Trends in Executive Compensation & Broken 401(k)s
Trends in Executive Compensation – Attracting & Retaining Key Employees
Employer-provided benefits are a crucial tool used to recruit and retain key employees in corporate America. Based on new developments in Congress and the Internal Revenue Service, there are two plans, one new and one old, that should be examined. In 2006, Congress made the Roth 401(k) a permanent employer-provided benefit. More and more companies and 401(k) administrators will be offering the Roth 401(k) alongside the traditional 401(k) plan, and the use of the Roth 401(k), alone or in combination with the traditional 401(k), could provide a great value to employees.
In addition, Section 412(i) plans are traditionally for employers with fifteen or less employees. While these plans are still a valuable employer-provided benefit, based on current IRS audit activity, it is important to review these plans to make sure that all plan requirements are being met.
During this session, you will learn:
* The important differences between traditional 401(k) & Roth 401(k)s
* Who should consider a Roth 401(k)
* How to add a Roth feature to an existing 401(k) plan
* How to avoid abuses with your 412(i) plans
* What the IRS is looking for regarding 412(i) abuses
Broken 401(k)s – How to Ensure Your 401(k) Plan is Truly Helping Your Employees
With the widespread move by American companies away from traditional defined-benefit pension plans to participant-directed 401(k) retirement plans, employees have been put in a very difficult predicament. They currently face growing problems, which are essentially three-fold. First, the sums of money now put into their retirement accounts – whether by the employee alone or with the assistance of an employer match – are typically far less than the funding previously offered under traditional pension plans. Under the old method, retirees could receive a guaranteed stream of income for the rest of their lives, depending on the length of service, employment level, and age of retirement. Today, it is estimated that the average retiree retires with enough funds to last only seven to eight years.
Second, the current 401(k) system also leaves many employees with a shocking lack of investment guidance. Unlike traditional pension plans, which were overseen by investment professionals who were instructed to ensure that the retirement funds were well-diversified and properly invested for balanced, long-term growth, today’s 401(k) retirement plans are “self-directed.” Accordingly, employees are encouraged to make their own investment decisions and manage these assets with limited or no assistance. As you might expect, the resulting methods and strategies utilized by 401(k) participants vary widely – with an alarming number of future retirees being overly-concentrated in one or two investment selections, sometimes the company’s stock itself – the “Enron problem” – not understanding the benefits of asset class diversification or how to properly balance risk and reward.
Finally, another major problem facing plan participants is the secrecy surrounding the investment management fees included inside many 401(k) plans – often much larger than expected. In fact, the excessive costs and fees of some 401(k) programs (through the inclusion of layers of hidden costs in the investment vehicles and various administration costs) has become a front page issue in the press and drawn the attention of Congressional lawmakers. Furthermore, a wave of class-action lawsuits regarding this issue has been aimed at some of the nation’s largest companies (including Northrop Grumman, Bechtel, Caterpillar, General Dynamics, and International Paper), accusing the employers of breaching their fiduciary duty owed to the plan participants under the Employee Retirement Income Security Act (ERISA).
During this session, you will learn:
* The essential elements of a 401(k) plan that’s great for you and your employees
* Why “revenue sharing” agreements can be extremely harmful
* How excessive investment fees can cause plan participants to lose up to half of their potential retirement savings – yes, half
* Why a wide variety of highly-efficient index investments should be included in your plan.
About the Speakers:
Jeremy Head, Southern Wealth Management
Jeremy leads the New Orleans office tax consulting practice at Southern Wealth Management. Prior to joining SWM, he was a senior manager with Ernst & Young’s New Orleans office, where he spent 6 years in the federal and international tax practices. His experiences at Ernst & Young range from providing tax services on large, publicly traded corporations to addressing the unique tax issues and tax planning of individual family groups and business owners. Prior to joining Ernst & Young, Jeremy spent 2 years in Arthur Andersen’s Private Client Service group in New Orleans. Jeremy has a Bachelor of Arts in English from Davidson College in North Carolina and a Juris Doctorate from Louisiana State University Law Center. He is a Louisiana licensed Certified Public Accountant.
Michael H. Smither, IndexEdge Investment Consulting LLC
Michael H. Smither, J.D., the founder and managing partner of IndexEdge Investment Consulting LLC is an attorney and a registered investment adviser. He received his undergraduate degree in Economics from the University of Virginia and has extensive experience within the securities industry. Before founding IndexEdge, he helped develop the private client investment services of a large regional banking corporation and worked with a wealth management and consulting group at a leading financial services firm. Mr. Smither has been written up and quoted in The Wall Street Journal as an expert on index investments and ETFs, and he also conducts a weekly financial segment on KVUE-TV in Austin entitled “Money Counts.”
Laura Sweeney, Southern Wealth Management
Laura was a senior manager in Ernst & Young’s Private Client Services group prior to joining Southern Wealth Management. Laura has focused her career in the financial planning field for the past 13 years having spent more than 5 years with the Ayco Company, 3 years with Arthur Andersen, and the past 2½ years with Ernst & Young. She specializes in providing comprehensive financial planning to corporate executives and wealthy families. Laura has a Bachelor of Arts in Psychology from Russell Sage College, a small women’s college in upstate New York, and also holds a Juris Doctorate from Albany Law School. She is admitted to the practice of law in both New York and Florida.
Cost:
$55 ATC Members
$70 NON Members
$5 additional at the door
Date & Time: Tuesday, November 13th, 8:00-10:00am Continental Breakfast will be served.
Location: Northwest Austin St. Edward's University Professional Education Center, Austin, TX
To reserve your seat, please register online. For questions or more information, please call Soozie Selfridge, Operations Manager, at (512) 305-0023.
