Business News
Edited by Jeb Bing
How will new fee regulations affect my 401(k) retirement plan? BY GARY ALT
The 401(k) retirement plan is the best way for most people to save for retirement, and for many people their retirement account is their second largest asset next to their home. Fees and expenses in your 401(k) plan can eat into your retirement savings, but knowing how much you’re paying is difficult. Current regulations Gary Alt don’t require complete disclosure of these expenses to the investor. Many times it’s difficult even for the trustee of the company’s
plan because the fees are buried or hidden in multiple places, such as mutual funds with high expense ratios, 12b-1 fees, asset-based fees, plan administration expenses, insurance costs of a group annuity and record-keeping fees. In 2012, new regulations from the U.S. Department of Labor (DOL) will bring greater fee transparency to investors and will be implemented in three phases. The 408(b)(2) regulations require that service providers must fully disclose to the plan sponsor (typically your employer) all fees, including those for administration, recordkeeping and investment advice. This first phase of rules goes into effect July 1. As a plan participant, you may not see these details right away, but
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there are two additional dates to be aware of. By Aug. 30, these fees must be disclosed to you, and by Nov. 14 they must begin appearing on your quarterly statements. There are two important points to make about the new disclosure rules. First, the government doesn’t specify a fair and reasonable fee. Plan sponsors will want to benchmark their expenses against similar sized plans to make sure they aren’t paying too much. Second, plan sponsors aren’t required to have the lowest expenses; they’re required to ensure the fees paid are reasonable compared to the level of service they provide. The cheapest service isn’t always the best service. Insurance company 401(k) plans will be impacted the most. They traditionally have had among the
highest expenses in their retirement plans. Rather than selecting the best mutual funds available, they oftentimes use their own in-house brands, which don’t have to compete with better funds available. Even when they do use popular mutual funds from other companies, they usually tack on an extra fee. And when a group annuity is used, there is an additional cost of the insurance contract added on, referred to as a “mortality and expense� (M&E) charge. Some plans have already begun paving the way toward fee transparency over the past few years. When fees are more transparent, it’s easier for your company to determine if they’re paying a reasonable price and ask, “What do we get for our money?� Do employees receive
assistance in constructing their portfolio? Are additional retirement planning services available? Can employees get advice on other topics, such as long-term care? The new regulations will pave the way not only for lower costs, but also better investments and more comprehensive service. Employers will benefit by having a more competitive plan to attract talented people and to take care of their people, and employees will win out as they get better investment options and have greater confidence in their ability to retire. Gary E.D. Alt, AIF(r), CFP(r) is a co-founder of Monterey Private Wealth in Pleasanton. Send your financial questions to gary@ montereypw.com.
Walmart Market goes to Pleasanton Council for final vote Monday Public meeting at Firehouse Arts Center will hear appeal to ban store BY JEB BING
The Pleasanton City Council will hold a special public meeting at 7 p.m. Monday to make a final decision on whether Walmart can open one of its Neighborhood Markets in the long-vacant Nob Hill supermarket building on Santa Rita Road. So far, both the council and the Planning Commission have endorsed a decision by the city’s zoning administrator, who ruled that Walmart could open its market at the site since its proposed market matches the footprint of the Nob Hill store, which the city approved in 1982.
But Councilman Matt Sullivan, a long-time and outspoken foe of the business and employment policies of national retailer Walmart Corp., filed an appeal against that decision by the Planning Commission, which voted 5-0 on March 19 to approve for a second time Walmart’s bid. The commission’s decision actually was to deny an appeal by two Pleasanton residents, Angela JoeWillmes and Linda Martin, who has contested the zoning administrator’s ruling. In February, the City Council voted 4-1 to accept the zoning administrator’s decision, with Sullivan
casting the one vote against the measure. More than 150 attended the Planning Commission meeting, which was held in the Firehouse Arts Center because a large crowd was expected. City Manager Nelson Fialho said the council meeting also will be held there, which has seats for 227 people, about 100 more than in the City Council chamber at the Pleasanton Civic Center. If the council votes to deny Sullivan’s appeal, Walmart could file for operating permits at the old Nob Hill store as early as next Tuesday, with the Neighborhood Market opening a few months later. N
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PHOTOS BY JEB BING
T.G.I.F. abruptly closes Pleasanton restaurant After 17 years, the T.G.I.F. restaurant in Pleasanton’s Rosewood Pavilion has closed. The Braid Group in New Jersey which operated the Pleasanton restaurant as well as the TGIF eatery in Union City, which is still open, had no explanation for the closing, suggesting only that customers could still dine at their Union City facility. Recent visits to the Pleasanton restaurant showed empty tables both at lunch and in the evening, although the numbers increased as late night diners came in. But no one heard the ďŹ nal click of the lock two weeks ago when restaurant management quietly closed the door and turned off the lights for the last time, shutting down the computers and telephones abruptly.