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Quarterly Considerations 03/31/2015

Plan Sponsors

Fiduciary update – After more than four years, the DOL has proposed a new fiduciary rule for advisors providing retirement advice. Key topics addressed include conflicts of interest, transparency around hidden fees and a standard to put the plan sponsor and participant interests first. A 75 day comment period is open and at the conclusion we look forward to finalized regulations.

DB funding on the rise – According to P&I, over 50 companies have announced they will contribute more than $17 billion collectively to their DB plans in 2015.
Low interest rates combined with new mortality assumptions are expected to cause an uptick in de-risking activity during 2015. Lump sum offerings to term vested and transfer strategies for retirees can help minimize participant counts ahead of rising PBGC premiums.

Non-Profit Organizations

Spending relatively unchanged – According to the NCSE 2014 study of endowments, spending rates were unchanged from last year at an average of 4.4%,
ranging from a high of 4.6% for large endowments to 4.2% for small endowments. On average, institutions reported 9.2% of their operating budget was supplied by their endowment, up slightly from 8.8% the previous year. Large institutions relied more heavily on their endowment to fund 16.9% of their operating budget compared to only 4.2% for smaller endowments.

Private Clients

Tax Time…Again – With another April 15th behind us, many taxpayers find themselves surprised by their tax liability. Please contact MPS LORIA to discuss the tax efficiency of your investment portfolio and other tax-savings actions to consider for the 2015 tax year.

‘Max’ed Out! – Contribution limits for some retirement plans have increased for 2015. Taxpayers can now add $18,000 (with a $6,000 Age 50+ Catch-Up) to their 401k and as much as $53,000 to SEP-IRAs (if self-employed). IRA limits remain the same from 2014 at $5,500 and $1,000 for the Age 50+ Catch-Up.

Retiree Regret – A New York Life survey of retirees age 62-70 found that most would have preferred to retire four years earlier than they actually did. Savings, Social Security, and Spending are just three of many key inputs when deciding when to retire. Our advisors at MPS LORIA stand ready and equipped to help guide this discussion for our clients.

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