TNNWC ENTREPRENEURIAL PUBLICATIONS

TNNWC Publications And Informational Products Division publishes The National Networker (TNNWC) Weekly Newsletter and The BLUE TUESDAY Report especially for entrepreneurs and early-stage venturers; free weekly subscriptions to these informative publications are available online to all entrepreneurial Members of TNNWC.

Membership in TNNWC is free (it's automatic for any subscriber to any TNNWC Publication) and available at our website. When you arrive there, just click on any of the JOIN US or BECOME a MEMBER buttons or links.

Sunday, July 25, 2010

SOUND INVESTING: Why Business Owners Need to Understand Their Company's Retirement Plan

Sound Investing with Jason Lampa, MBA


Emerging Enterprises who currently sponsor an existing retirement plan or have thoughts of starting one need to be aware of the responsibilities placed on them by the DOL and ERISA. This article will cover the three main areas in which business owners need to be fluent, in order to meet their fiduciary responsibility:
  • Costs
  • Investment Options
  • Employee Education
Since having an expertise in retirement plans is not the core strength of most business owners, more often than not, he or she is not aware of the fiduciary responsibility that they have to provide their employees with a retirement plan that is cost effective, has adequate investment options and provides ongoing education for new and existing employees who participate in the plan. The retirement plan consultant and the vendor they represent will not disclose all the fees involved within a retirement plan if the business owner does not ask the right questions. Here are a sample of costs that can be associated with a 401k/Profit sharing plan:
  • Administration/Recordkeeping Fee
  • Annual Audit
  • Back-End Load
  • Balance-Inquiry
  • Brokerage Commission
  • Contract Administration Charge
  • Contract Termination Charge
  • Conversion Fee
  • Distribution Expense
This is just a small list of the fees that can be involved with a company retirement plan. It is important for me to mention that if your company currently is utilizing an insurance provider for your 401k/profit sharing plan, you and your employees may be paying in upwards of 4% per year in fees. Taking into consideration that the average investor has made 4.5% annually during the past 20 years, when you subtract the 4% fee, it leaves the retirement plan participant with a .5% annual return. Simply put, at this rate, the investor would double their money every 144 years!

Most the business owners with whom I speak, face a major challenge in choosing the investment options for their employees to choose from within a retirement plan. Though they usually have the best intentions, too many times, the business owners selects the lowest cost investment options because large asset management firms convince them that investment options with the lowest expense outperform other investment options with higher expenses. Nothing could be further from the truth. One of the main reasons that employees have lost more than half of their retirement savings within the past five years is because the investment options within their plan were did not provide them the diversification necessary to manage downside risk.

In my experience, less than 50% of business owners provide their employees with access to educational resources with regards to the company retirement plan. By not providing access to these resources, business owners are opening themselves up to lawsuits. We have already begun to see this happening with larger companies and as this trend continues it will begin to affect the emerging enterprise community as well.

Fulfilling your fiduciary responsibility as business owner to an employer-sponsored retirement plan is not an issue to take lightly. If you do not follow the rules put in place by Department of Labor and ERISA law, you could wind up paying a hefty price. Though your intentions are pure, in providing your employees with a vehicle to save for retirement, failing to provide them with an adequate retirement plan can land you in hot water.


For more information, please visit Jason's TNNWC Bio.



Membership is FREE!The NATIONAL NETWORKER™The NATIONAL NEWSPICKER™LEFT, RIGHT and CENTER™Financing, Credit and Risk ManagementEmerging Enterprises Venture Capital Program™Merchant Payment Processing SolutionsNews Releases, Publicity and Public RelationsBUZZWORKS™ - Branding and Social Media DominationMarket Research, Surveys and PollsAssessment ToolsBLOGWORKS™ - Expand Your Search Engine Presence, Positioning and CredibilityAdvertise with Us!Selected Service ProvidersInternational Connections Service - Go GlobalIntelligence and Information OperationsInstant Mobile Communications, Applications and Training
Visit Our WEBSITE for more!http://www.TheNationalNetworker.com
Capital, Traffic Building, International Customers and unique SERVICES.
The National Networker Publications™ produced by TNNWC Group, LLC
Empowering Emerging Enterprises”

Forward/Share This Article With Colleagues And Social Media:
Share/Save/Bookmark

No comments:

Blog Archive

BNI News Feed

The Emergence of The Relationship Economy

The Emergence of The Relationship Economy
The Emergence of the Relationship Economy features TNNWC Founder, Adam J. Kovitz as a contributing author and contains some of his early work on The Laws of Relationship Capital. The book is available in hardcopy and e-book formats. With a forward written by Doc Searls (of Cluetrain Manifesto fame), it is considered a "must read" for anyone responsible for the strategic direction of their business. If you would like to purchase your own copy, please click the image above.

Knowledge@Wharton













Site Credits:


Featured in Alltop
ALLTOP Business
News Wire. HOT.
Cool Javascript codes for websites
KeepandShare.com(R)  Fabulous Free Calendars

Create FREE graphics at FlamingText.com