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Confused by Complex 401(k) Terms? We'll Help You Clarify if They Are Jargon, Gibberish or Jumbled - Take Two!

NEW: Bonus Question

Question: Can a failed retirement plan coverage test be fixed with a QNEC or QMAC contribution?


Answer: Provided by Chad Johanson (aka The 401(k) Nerd)

The minimum coverage test (as found under IRC 410(b)) is one of many nondiscrimination tests that a 401(k) plan must abide by. This test was designed to make certain the ratio of benefiting Highly Compensated Employees (HCE's) versus the ratio of benefiting Non-Highly Compensated Employees (NHCE's) is not to swayed to heavily in the favor of the HCE's.


In an oversimplification, 410(b) testing states that we must cover 70% (of NHCE's) of the percentage of HCE's that the plan benefits. This test must be ran on each contribution type and only includes members that have met your plans eligibility. If the plan fails coverage testing for a specific contribution type there are corrective measures that can be taken.

For example, if the 401(k) plan excluded managers from participating in elective deferrals and the elective deferral coverage test did not pass then the a retroactive amendment can be made to fix the exclusion that cause a coverage test failure and a Qualified Non-Elective Contribution (QNEC) should be made. The QNEC is providedsince these employees did not have a chance to defer during the plan year. If done in the approved timeline this QNEC can be calculated as 50% of the missed deferral. The missed deferral can be calculated as the plans NHCE ADP rate from the plan year. Based on your correction timing you may have to use the Self Compliance Program (SCP) or the Voluntary Compliance Program (VCP) to properly correct this coverage failure

Listen now!

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With Guest:
J.D. Carlson, 
President & CEO of Plan Design Consultants, 
One Fourth of the Retireholiks

J.D.. Carlson is the President & CEO of Plan Design Consultants,

a retirement company that since 1975 has been providing businesses with affordable, quality plans customized to meet the specific needs of our clients.

Over four decades in the business has given PDC the experiences we need to evolve our service model to what it is today.  A smart, easy process centered on the needs of our clients.  A service model designed to be AWESOME!

It is our deep understanding of all areas of retirement plans combined with a constant commitment to customer service that sets us apart.  We share our expertise with our clients to make sure they are comfortable and confident in making decisions around maintaining a successful Employer sponsored plan.

As an independent company, client advocacy is a major strength of our firm.  We partner with Financial Advisors to offer our clients a very healthy choice in vendors.  A strong understanding of fees and services allows PDC to help clients find the perfect fit.

Thousands of retirement plan clients from all over the country have relied on PDC to assist them in offering the right plan to help their employees reach retirement goals. 

Recap, Highlights, and Thoughts

Today we have a little fun, I am excited to welcome back J.D. Carlson who by day is the President & CEO of Plan Design Consultants, a Third Party Administration firm and by night is a YouTube sensation as one fourth of the Retireholiks.  Our conversation is a follow-up to one we had on the podcast last year where we tackled some tricky workplace retirement terms to either decipher some industry jargon, declare they are pure Gibberish or if they are real terms or concepts that can be confused or jumbled together.  I think the conversation we have falls into the edutainment category.  Oh, and two things not to miss this week, our bonus question which you can find a and when JD gets fired up towards the end of the episode.  


While you don’t have to listen to the first version of Jargon, Gibberish or Jumbled, you can find it here or by scrolling through your favorite podcast app and look for the title Frustrated Complex 401(k) Terms in March of 2018.  While you are there, we do have over 175 episodes in our podcast library.  If you find something else that catches your eye, give it a listen as well.  Our episodes are evergreen and don’t tend to expire over time.  

Before we get started, if you have been enjoying the podcast if you could either go to your favorite podcast app and either like or leave a comment.  Based on the way their technology works, that goes a long way in helping other people find the podcast.  As our audience grows, it helps me continue to attract great guests and bring you their unique perspectives on workplace retirement plans.  

Thanks for listening!​​

Sincerely Your Host, 

Rick Unser

NEW: Episode Transcript

Rick:    Well, JD, thanks for being here or I should say, thanks for having me to your office down here in San Diego.


JD:    Yeah.


Rick:    Super stoked to see you, and I'm excited to take on another episode of jumbled, gibberish and jargon to clarify and communicate some 401(k) terms and concepts.


JD:    The first time we did it, you were saying that this would be a test. We'll see if this works, you know? So, I think that we're back here doing it again, 2.0 means it did work. It seems like it went over well. It was fun and had good response.


Rick:    Absolutely, and I'd say it's one of our more popular episodes, so for anybody who hasn't checked out part one, go search that on the podcast library and we'll certainly do this in a way that we're not going to rehash what we talked about the last time but we'll certainly try to recreate that fun and informative setting.


JD:    So, it's probably your most popular one because my beard was on fire at that point. I had a solid beard, and we did video, so, I'm such a good looking guy, it made it work, I guess.


Rick:    You still got a pretty strong beard game. Well, not right now though.


JD:    No. We were going to do some-


Rick:    Can't really see that on the podcast, but-


JD:    We're going to do some different-


Rick:    ... it's impressive in person.


JD:    Thank you. We're going to do some different questions from the first time, and I'm going to kick off the first one, but just to reiterate the concept, I'm going to throw a sense at you. It's either you'll classify it as it's jargon, it's jumbled, you know, messed up a

little bit, or gibberish meaning it's just total fake stuff.


Rick:    Gobbledygook.


JD:    Okay. All right?


Rick:    I'm in.


JD:    Are you ready?


Rick:    I'm ready.


JD:    You ready to rock? Okay. My first question for you, Mr. Answer, is an ETF is a better option than an institutional share class of a passive index 40 act fund. Break that down, see how you feel about that.


Rick:    Yeah. There's all sorts of good stuff in that one. So, ETF is Exchange Traded Fund, and we'll put a pin in that, we'll come back to that one in a second. 40 act is jargon that a lot of people will use for a registered mutual fund.


JD:    Right.


Rick:    So, a 40 act fund is like, and again, some people just-


JD:    Fancy term for a mutual fund.


Rick:    Exactly. They like to say that over a mutual fund because there is some confusion out there. There's a lot of different types of investment vehicles that are coming to 401(k) plans. So, you mentioned one ETFs, mutual funds, now we have collective investment trusts or CIT-


JD:    CITs.


Rick:    ... separate accounts, group annuities.


JD:    Yeah. Right.


Rick:    So, all of that flows in there, so I think some people have tried to say, "All right. 40 act is the way that they try to-


JD:    I feel smart-


Rick:    ... clarify some of that-


JD:    ... when I say 40 act fund. Makes me feel smart. So, I'm asking you, is the ETF better yet then the institutional share class of this 40 act fund, passive?


Rick:    Yeah. And I think, in my opinion, the way that I would break that down if someone was asking me that is, I think it's different. I don't know if there's one that's categorically better than another. I think certainly a lot of people feel very strongly about passive funds, people feel very strongly about institutionally priced funds, but one of the challenges that we have in the 401(k) world from a record keeping standpoint is, it is a very different reality to record keep an ETF than it is to record keep a mutual fund, a collective investment trust, or something that trades once a day.


JD:    I was hoping to, for the follow up discussion, to be like this debate on ETF in general like so, because I feel as though, correct me if I'm wrong, like ETS for a few years now have been a pretty popular thing, especially among discussions amongst investors because they're so popular for individual investors, right? So, obviously like, hey, to have an ETF in your 401(k) plan would be the coolest thing, right? And I pushed back on it originally and that's what I wanted to talk with you about because I feel as though the biggest reason why people wanted to use ETFs in their 401(k) was because they perceived it as low cost.


Rick:    Yup.


JD:    And so that's why I'm making the comparison in this sentence, which I think we can call jargon.


Rick:    Yeah. Lot of jargon. Not jumbled though, it all-


JD:    No, it makes sense.


Rick:    ... is a logical flow of statements.


JD:    Whether or not it's better or not is a different thing, but so the low cost of the ETF, get it, understand the value there, but I'm trying to say here that an institutional share class, which we should probably define, in my mind means, hey, it's like a very low cost share class. There's very little revenue share, it's a very cheap if, you will, expense ratio, and then I go on further to say, of a passive index, which means just like many ETFs, this is a non-actively managed passive fund think SMP 500 index or what have you, and so I guess what I'm trying to say is, or put the point out there is, what's the difference between the two? I mean wouldn't you be just as well served with the institutional share class of the SMP 500 versus the ETF? What's the advantages of the ETF?


Rick:    Yeah, I think there's some people that like the structure of an ETF and I think there's some nuances there that some people might prefer over a mutual fund, but to your point, let's just use the SMP 500. You look at an institutionally priced, or something that's available in a lot of 401(k) plans that have any size to them, you can get an index fund these days, two, three, five basis points, whatever the case is, that is going to have a very high correlation to its underlying benchmark, and so do you really need to look too much farther than something that's tried and trued and is very inexpensive, and then I guess again, coming back to the workplace retirement plan market, when you do introduce the concept of ETFs, if you're trying to make your core investment lineup populated with ETFs, it just adds a lot of complexity and cost from a record keeping standpoint.


JD:    Isn't it also a huge characteristic of an ETF, why people really fell in love with them was because they could be traded during the day, during the market, like intraday or whatever-


Rick:    Yeah.


JD:    ... you guys might call it.


Rick:    No... that's a big differentiator-


JD:    You trade it like a stock.


Rick:    So, where I see ETF's is in self directed brokerage accounts, and we've talked about this on the podcast before, but, hey, you've got a core investment lineup but then you give the ability for somebody to go in and say, "All right, well I want to take some or all of my money and move it to a brokerage account where I can have access to-


JD:    Be more active, do some-


Rick:    ... pretty much, yeah. Whether it's more active or more choice or whatever it is, but that's where I typically see ETFs pretty popular in the 401(k) workplace retirement world, and coming back to your statement from a minute ago, that is much more of an individual or a retail type environment where somebody is using that self directed brokerage versus like an ETF on a core lineup that like that, I don't see as much.


JD:    Because I would just be the boring 401(k) guy and push back and say, 401(k)s are not really built for active trading like that. Like in reality, this is supposed to be a, "Hey, pick your proper asset allocation that matches your risk tolerance, just do this over the long haul." 401(k)s aren't really supposed to be things where people are trading every day, let alone within the day, and so I feel like in this debate you take that power away from the ETF because it's not really something that's going to be used in a 401(k), but with most ETFs within 401(k) record keeping systems aren't traded intraday anyways, right? They're traded just like your normal funds typically.


Rick:    Yeah. Not in a daily... not in something that's valued once a day.


JD:    Right.


Rick:    Yeah. There are some ETFs that trade like a 40 act mutual fund.


JD:    Right. Sure.


Rick:    But then it's like you get into the debate. "All right, well is it really an ETF?" Well, it's a mutual fund made up of ETFs, or-


JD:    Looks like it.


Rick:    ... all sorts of jargon to throw in there.


JD:    Some people have come back to me and debated back at me saying, "Oh, but ETFs, there's a lot more cool, different types of ETFs, like little different areas on the market. Is that true?


Rick:    Yes. You can get super specialized. Again, I'm not going to proclaim myself to be an expert on ETFs and all the selection that's out there, but I know there are certainly a lot of really nichey opportunities within that ETF space, but I'll probably-


JD:    Here I go again.


Rick:    ... agree with you.


JD:    Why is that valuable.


Rick:    Yeah, I agree with you. Why would you want that, or why is that something that should be part of a core investment lineup that any participant in a plan could have access to-


JD:    Doesn't fit.


Rick:    ... or could stumble into? Yeah, I agree that in my opinion that, that doesn't make a ton of sense. That doesn't fit necessarily. Hey, if you want to give somebody that access, have a self directed brokerage account where they can get to ETFs, but if you're thinking about what's going to be the best set of options for 80% of my employee population, it's probably, as you said, more the mainstream broadly diversified strategies.


JD:    Some 401(k) core menus, smart people would say, you shouldn't even really have a lot of specialty asset classes in that core menu. Maybe a few, or this, or that. So, again, I'm taking away another advantage of an ETF that I just don't think really makes sense in the 401(k). So, in summary of that question, I'm not against ETS, I was just having a little fun. I think that's great if you want to have them in there, I just feel like it's not earth shattering new stuff. Like you could always have an institutional share class of a passive index mutual fund or 40 act fund if you want to be cool the same way. So, that's what all I wanted to bring up. So, well done. Well done, your time to throw a question at me.


Rick:    All right, my turn. So, JD, we just failed our coverage test. I did a Google search on what that meant and wondered if we could fix it with a QNEC or a QMAC contribution to the plan.

JD:    Okay. So, here's we go, we break it down and everyone needs to understand, I'm the CEO, president of a company. I'm not doing admin every day, but obviously I do know what all those things mean, and so a coverage test is a discrimination test different from your ADP and your ACP but similar in some ways, you're trying to make sure that you're not giving something in the plan that's advantageous to the owners, the age cheese as it relates to the rank and file, the non-Holly's.


Rick:    And that's the first key concept there that I wanted to have you talk about because I feel like today there's still so much confusion, and so much conflation, that's one of my favorite words, conflation of terms where, if you're talking to an employer, and, "Oh Hey we just failed our coverage test, what do we do?" It's like, "Okay, well-"


JD:    What is that?


Rick:    Yeah. Let's go one level deeper here when you say that-


JD:    Let me help explain coverage in a little more detail because it's not as similar to the ADP and ACP because it can happen-


Rick:    Exactly. Yeah.


JD:    ... in a variety of ways. We deal with compensation a lot. I'm going to hit you with a compensation question here. So, I'll use a simple one. You can exclude bonuses as part of your comp, right? That's something that you can do. Yes, that is okay. You can do it, but there's a caveat. It needs to be run through this type of coverage tasks, right? It needs to be run through a test that makes sure that it's not discriminatory in nature. Right?


Rick:    So, how would that be discriminatory in nature? Let's say JD, I am in my plan, I'm excluding overtime as eligible compensation for a match or profit sharing.


JD:    Yeah. Well, let's be simple about it. So, if you're excluding over time, but the bulk of your employees that are getting overtime are non-highly compensated employees and there's a match involved, then you're basically taking those people's compensation from what was a $100,000 and turning it into $75,000, therefore, they're getting less of a match, less of a benefit, but yet the big HCEs, the highly comped employees don't get overtime, they just have bigger, fatter salaries, and so they're getting an advantage. That's in a situation where that would look discriminatory. They would not pass the coverage test. What was the second half of your question" Oh, can I solve it with a QNEC, or a QMAC?


Rick:    Let's try some jargon.


JD:    I don't know the answer to that question. I think the answer is maybe. I think there in some situations you could, but there's other situations, like the one I just gave you, correct me if I'm wrong, but I don't think I can solve a bonus problem with a QMAC or a

QNEC, that's just an improperly designed, or no, I could. I could.


Rick:    Well, let's start with what is a QNEC, or a QMAC.


JD:    So, QNEC and QMAC are contributions that the employer is going to put into the plan to fix these types of problems. Basically going, "You're right, we failed. It does look discriminatory, so we're going to give some money in terms of a profit sharing through the QNEC, or a match that will make the test right." Right? "We'll make everything back as it should be." And so in saying that out loud, yeah, you can solve a lot of those problems with a QNEC, or a QMAC by being more generous to the staff.


Rick:    And you know, one thing I've started doing on the website is adding in a bonus question. So, what we're going to do, is we're going to ask the 401(k) nerd to be the ultimate authority on whether you can fix a coverage test with a QNEC or QMAC, and that way, and he can give us some additional perspective that people can find on the episode webpage-


JD:    Okay, cool.


Rick:    ... for this.


JD:    I like that. I like it, but I do think a lot of times in my business the answer is yes, no, maybe.


Rick:    Right. I'm with you.


JD:    And I think there are plenty of situations where you could fix it with that, but there may be others where you could not.


Rick:    Perfect. Yeah, and like you with the ETF thing, my big point that I wanted to get to have you clarify was coverage versus ADP-ACP or even, we talked a little bit-


JD:    Last time.


Rick:    ... about this last time, but-


JD:    Top heavy.


Rick:    ... top heavy. Exactly, because I feel like when you're communicating with employers, you get a lot of people that are going to, again, conflate those, "We failed our top heavy test. Well, we failed our coverage test. We failed our discrimination test." And in their mind, they're usually talking about the same thing, which is an ADP-ACP test, but when you start saying that to-


JD:    You always have to decipher it.


Rick:    ... a practitioner, it's like, "Hold on a second, you just said three completely different things that have three completely different strategies to remedy those. So, let me drill down one level deeper, and see if I can make sure we're on the same page of what you're talking about."


JD:    Continues to happen all the time, and actually makes me feel bad for plan sponsors and people out there that there are so many moving pieces, because if you think about it from their perspective, you think like one test is enough, right?


Rick:    Right?


JD:    But no. There's different layers and different types, but I think the moral of the story is, all of those tests are built to protect the rank and file employees. Just trying to make sure that this plan isn't being too advantageous for the big shots, and being fair to everybody that's in the plan, so all right, my turn right? All right, Rick, I'm going to hit you with some code section, so I apologize.


Rick:    My favorite.


JD:    I'm just trying to make the sentence a little more confusing. Section 414S compensation shall not include compensation above limits determined by 401(a)(17). How do you feel about that?


Rick:    Alright, well thank goodness we talked about compensation because that did jog my memory, that 414S is the test you have to run if you're excluding comp from your definition of compensation. So, if you're not hitting that, select all four forms of compensation that are eligible for deferral match profit sharing, whatever.


JD:    You have a couple of different default options, but yeah. Yes?


Rick:    So, that one... I'm really-


JD:    Think W2 comp as in this classic one?


Rick:    Yeah. Or, so, just to, I guess, make sure I'm going down the right path here as well, we'll use your example of W2 comp that excludes bonuses.


JD:    Right.

Rick:    So, meaning that, "Hey, I can make a 401(k) deferral, I can get a match, I can get a profit sharing compensation on all of my W2 comp except for my bonus." If you're making that exclusion, you would have to run-


JD:    Correct.


Rick:    ... a 414S.


JD:    And it ties to your question. Yeah.


Rick:    Yeah. So, there's-


JD:    Very good.


Rick:    You know what? Since we didn't share these questions in advance with each other, there's some amazing symmetry, or synergy going on here.


JD:    We're dancing well together. That's right.


Rick:    Okay, and then the other one-


JD:    401(a)(17)?


Rick:    ... I'm going to have to phone a friend on that one.


JD:    That's just the limits.


Rick:    Okay.


JD:    Yeah.


Rick:    So, is that your traditional compliment-


JD:    Yeah.


Rick:    ... where, if I'm looking at $280,000, which I think is the compliment for 2019-


JD:    Can't go beyond that.


Rick:    Yeah, and it's interesting that that is something that comes up from time to time. There are some companies where you have some people that are very highly compensated and you look at, or they look at their statement at the end of the year or they're sitting down with their accountant or whatever it is, and just looking through maybe what they put into the plan or how much match they got, whatever. It's like, "Hey, well we have a 3% match and I earned a half a million dollars last year, and I didn't get $15,000, I got $7,000. I'm trying to do math on the... or $6,000.


JD:    Hopefully, it's on the opposite, or they screwed up and they gave them way too much. Yeah, right. No, it can be misunderstood.


Rick:    And I think that's two things there where you have, for some employees there's no recognition of... and why would there be, right? I mean, this is such a specialized, such a nichey thing, but there's no recognition or no understanding that will, hey, in the world of the IRS, you don't get any benefit beyond $280,000, and then on the employer side, I think there's some education opportunities there on the employer side because unless you're-


JD:    Operationally, they could screw up. Yeah.


Rick:    Yeah. And unless you're living and breathing this as maybe a benefit specialist or an HR specialist that has had a couple of years where you've touched and felt and had to manage 401(k) plans, the idea of... the conversation around limits usually begins and ends with how much can people defer into the plan.


JD:    Over my career, I have had a lot of smaller clients submit to me a homemade spreadsheet that they've done to calculate their match, and that's usually the biggest fall on the spreadsheet is that it's not dealing with that 401(a)(17) limit. Right? And so it doesn't usually play out a lot of times, but if someone's way above that, then that spreadsheet not going to work. Right? So, yeah, you do need to understand those limits.


Rick:    And just on limits, one thing that I still find a little confusing for some people is, as they're communicating the deferral limit, some people are like, "Well, okay. Well, do I still get a match if I max out my contribution?


JD:    Right. Right. Yeah, and so we've got two limits, right? We've got our deferral limits, but then we also have our combined limits, right? Of the employer plus the employee contribution. So, the lot of moving pieces, there's so much stuff. The conversation I wanted to have though is a big one for me.


Rick:    I wasn't going down the right path there?


JD:    No, it's fine though.


Rick:    Right.


JD:    We're dancing well, it's fine. I wanted to focus on compensation, the definition of compensation, because it's something that

continues to come up with both my small clients and my large clients.


Rick:    Sure.


JD:    And my concern is, is we talked about the exclusion of bonuses, well, it can get far more complicated than that. People can give gift cards, or on spot bonuses, or adoption assistance, or... I mean the list goes on and on for different types of alternative compensation that employers are paying to their employees, and if those types are not excluded in the document, you really should be looking at them just like any other types of compensation, meaning the employees, if they have a contract with you that says, "I would like to defer 10% of my pay, each pay period."


JD:    In theory, he should be deferring 10% of that gift card, 10% of that on cash bonus, and the more I stick my nose in to clients and committee meetings, the more I find them confused by this and their operations are not matching their document, and so that's why I wanted to bring it up, is you should always ask yourself, what is the true definition of our compensation?


Rick:    So, since you brought up gift cards and things like that, do you have any best practices that you give to your clients that if you're going to do this, or here's how we'd recommend you stay compliant with your 401(k) plan, or?


JD:    I think the easiest solution is using the document to your advantage, that you can exclude cash and non-cash fringe benefits without having to go through these coverage tasks if you're a certain type of plan, and so it's funny, here we go with coverage tests again. But I like that one as a solution, but sometimes that can't work, and so then it's just really getting into the weeds with HR and payroll and figuring out how you want to deal with them. Like are you going to gross them up for taxes?


Rick:    Yup.


JD:    You know? There's a lot of consulting that's involved and there's different ways to solve it, but from a general best practices, I like the exclusion of the cash and non-cash fringe benefits tends to work well when you can do it.


Rick:    So, dare I say, when we do this a third time, we're going to have to work in fringe benefits.


JD:    Yeah. Because in the back of my head-


Rick:    Because that's another Pandora's Box right there.


JD:    ... in the back of my head, I just said, JD, you're using jargon on [crosstalk 00:22:36]-


Rick:    I'm trying to explain jargon.


JD:    ... no one knows what fringe benefits are, so fringe benefits is a debated thing, but it's all those other little areas there of that alternative cash, so here we go again. I guess it's why we're having this type of podcast and we work in this type of business. There's just so many things, so many little areas to understand, so.


Rick:    All right. I didn't have as much code section as you did, but here comes my one-


JD:    I suck with codes.


Rick:    ... maybe my one reference here. So, JD, I was just told that the EBSA suggests we use a VFCP and complete a 5330 to avoid a DOL audit in the future.


JD:    Wow. Wow. You're really going to hit me with that. Okay. Yeah.


Rick:    I went into-


JD:    To avoid a what in the future?


Rick:    A DOL audit.


JD:    Audit?


Rick:    Yeah.


JD:    The 5330. Lost earning stuff.? Okay. Yeah. Okay, I got all that.-


Rick:    You got it.


JD:    That's jargon. That's correct.


Rick:    100%.


JD:    Yeah, that's correct. Okay. So-


Rick:    So, what is EBS?


JD:    I don't know the actual name, what? Employee Benefits... something, Administration or whatever. I mean, governing body is

saying, "Hey, if you've screwed up your plan, you've done something wrong and you're aware of it, you can, your VC-


Rick:    VFCP.


JD:    ... you can voluntarily comply, show us how you want to fix this thing. Go through fixing it, and then you're adding in the 5330 because usually when you're fixing a mistake, it means that you've somehow wronged the participants. Right? They're short of cash, they didn't get the proper investment they should have, you didn't put money in for them when you should have, and so the 5330 is, they get lost earnings with that as well. Right?


JD:    So, you can't just make them whole, you have to make them whole plus what they would have made had the money been there when it should have been, and so yes, those are all, that's an accurate statement, and tell me where you'd like to go down that path because it's a cool one. I'm down to talk about it.


Rick:    So, I think two things. One, I've always heard, and I'd be just curious in terms of what you guys see as well, is that having late deferrals on your 401(k) or 403(b), or whatever listed on your 5500 is one of the biggest flags for a DOL audit-


JD:    It has to be. Yeah.


Rick:    ... and then I guess part two to that is as you go and you look at that form 5500 a little bit, they'll also ask you whether you corrected those late deferrals inside, or outside of the VFCP, which is, as you were saying, is what I call the confessional-


JD:    Yeah. Good.


Rick:    ... for where you can go in and say, "We made a mistake in our retirement plan, here's how we're going to [crosstalk 00:25:30] fix it." And a lot of them are prescribed solutions and whatever the case is, but anyways-


JD:    And you're focusing on the biggest one that happens a lot, because you could use that voluntary compliance for a variety of things, but you're going to focus on late deferrals, which is probably public enemy number one, and because I think also there's some confusion in late deferrals. There's some language out there for larger plans with multiple locations that talks about what the 15th or the 30th of the following month and a lot of smaller plans grab on to that language, thinking that they can wait-


Rick:    "We're good to the 15th."


JD:    Yeah. Of the next month, which is not true at all. The real rules even have some gray area again, where my understanding is, there's no set five days or seven days. The reality is, is whatever you've deemed or proven is administratively feasible, if as a company you've proven that you can do it in 48 hours and that's how it works around your shop, that's the new benchmark. That's the new waterline. It's 48 hours, believe it or not, how soon it's supposed to go in, and so I think that the determining whether you've had late

deferrals can be confusing for plan sponsors alone, which is why you need to have the right team helping you.


JD:    And so we do that at our firm. We're going to look at our clients and figure out the ones that haven't put it in on time, and it's a bummer. I hate it, to go to them and say, "Hey, six times last year you were late by five days, and we need to fix this, and so we've got to put the money in, but you're late." So, it comes down to that 5330 that lost earnings calc and making it right. Yeah, it's a bummer, but if you do it, and then you tell the government you've done it, and you tell them that you fixed it and you keep that and document that process, I feel like even if they come sniffing around, you're going to look good, which is why you'd do it.


JD:    What's the alternative? You don't want to fib, and say you didn't do it on the 5500, so I would agree with you when you say that you did do late deposits, yeah. You're going to be more susceptible to an audit, but hopefully you're doing all the right things and that's okay. It's okay to make mistakes and fix them.


Rick:    Yeah, and I think, I guess maybe my last point on this and then we keep going, but I think we talked to some employers and it's like, "Well, why is this such a big deal?" It's like, "Hey, Sally was out on vacation, or Joe was..." whatever, "...and just didn't submit it in the usual process." But I think the way the government looks at this, and the way the DOL-


JD:    It's their money.


Rick:    ... looks at this, yeah, is, you're basically as an employer, you are stealing money-


JD:    Right. You are.


Rick:    ... from the participants, and I've also had this conversation as well with other people is, what is really the one weak point in the security of 401(k)? The one weak point in the security of 401(k)-


JD:    Is probably the employer.


Rick:    Yeah. Is getting money out of someone's paycheck into the employer's hands, and then having the employer transfer that over to the custodian, the provider, the record keeper, whatever terminology you want to use, but if you think about it from where can you exploit the system, or where can things go really wrong-


JD:    Right there. That's the weak point.


Rick:    Exactly. That's the weak point. I mean, there's-


JD:    You see articles of theft and negligence, or whatever.


Rick:    Okay. And I've seen it over the years, whether it's a due diligence or other processes, I was like, "Oh my gosh." Either they were six months late in contributing contributions, or yeah, there's clear evidence here that they've not made any contributions-


JD:    Hey buddy.


Rick:    ... over the last, whatever.


JD:    I have had employers look me dead in the eye, and totally exonify themselves by saying like, "Hey, we're short on cash flow right now. We're two months behind on the deferrals, but we've got to keep the lights on." And they're almost telling me like it's okay. Like, "Hey, what's the alternative? I got to keep the lights on." And think of it this way, that's their pay. So, that would be the same as me coming to an employee saying, "Hey, I know I'm supposed to pay you $5,000 this month, but I'm just going to hit you up with 3,500 because I'm kind of low on cash and I'll get you that other 15 at a later date."


JD:    That's not okay. I have an agreement with them. They worked for me for a certain wage, and so you do have to be really, really sensitive to the fact that in transit and if it's not getting in there quickly, that's their money. You paid them that money. It's not your money. It's not the company's cashflow. That is 100% their money, and I think that's why the government is so strict about that timing because they didn't want to see it abused.


Rick:    Yeah, and I think for some people, when you explain it to them that way, I think that helps them understand, "Okay I get it." You know? Ye. I'll push a little harder on payroll to make sure they tighten this process up, or next time they give me a hard time about why I'm being so insistent that this happens on a certain regular interval, that helps give the perspective of why is this a big deal and what are the risks that we're taking as a company downstream if we're consistently showing that we have late deposits on our 5500.


JD:    Some people might disagree with me, but that's why I find comfort in that 5330. To me, I'm okay with you being late as long as you fix it, because then you are raising up your hands, you are at the confessional, and you are saying, "Oh no, we understand this is important, so much so that we're willing to calculate loss earnings and put that money back in them."


JD:    I think at that point you're fine. I get that Sally was sick, or Tom, and HR, and payroll was out and just no one could back them up. That happens in small business, but then put the money back in. You put the loss earnings in and then you're fine. You're good. You did what you're supposed to do.


Rick:    Alright.


JD:    Alright.


Rick:    Well done.


JD:    Okay. TDS managed accounts and risk-based funds are different names for the same thing. That's my statement.


Rick:    Well, there you go. So, where does that fall in... Well, that's certainly a bunch of jargon, but that's also going to be jumbled, I guess.


JD:    Yeah.


Rick:    Right? And that, that's really not a true statement. That is a false statement in that TDS, stand for Target Date Funds, my guess that there's really no an acronym for managed accounts, that's just... [crosstalk 00:32:09] and then same thing with risk-based, but yeah, I would imagine the point you were looking for there is, well, okay. Can we say that they're the same thing and no, you can't.


JD:    Yeah, you're right. I want us to talk about from the participants' perspective, I think participants struggle with the difference between those because they're all fall into this category of like, "Do it for me." Type of vibe, and I get questions from participants all the time like, "Why a managed account over a TDF." Or, "Why risk based versus time-based TDS?" What's the difference between those three things? I was hoping we could chat a little bit about that.


Rick:    Yeah, absolutely. And I completely agree with your statement there, which is, I think for the average participant, 60%, 70%, 80% of your employee population, I think a lot of people are going to look at whatever one of those solutions you're going to put out there as very similar in concept, which like you said, it's, "Hey, this is something that I can choose that the employee or my employer has said makes sense if I don't-


JD:    Do it for me.


Rick:    ... feel comfortable..." Yeah. "If I don't feel comfortable making decisions about my investment strategy, or my asset allocation." Or whatever fancy terminology you want to use.


JD:    That would be the smart way to set it up, that you would just have one of those options, but I see lots of plans that have multiple of those.


Rick:    So, that's a really good point. So, let me back up for a second though, and do the first thing you wanted me to do, which is let's define terms. So, TDF, Target Date Fund, that is your time based strategy, so-


JD:    2055 fund,


Rick:    Starts off aggressive, usually with more allocation to equity or risk because people have more time. Gradually it's going to roll down in risk. There are many different philosophies and many different ways that Target Date Funds do that. You've seen one Target Date Fund these days. You've seen one Target Date Fund, it's tough to make broad generalizations-


JD:    Different glide pass different strategies. Yeah.


Rick:    Absolutely, but that the key point there is that over time, whether you're in a 2055, a 2040, 2025, whatever it is, that is going to be managed and it's going to be changed to get generally more conservatives as you approach your-


JD:    Automatically-


Rick:    ... conceptual retirement date.


JD:    ... for me without any of my input. Yeah. Or acting.


Rick:    And also without any customization to drawer specific needs-


JD:    Pre-cookie cutter.


Rick:    ... which is a nice dovetail to managed accounts, which managed accounts in some instances will maybe look and feel a little like a Target Date Fund where they're going to say, "All right, well if you're younger and we're going to take more risk, but if you're older, it's going to take less risk, but managed accounts, one of the things that they do, because they will change over time, they're going to be, depending upon the strategy, they're not going to be static or they're not going to be one size fits all, but a managed account on paper is going to take into account your income.


JD:    It's asked you some questions.


Rick:    Yeah.


JD:    Yeah.

Rick:    Exactly. [crosstalk 00:35:13] Maybe your spouse's assets or maybe, "Hey, I've got an inheritance that I'm getting."


Rick:    "Hey, I've got a big pool of money in company stock from a prior job. That's really what my retirement is going to be in this 401(k) or 403(b) account. This is a piece of a bigger puzzle."


JD:    In some way, the managed account service has sought to find way more information from you to customize their approach. I like what you said, still would look very Target Date-like in that-


Rick:    Could look very targeted. Absolutely.


JD:    ... but more customized.


Rick:    And then a risk-based fund is just going to be your classic aggressive, moderate conservative balance, whatever mantra-


JD:    Do we still see those a lot? I mean they were a big thing 15 years ago, 10 years ago, but are they less and less?


Rick:    Yes and no. Less and less, I would say. I mean we still see some plans that have them. I think the conversation has definitely been, "Okay, well does this still work? Is it still something that you feel like participants understand?"


JD:    I used to like the idea, and you hit the nail on the head. It's like one would be aggressive, one would be moderate, one would be conservative, and I liked the idea, but the only problem is, now the participant has to play a more active role. Right? Because they may start in the aggressive one, but at some point they need to shift to the moderately aggressive fund and then to the moderate fund, and so it takes them some active involvement from them. Right?


Rick:    And what we've seen time and time again is that, that just doesn't happen-


JD:    Right. They just fall asleep.


Rick:    ... You've got somebody that, I mean, God bless them if they've been on the same company for 20 years, and the plan at 35 years

old they chose the aggressive fund because that's what the little quiz told them to choose, 20 years later they're still in the aggressive fund at 55, and is that the right strategy for them? Is that the best option for them? I don't know, but I don't think that risk-based funds are-


JD:    Split them aside for a second.


Rick:    ... completely antiquated, but I think we definitely don't see them as much.


JD:    Split them aside, and I've had this question brought to me a lot in my career, which is a participant wanting to know, "Well, why would I do the managed accounts versus a TDF, the Target Date Funding, and usually the managed accounts would come at a premium in my scenario." Okay? It would come at a slightly higher cost, and so they're saying, "Well, a target date's going to do the exact same thing. Isn't it managed? Aren't these people managing the investments?"


JD:    And you already mentioned it earlier, but my answer to them is, "If you're more comfortable where someone who's delve deeper into your details." And in many times, and again, not all managed accounts can be put in the same box. So, I should caveat that, right? They can be different, but ideally they're also more actively managed, right?


JD:    They're willing to make some changes from time to time based on how they see the market's environment, what have you, where I would argue in that a TDF is much more just built on its course, and going to do what it's going to do, and so I don't think one's better than the other one. It's more, what makes you more comfortable as an investor. Right? What do you feel better about?


Rick:    Yeah. And I've had, over the last couple of years, a 180 on this. I used to be very much Target Date only, it's not a both, and part of that was that I think in the early iterations of managed accounts, they were positioned as the default option, and so essentially as we know what happens is, somebody gets defaulted into a managed account and then for them to get any benefit from that or any customization, they have to go online, they have to call somebody, they have to take some action.


JD:    But they won't. Yeah.


Rick:    Exactly, and that's what happens, and so you get a ton of people that are defaulted into this managed account-


JD:    So, it's like a watered down managed account.


Rick:    ... and then the only input they have to go with is making some [crosstalk 00:39:16] generalizations here. Yeah. It's usually going to be age, maybe-


JD:    Salary.


Rick:    ... they can throw an income or something in there that's fed in via the census file, so what you got there in the first iteration and in the way that I felt managed accounts were introduced into the 401(k) world was, it was just a more expensive Target Date Fund, and I think and that was-


JD:    In that scenario, yeah.


Rick:    ... a similar way of what you were saying, which is, "Hey, if the only input you have to work with that tells you anything about me is how old I am, then I might as well just being a Target Date Fund.


JD:    Fair enough.


Rick:    As long as that Target Date Fund has been screened and selected in a good way, but I did a podcast episode, wow, maybe 18 months ago where we had JP Morgan in Financial Engines where I talked to a target manager and I talked to a managed account manager and I was like, "All right, and I thought there was going to be blood in the streets, I thought they were going to be talking about how, "Target dates are better."


Rick:    "No. Managed accounts are better." And like, "No, they're actually complimentary." I'm like, "Woo-hoo".


JD:    Yeah.


Rick:    "You said what?" But it really got me thinking about that and I said, "Yeah. I think positioned correctly for them-


JD:    Based on what you were saying.


Rick:    Yeah.


JD:    If people aren't active user of the manage accounts and there can be a lot of neat value there.


Rick:    Absolutely. So, for the 70%, or 80% of your population that are probably not going to take the time or maybe don't have more complex financial needs than, "Hey, I just need something that's going to be appropriate for my timeframe, and so retirement, this is really my only savings vehicle that I'm using for retirement, and a well structured Target Date Fund probably does the trick." Whereas, "I am 52 years old, I want to retire in 12 years. I have a wife, I'm expecting an inheritance, I've got some real estate, I've got some..." whatever, "... and now how do I structure my investments in my 401(k)?"


Rick:    That is really where, in my opinion, a managed account service can really add value and is worth the extra cost, is worth the "premium" that you're paying over the years because you have the potential to get some benefit from the customization to your specific or your family specific needs.


JD:    And I'm getting the vibe that our industry agrees as what you just said, it seems that managed accounts are in a bit of an uptick, and I think that has to do with... we evolve, right? Things evolve, and I think the 2.0, and the 3.0 versions of managed accounts are interesting and exciting and we're living in a world where data's available much more readily available to us, right?

JD:    So, we can learn more about a person without getting all their involvement all the time, although that would be the ideal way. Right? So, Google and Facebook and everyone knows exactly everything about JD Carlson and what surfboard I want to purchase two weeks from now, so they're going to let me know it, and so I think that managed accounts might be able to benefit from that type of data down the line, and so...

JD:    Oh, I wanted, and all I want for any listener out there is, I just want you to be comfortable with what you're investing in, right? I feel as though any average investor should at least be able to communicate what they're in and what it is, and so if there's confusion between a target date or a managed account, and I think they're the same thing, I would just really hope that they could learn the differences so they feel comfortable. That's what I want them to do.


Rick:    All right. I love that. That was great points and clarification. So, I've got another one that I think hits on an important concept that maybe we piece through here.


JD:    Why am I always nervous as you're about to say something I'm not going to know?


Rick:    So, JD, can I use my Roth 401(k) after tax option in my 403(b) as an emergency savings account?


JD:    Can I use my raw? Okay, so I'm going to do what you always do. I'm just going to break it down before I try to figure out what it is. Roth 401(k), or 403(b) you said?


Rick:    Yeah.


JD:    I mean, so I don't get tricked up here?


Rick:    I said 403(b), but I just want to throw some [crosstalk 00:43:25] to our non-profit brethren.


JD:    Roth within a retirement plan is a just your other option versus your traditional tax deferred option where you're obviously paying the taxes on that money before it goes into the plan, therefore, when you take it out, it's tax free, so to speak, whereas your normal 403(b), 401(k) deferrals, when you take them out, you got to pay your taxes on it, right? The government wants their pound of flesh eventually, and Roth can be really neat, but we won't go down that trail right now.


JD:    Can I use those types of investments as my emergency savings? Was your question?


Rick:    Yeah.


JD:    An emergency savings is something that's on my mind a lot lately. We see these crazy stats where people don't have $750, or $1,000, I forget what-


Rick:    $300 bucks, yeah.


JD:    ... $300. Like they literally don't have that money for something that goes wrong. You know. The car breaks down or God knows what, and that's really, really scary, and so I think as an industry, we're all pretty motivated to help solve that, and we'd love for people to just have a little bit put aside, right?


Rick:    Yup.


JD:    And make them feel better, less stress, less anxiety in case something happens. So, you're saying, as opposed to it being outside of a retirement plan, could I use those Roth deferrals as my emergency savings? Now, in theory I would say I don't like that idea.


Rick:    No. Agreed.


JD:    Your 401(k), your 403(b) is supposed to be your saving vehicle for the future, and by the way, the only way you're going to tap into it if your plan has a loan provision, because just because you've done a Roth deferral, you've paid your taxes doesn't mean that it's any more ready for a distribution than any other type, right? So-


Rick:    Yup. So, this is where it's a little jumbled, and I guess this is a, what's old is new again, concept and that you're absolutely right. Traditional pre-tax, I think that's the way most people think about how they contribute to the 401(k) or 403(b), you've got the Roth, which as you mentioned as obviously the after tax option, and after tax option where put it in after tax can take it out tax free as long as you meet a couple of requirements, but then there's this legacy, traditional, or I'm not saying the right word, but the legacy true after tax contribution.


JD:    Yeah. Okay. A third area?


Rick:    Yeah.


JD:    Straight up after tax?


Rick:    Straight up after tax, and this is making a comeback, and what I'm seeing, and I've talked-


JD:    It can be.


Rick:    ... about a couple times.


JD:    This would be a good option for emergent. I'm just jumping in, so I look smart. Yeah, no, you're right. I don't deal with-


Rick:    You look, and sound smart, so.


JD:    Yeah. I don't deal with after tax as a company, I'm aware of it, I get it, and I think what you're leaning towards is, sure, it could be a decent vehicle for an emergency savings. Is that where you're going, Rick?


Rick:    Yeah. And it's not a Roth, and that that was where it fit into our broader theme of jargon, gibberish, or jumbled was a little bit of jargon, but also it is jumbled in that I think there's a lot of people to the extent that you want to talk about it, and I'm seeing more providers and I'm seeing more advisers, I'm seeing more papers that are being put out about just exactly what you said, "Hey, we've got this challenge with emergency savings."


JD:    What's a solution?


Rick:    Yeah. We've got this option within a workplace retirement plan, within a qualified retirement plan where somebody can take money out directly from their paycheck. [crosstalk 00:47:11]. It doesn't have to go to the credit union, it doesn't have to go to the to their bank, they can just do a straight salary deferral like they would do in the 401(k).


JD:    Could be a convenient place to house that money. I'm going to go back to what we talked about earlier, what I know of after tax, which is a little, but you still have to do a certain coverage test, right?


Rick:    Yep.


JD:    Discrim test and make sure, and it doesn't always work, but yeah, I do know that it is becoming a bigger trend because of the need to solve the emergency savings.


Rick:    Yeah, and just in the broader concept of financial wellness, and as I think people's aperture and appetite to try to take on some different maybe financial challenges that their employees might have, emergency savings is one that I think as you talk to a lot of employers about it, their heads nods like, "Yeah. You should see we've got an employee assistance fund that we offer where people can apply for up to $500 or something like that, and you should see the type of applications we get for money in this employee assistance fund for some things that people just aren't able to meet." I mean, the other thing that I know depending upon the type of company or the industry that can be a huge scourge are payday loans. So, you've got people that are, and I mean-


JD:    And you give it like you're fronting them.


Rick:    Yeah. I'll front you your paycheck for 72 hours. You're going to me some exorbitant amount of interest, but-


JD:    I don't know why I'm a little less excited by that, but yeah.


Rick:    But I'm not suggesting that's an option, but I'm-


JD:    No.


Rick:    ... but what we see as some, I mean that's a struggle-


JD:    Solve the emergency.


Rick:    ... and some companies are just like, "Oh man, if we could just figure out a way to get these payday loan folks out of our employees lives, we feel everybody would be better off for it."


JD:    Sure.


Rick:    So, everybody I think is very understanding of the power of automation and payroll deduction and having money come out of [crosstalk 00:49:13] people's paychecks before it's there, and so again, I think that's why, 20 years ago after tax was in every plan, 30 years ago after tax was in everybody's plan, pretty much, with the advent of Roth, that true after tax has gotten pushed to the side-


JD:    Right? Less attractive.


Rick:    ... because a lot... Yeah. "Hey, we don't want to confuse people." Or just it's either traditional pre-tax, or Roth after tax, but it's something that I feel like some firms out there are really pushing it to the front and center saying, "Hey, here's something that we can just flip a switch and turn it on."


JD:    Well, operationally it's easier because my first instinct is like, "Oh well, why don't we just set up accounts for everyone outside of the 401(k)." Right? And then advisors work with them to help them build some money in there, let's get to that $1,000.


Rick:    Yeah.


JD:    Maybe we can get the employer to chip in and that would be cool, but you're right, that's a bigger mountain to climb, versus just creating what I would call as an industry person, sorry for the jargon, another source-


Rick:    Yep. A bucket.


JD:    ... another bucket, thank you, within the retirement plan that can be used for that. Of course there's advantages to that, so.


Rick:    But I would just echo your point as well, people should really look at the pros and cons because you're 100% right. It has to go through testing.


JD:    You know what though? As I think about it out loud, if you're trying to do it for people who lack emergency savings, then you're not concerned about all those tests. I feel where after tax as a bucket gets knocked down is when you're trying to create some cool things for the big wigs. Right?


Rick:    Yeah. I agree.


JD:    Trying to get them to dump a bunch of money in. That's where it just doesn't work.

Rick:    Yeah. Or you're trying to do the mega backdoor-


JD:    Yeah. Right.


Rick:    ... Roth type thing where you're using after tax and converting it to Roth down the road.


JD:    That's usually a pipe dream. It doesn't really work.


Rick:    Yeah. Exactly, and unless you've got a really tiny company and whatever, I agree with you. That's usually a pipe dream, but inevitably every year I get a couple emails from employers that are like, "Hey, is this thing possible? One of our employees saw this article about how they can get up to 59,000, or whatever, into their 401(k) plan."


Rick:    But yeah, no, I agree. I think that depending upon how you frame it, if it is really going to be something where you want people contributing enough money to have a little bit put aside, it still needs to be tested, but you're probably okay, but if it is going to be like, "Oh Hey." The HCEs are like, "Oh wow, I can put $20,000 into, whatever, into this." That's, yeah, that's where it has the potential to implode.


JD:    So, that's cool. I was aware of that and I'm learning more as we talk. I think it could be a pretty decent solution for that, and I'm a fan of that. I cannot stomach the fact that there's people out there that don't have $300, $500 $1,000 for some. I can't even imagine. That's gotta be a lot of, that's a black cloud looming over you. You're worried about-


Rick:    Yeah. It's just a lot of stress, so you end up having to make... unfortunately you're forced to make some bad financial decisions to deal with things in the short run that can oftentimes just snowball or have-


JD:    Such a bombing-


Rick:    ... bad effects down the road.


JD:    So, if we could help fix that, it would be cool. It'd be great to see employers jump in.


Rick:    One thing to think about.


JD:    Okay, I've got a fun one here and we're getting close to wrapping this show, but I want to make sure we get this one in. Certain types of fund share classes, Rick, can generate so much revenue that the plan could in a sense be free. You know? And well go ahead and I'm going to just throw that out. I know it's a little vague, but-


Rick:    All right. So, that is-


JD:    Certain types.


Rick:    ... That is the statement that I think launched the fee disclosure-


JD:    Okay. Cool.


Rick:    ... initiative.


JD:    We're on the same page.


Rick:    It sounds like that's where you're headed. Yeah. I guess, coming back to factual statement, could you have a plan where you're using different types, and expense structures on your investments-


JD:    Share class, because I used that.


Rick:    ... mutual funds, 40 act, whatever, share classes which are basically just different ways that you can structure the cost of the



JD:    Embedded revenue. Yeah.


Rick:    Yeah. So, maybe it has a higher total expense ratio but it's going to offer more revenue to offset plan costs.


JD:    What you're trying to get to is in theory the sentence could be true-


Rick:    Yes.


JD:    ... sort of, and I think you're right, you're with me. It just really comes down to how do you define free, which is the last word.


Rick:    Yeah. Exactly, and I think that's the big word that a lot of people are trying to make sure employers understand is that just because you are not writing a check does not mean your plan is free.


JD:    I want to continue to beat on this subject. You know? The beat, the drum of the subject because I don't like plan sponsors, decision makers not understanding this, and I continue to see it long after 40B2, and 40485, which are the fee disclosure regs you were talking about. We still have decision makers that don't understand this game of revenue share, and the fact that you can have a fund that is generating revenue for your vendors, your record keeper, your advisor, your TPA like my firm.


JD:    That's fine and good as long as you, and your plan in a sense could be free in the sense that you're not writing a check, but you need to understand where that money came from. Right? And so when you use a share class that creates that revenue to pay for some, or all of your vendors, the reality is that it's your participants that are paying for that because you could have, in theory, gotten a cheaper lower cost share class that didn't generate that amount of revenue and then where's that money going to come from?


JD:    Well, maybe your vendors are going to have to bill the employer to pay for it. Right? And so it's just a game of understanding where it comes from, and I just do not like the concept of it's free. It shouldn't be looked at that way. It should be looked at for each one of your vendors, how much are there are they receiving? Where's it coming from, and why?


Rick:    Yup, and I think over the years, that has gotten better.


JD:    Sure.


Rick:    I got into this business almost 20 years ago now, which is a little crazy to think about.


JD:    Yeah.


Rick:    But it started out with these total cost conversation, which everybody was looking at maybe a top line average expense ratio and just, "Hey, don't worry. Everything's in there."


JD:    I've heard those exact words before.


Rick:    Yeah. It's all good, to now, where I think at least there's the ability, as you were saying, to say, "Okay. Well, how much am I paying for record keeping? How much am I paying for TPA, for advisory, for investment manager expenses." And breaking down all of those individual components there.

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