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Author: sutton One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Being the (new) boss Date: 11/25/1999 3:24 PM
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Ladies and gentlemen...I need your collective wisdom.

I'm suddenly finding myself An Employer. After years of contributing to the mother ship's plan, as of January 1 I'm president of a for-profit corporation with 20 employees (including four partners/HCEs).

Getting a qualified retirement plan (as a defined contribution plan) set up is fairly straightforward with the local talent. But getting someone to hold the money is getting to be tricky:

--Merrill Lynch et. al. will happily pick both my pockets.
--Vanguard et. al. will administer the plan and give me and mine a bunch of mutual funds to choose from.
--Discount brokers want only my personal IRA.

Trouble is, I'm a Fool, and I want to self-direct my own investments. (Third year in a row I'm beating the S&P 500 and have had a good time doing it). Getting that set up, while meeting ERISA requirements for my fiduciary responsibility to my employees, is getting to be tricky. My understanding is that they need to be given choices, but need to be constrained to responsible ones, and need to be educated as to those choices. Once I do that for them, it seems I'm back to Vanguard and mutual-funds-only. The Wise have me between two horns, it would seem.

Anyone have better thoughts than surrendering to the Wise, sticking it all in an index fund and learning to play golf for fun instead?

(Tom and Dave: where is the Fool Qualified Retirement Plan when I need it -- hint, hint?)

--sutton
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15696 of 74759
Subject: Re: Being the (new) boss Date: 11/26/1999 9:31 AM
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Greetings, Sutton, and welcome. You wrote:

<<Ladies and gentlemen...I need your collective wisdom.

I'm suddenly finding myself An Employer. After years of contributing to the mother ship's plan, as of January 1 I'm president of a for-profit corporation with 20 employees (including four partners/HCEs).

Getting a qualified retirement plan (as a defined contribution plan) set up is fairly straightforward with the local talent. But getting someone to hold the money is getting to be tricky:

--Merrill Lynch et. al. will happily pick both my pockets.
--Vanguard et. al. will administer the plan and give me and mine a bunch of mutual funds to choose from.
--Discount brokers want only my personal IRA.

Trouble is, I'm a Fool, and I want to self-direct my own investments. (Third year in a row I'm beating the S&P 500 and have had a good time doing it). Getting that set up, while meeting ERISA requirements for my fiduciary responsibility to my employees, is getting to be tricky. My understanding is that they need to be given choices, but need to be constrained to responsible ones, and need to be educated as to those choices. Once I do that for them, it seems I'm back to Vanguard and mutual-funds-only. The Wise have me between two horns, it would seem.

Anyone have better thoughts than surrendering to the Wise, sticking it all in an index fund and learning to play golf for fun instead?>>


It's no trick to have a self-directed option included as an investment choice in a defined contribution prototype plan. The problem is to find a plan administrator and brokerage willing to manage that option at a reasonable cost. I know Vanguard does so, and I'm surprised no one you're dealing with mentioned that. Maybe you're not asking the right questions of the plan providers to whom you're speaking. You still have to offer the other choices to your employees, but nothing prohibits you from including the high-risk option of self-direction if that's what you desire. Just be prepared to pay for the privilege of doing so. As a small employer, you may find that cost too high.

Regards..Pixy

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Author: dmmbmsi Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15768 of 74759
Subject: Re: Being the (new) boss Date: 11/30/1999 11:57 PM
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Don't know if you are still checking for response,
I don't spend much time on the boards.

sutton wrote:
-Merrill Lynch et. al. will happily pick both my pockets.
--Vanguard et. al. will administer the plan and give me and mine a bunch of mutual funds to choose from

We are much smaller (6 people). ML did me one favor and got us into a SARSEP (not available after 12/31/96). Once I woke up after spending some time learning to be Foolish, I moved us to Vanguard. Those who want funds have funds, I put part of my money into the 500 Index fund, the rest is in Vanguard Brokerage Services. Transaction fees are $20. Not the best but not bad unless you churn a lot. I use the online to trade. Have an FF4 and also some PEG5 stocks. I have been with them for about 5 months and am quite satisfied. In particular, (being in computers) Vanguard's security seems somewhat better than others.

Just my input.

BTW I watch for info from Pixey. Good stuff.

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Author: ibinyon One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16961 of 74759
Subject: Re: Being the (new) boss Date: 12/28/1999 9:22 AM
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Pixy,
I'm catching up on my boards and I read your reply to #15696 on the Retirement Investing board. I am asking you personally, rather than posting on the board since I don't feel our situation is "average."
My husband and his partner own a business. We have about 60+ employees. Until Jan.1998 we personally had a "financial" advisor who managed our personal funds (not an awful person, just one of the "wise.") and all the business funds. I took over our personal monies and have done MUCH better. This person also manages our defined benefit program. I am so confused as to what this is. I need info. It's a lot of money. I am told the defined benefit is government controlled and very safe. This person/company also manages an ESOP for us and has sold us long term insurance. Help! Where can I get more info. I tried Jane Bryant Quinn's Making the Most of Your Money, but it didn't have much info about defined benefit. Are they really better than 401k's? As you may tell, I am "just the wife" of one of the partners. There are two partners.

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Author: ibinyon One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16968 of 74759
Subject: Re: Being the (new) boss Date: 12/28/1999 10:56 AM
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Sorry, folks I punched the wrong button. I tried to reply straight to Pixy and this went on the board. So now I'm replying to my own question.
I have found Pixy's writings on the defined benefit. I will read and then as I get more informed ask better questions. Sorry for taking up space.

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