Schulmerich & Associates Timely Retirement Solutions for Companies Large and Small
Choosing an investment manager for your company’s retirement plan can be a challenge. Quality services and a diverse range of investment options are important, but solid investment performance is also key. At Schulmerich & Associates, that’s what we’re all about. We strive to excel at what we do best---manage money. Our time-tested disciplined investment strategies are the basis of our strong, long term-term results. But we offer more than just disciplined performance. Our customized approach to retirement planning takes quality service a step further. We focus on the special needs of a company and tailor retirement plans based on size, demographics and goals. The result? A timely retirement solution that fits your company today and can grow with it tomorrow.
Stephen C. Schulmerich, CFP - A Valuable Resource
When it comes to the fine points of putting together the right retirement plan and complying with 404(c) requirements, contact Schulmerich & Associates.
Whether you’re considering transferring your plan or establishing a new one, Schulmerich & Associates can show you how to bring the TD Ameritrade and Dimensional Fund Advisors retirement solution to your employees, how to customize the plan features to best fit the needs of your company and how TD Ameritrade and Dimensional Fund Advisors mutual funds can help limit your company’s fiduciary liability under section 404(c).
For more information, please contact Stephen C. Schulmerich, CFP, CEA, AIF
Local: 503.672.7750
Toll free: 888.866.5639
Fax: 503.672.7699
UNDERSTANDING YOUR RESPONSIBILITIES AS PLAN SPONSERAs a plan sponsor/trustee, you have an essential role as a fiduciary in selecting and monitoring the investments offered to your plan participants. However, if you elect to have participants direct the investments in their accounts, you have the option of limiting your fiduciary liability for investment losses by complying with section 404(c) of ERISA (The Employee Retirement Income Security Act of 1974) and the related Department of Labor regulations.
Following are questions and answers to help you understand your responsibilities as a plan sponsor under section 404(c).
The Role of a Plan Fiduciary
Q. What is my responsibility regarding investment options?
A. The investment options available within your retirement plan should meet the diversification goals of your participants and allow them to invest according to their individual financial goals and risk tolerance. As a plan sponsor, you have the responsibility to carefully select and continuously monitor the investment alternatives available to plan participants. They must be provided with relevant investment information. Additionally, plan participants should be provided with ongoing educational literature to help them make informed decisions.
To meet these responsibilities, consider forming an investment policy committee and creating an investment policy statement.
Q. What are the responsibilities of an investment policy committee?
A. An investment policy committee typically includes individuals who have the background and experience to make decisions regarding plan investments. Consider principal management employees such as the company’s president, chief financial officer and human resource director. The investment policy committee can help to create the plan’s investment policy, assist in monitoring the investments and ensure adherence to the investment policy.
The investment policy committee should● evaluate and select investment options that include both aggressive and conservative alternatives,● maintain a broad range of investment alternatives,● continuously monitor the performance of each investment alternative to ensure consistency with stated objectives,
● collect and review each fund’s prospectus, semiannual and annual reports as
well as other related performance documents and marketing literature,
● inform participants that they are responsible for their own investment strategy and managing their individual retirement accounts and● provide participants with relevant investment information and ongoing educational literature to help them make informed decisions.Documentation of the committee’s analysis and decisions should be retained. For example, the documentation should include industry ratings and investment reports.
Q. What is the purpose of an investment policy?
A. An investment policy is a guide to a plan’s investment program. Your investment
Policy would set the standards and provide guidelines for reviewing and changing your plan’s investment options, whether you or a committee makes the investment decisions. Once an investment policy is adopted, it becomes part of a plan’s documents. When creating your investment policy, consider ● the size of the plan and ● the age, income, investment knowledge and investment goals of the participants.
Understanding the Department of Labor Regulations Related to Section 404(c)
Q. What are the basic requirements of the regulations?
A. Section 404(c) relieves a plan trustee of investment liability for specific participant-
directed transactions. That means that when plan participants or their beneficiaries
exercise control over the assets in their individual pension plan accounts, your liability as fiduciary is reduced with respect to losses resulting from that exercise of control.
Compliance with section 404(c) is optional. If you choose to comply, you will still have fiduciary responsibility to ensure that the investment options offered continue to meet the fiduciary standards.
Some of the 404(c) requirements are listed below. Participants should be provided with
● an explanation that the plan is intended to comply with section 404(c) of ERISA and
that its fiduciaries may be relieved of liability,
● a broad range of investment alternatives,
● a description of the investment alternatives,
● procedures for participants to give investment instructions and
● the opportunity for participants to receive written confirmation of investment
instructions.
Please note that this guide does not fully disclose all of the requirements. Schulmerich & Associates Asset Management can help you create a complete 404(c) checklist tailored to your plan.
How Schulmerich & Associates Helps You Meet 404(c) Requirements404(c) Requirements
Dimensional Fund Advisors Offers a Range of Investment Choices.
404(c) requires a broad range of investment alternatives---generally,
at least three investment options that are diversified and have different
risk/return characteristics.
Provide Investment Flexibility.
404(c) requires the ability to make investment changes on a frequent
basis.
Provide Information on Investment Alternatives.
404(c) calls for employers to provide sufficient information to help
participants make informed decisions.
DFA Funds through TD Ameritrade
Offer a broad range of investment alternatives across
the risk spectrum from which to choose---from
conservative to moderate to aggressive. In addition
To DFA funds, you may select investment options
from other fund families. Your financial advisor can
help you determine which funds would be appropriate
to meet the 404(c) requirements for your plan.
Allow participants to change their investment allocation
or the investment of future contribution at any time.
TD Ameritrade retirement plan accounts are valued daily.
Provide employers with comprehensive package of
educational literature, fund prospectuses and fund
fact sheets so that each participant can receive employee
educational literature prior to enrollment. Each quarter
after enrollment, participants will also receive a
newsletter, fund performance updates and a statement
of their accounts.
INVESTMENT POLICY STATEMENTThis sample investment policy is for illustrative purposes only. It should be used solely for discussion or planning purposes. An investment policy becomes part of the plan documents and must be followed. Please seek legal or other advice to prepare an investment policy appropriate for your plan.
Purpose of Investment Policy
The (the “Plan”) allows participant direction of individual accounts. The plan is intended to comply with section 404(c) of ERISA (The Employee Retirement Income Security Act of 1974).
Investment Options
The plan will offer a range of mutual fund investment options. Each option will be diversified and have materially different risk and return characteristics.
Funds will be offered in the following classes:
● Small Cap Value● S&P Enhanced● Micro Cap
● S&P Enhanced● Micro Cap● International Small Cap Value ● Fixed Income ● US Large Cap
● Fixed Income ● US Large Cap● Real Estate Sec. ● Small Cap● Pacific Rim Small Co. Port.
● Small Cap● Pacific Rim Small Co. Port.Fund selection will be made on the basis of performance history relative to industry benchmarks, return relative to risk, diversification of the fund and the fund strategy.
Review of Options Offered
The Investment Committee will review the investment options selected on at least a quarterly basis to ensure that each option continues to be an appropriate option for the Plan.
Participant Information and Education
During enrollment, participants will be provided with the following information for each fund offered:
● Description of the investment objective
● Risk and return characteristics
● Type and diversification of the portfolio
● Transaction fees—sales load, commissions, redemption or exchange fees, advisor fees
● Prospectus
Upon request, the following will be furnished:
● Updated investment performance
Employee communications of the Plan’s provisions and investment options will be designed to encourage participants and enable participants to make informed decisions. Sources of general financial and investment information will be communicated to participants.
INVESTEMENT POLICY STATEMENTInvestment Committee
The members of the Investment Committee are designated below:
Name Title
Name Title
Name Title
Plan’s Initial Investment Options
The initial investment options selected for the Plan are as follows:
Plan Adoption Date
The Trustees adopt this Investment Policy for the Plan on this month
day year .
TrusteeDate
DateTrusteeDate
Date