary. It’s important to document valid reasons if your fees appear to be high, such as providing additional services like a 24/7 help desk, educational programs, or translators for non-English-speaking employees. These factors may be important to employees and result in higher costs.

However, it’s not always ideal to have the lowest fees, as this can indicate a lack of quality services or a limited investment lineup. Therefore, it’s crucial to have an advisor who can bid out your plan to several providers every three years, compare the options, and negotiate on your behalf to ensure you don’t change plans unnecessarily.

In Summary

The new fee benchmarking requirements for 401(k) plans in 2023 are designed to ensure that plan fees are reasonable and necessary for the administration of the plan. Employers should take the necessary steps to comply with the regulations, including reviewing the plan’s fees, benchmarking the fees, documenting the benchmarking process, providing fee disclosures, and taking action as needed. By doing so, employers can fulfill their fiduciary responsibilities and help their employees achieve financial success in retirement.

Learn More About 401(k)Plans

Employers should create an effective 401k communication plan that helps employees make informative decisions for retirement.

Contact RWM today to review your existing 401k or talk through a plan of action to offer retirement savings to your employees. 

This information was developed as a general guide to educate plan sponsors but is not intended as authoritative guidance or tax or legal advice.  Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.  In no way does the advisor assure that, by using the information provided, the plan sponsor will be in compliance with ERISA regulations.