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For the Business Partners & Friends ofRetirement Solution Group, LLC,
Q4 2010 Review and Looking at 2011
January 25, 2011
Presentation by:
Steve ScottManaging PartnerRetirement Solution Group, LLC
“Securities offered through Ausdal Financial Partners, Inc, member FINRA, SIPC. Advisory services provided by Ausdal Financial Partners. Retirement Solutions Group and Ausdal Financial Partners, Inc are separately owned and operated companies.”
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Agenda
Market Update
Legislative Updates
2011 Contribution Limits
Plan Analysis: Plan Design & Benchmarking
Summary and the Year Ahead
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Market Update
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What’s New - The Markets
The Markets (1 Year Returns as of January 24, 2011, source: Morningstar) S&P 500, +18.56 DJIA, + 17.38 Russell 2000, + 24.57 Mid Cap 400, + 25.85 EAFE, + 11.79 EMFI, + 11.71
Strong End to 2010 Month end returns Year ended even stronger than predicted
Concerns Bonds and interest rates Cash Unemployment rates high, but getting better. Down .4% from Sept to Dec 2010.
Retirement Solution Group
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Legislative Updates
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Section 408 b(2)
New Fee disclosure rules becoming mandated in July 2010
Fiduciaries are required to understand all fees and expenses associated with their retirement plans and assess whether these costs are competitive in the marketplace
Requiring Plan Sponsors to provide fee disclosure to its participants is nothing new. RSG has proactively provided participants with information on their particular fee structures in newsletters and statements but if you would like to discuss your account please contact us
Retirement Solution Group
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New Limits for 2011
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2011 IRS Limits
No change to Employee Elective Deferral limits $16,500 for 59.5 and under $22,000 for 59.5 and over
IRA Limits $5,000 for age 49 and under $6,000 for age 50 and over
Strategy Evaluation If you have stopped your deferrals it is time to re-start If you were lucky enough to receive a pay raise, increase your contribution percentage also Take advantage of the Catch Up provision if you are 59 and over Remember that you should be saving at least 10% of your pay towards your retirement
Retirement Solution Group
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Loans and Hardship Withdrawals
Fidelity Investments included the following in a recent report on developments in the second quarter of 2010:
While the majority of 401(k) participants continued to save during the quarter, the percentage of participants either initiating a loan or a hardship withdrawal increased. Loans initiated over the past 12 months grew to 11% of total active participants from about 9% one year prior. The portion of participants with loans outstanding also increased two full percentage points in the second quarter to 22%. The average initial loan amount as of the end of the second quarter was $8,650 with an average loan duration of three and half years….
During the second quarter of this year, 62,000 participants initiated a hardship withdrawal, as compared to 45,000 participants who initiated one during the prior quarter. As of the second quarter, 2.2% of Fidelity’s active participants took a hardship withdrawal, up from 2.0% one year prior. Additionally, 45% of participants who took hardship withdrawals one year prior also took a hardship withdrawal in the 12 month period ending in the second quarter of this year. Plan sponsors report that the top reasons why participants are taking hardship withdrawals are to prevent foreclosure or eviction, pay for college, and the purchase of a primary residence.
Fidelity has found that the average age of those taking a loan or hardship withdrawal is between 35 and 55 years old – a worker’s peak earning years – when individuals often have to deal with multiple, competing, financial challenges. Distributions from a 401(k) or 403(b) are taxed as ordinary income, plus if you are under age 59½ you may be subject to a 10% early withdrawal penalty.
Source James Ridgeway, Mother Jones
Retirement Solution Group
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Plan Analysis: Plan Design & Benchmarking
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Plan Analysis
Plan Design Pressure Washing Company wastes 4% of payroll Defined Benefit/Cash Balance Plan for private consulting firm, Max Contribution Confusion Pastry Shop gets hit with excise tax
Benchmarking Why? RSG’s role Brightscope
Strategy Evaluation Are corporate goals aligned with plan design goals? Do you know what your plan costs? (Full disclosure service agreement) Have you run a Trustee Review in past 12 months? Transaction versus Consultant Service Model?
Retirement Solution Group
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Summary
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Summary
Recovery continues in 2011 but a setback could occur at anytime
Fee Disclosure will be a hot topic
Time to evaluate your Plan
Call us to schedule a portfolio review at 866-352-7731
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Retirement Solution Group Works For You…Review your plan and solicit help as needed:
1. Steve Scott, Managing Partner 866-352-7731 x 21
2. Scott Emering, Partner x 11
3. Ed Emering, Senior Actuary x 14
4. Christie Cheng, Education & Relationship Manager x 31
5. Elvia Sanchez, Education & Relationship Manager x 41 (Spanish speaking)
6. Julie Yanez, Sr. Plan Administrator x 15
7. Bob Kibble, Plan Administrator & Participant Transactions x 16
8. Dawn Vazquez, Administration & Participant Transactions x 51
Retirement Solution Group
“Investments involve risks and potential loss of principal and are not FDIC insured investments.
Investments and investments in 401k plans are not guaranteed by the federal government or the FDIC, they involve risk including but not limited to loss of principal. Opinions expressed are those of Steve Scott and do not represent the opinions of Ausdal Financial Partners, John Hancock, Apotex or Retirement Solutions Group. They are opinion only and should be not considered as stand alone advice.”