105 Lincolnway Suite 205, Valparaiso, Indiana 46383              (219) 246-2516              [email protected]

   

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Why are people fearful of investing?

There are many reasons why people may be fearful of investing. Here are some common reasons:

  1. Lack of knowledge: Many people may fear investing because they lack knowledge and understanding about how investing works, their investment options, and how to manage risk.
  2. Fear of losing money: Investing involves some level of risk, and the fear of losing money can be a powerful deterrent for many people. The fear of losing money can be especially acute for those who have experienced financial hardship or have limited financial resources.
  3. Emotional biases: Human beings are prone to emotional biases that can influence their decision-making, including when it comes to investing. Fear, greed, and overconfidence are just a few examples of the emotional biases that can cause people to make poor investment decisions.
  4. Lack of trust: Some people may fear investing because they need to trust financial institutions or investment professionals. This lack of faith may be based on past experiences, media reports, or other factors.
  5. Complexity: Investing can be complex and overwhelming, with many different types of investments, strategies, and financial products. For some people, the complexity of investing can be a barrier to entry.

It’s important to note that while investing can be intimidating, it’s also an essential tool for building wealth and achieving long-term financial goals. By educating yourself about investing, seeking advice from trusted professionals, and being disciplined, you can overcome your fears and take control of your financial future.

What happens if my bank is seized?

With the recent developments with Silicon Valley Bank and First Republic, people have been asking us this question: What happens if my bank is seized?

If your bank gets seized by the Federal Deposit Insurance Corporation (FDIC), it means that the bank has failed and can no longer operate. The FDIC is a federal agency that insures deposits in banks and thrift institutions, and its primary role is to protect depositors in the event of bank failures.

If the FDIC seizes your bank, your deposits are typically insured up to $250,000 per depositor, per account type, at each FDIC-insured bank. This means you should receive your insured deposits back, up to the insurance limit, even if the bank cannot return your deposits to you.

In most cases, the FDIC will arrange for another bank to take over the failed bank’s accounts and continue providing banking services to its customers. This means you may be able to continue accessing your accounts and conducting transactions as usual, but with the new bank.

If the FDIC cannot find another bank to take over the accounts, it will send depositors a check for their insured deposits. It’s important to note that this process can take some time, and you may need immediate access to your funds while the FDIC is resolving the bank’s failure.

Overall, while having your bank seized by the FDIC can be an unsettling experience, the FDIC’s insurance program is designed to protect depositors and help ensure that they receive their insured deposits back in case of a bank failure.

Here are the top 10 most important things to learn about financial literacy:

Budgeting: Understanding how to create and stick to a budget is essential to financial literacy. This involves knowing your income and expenses, setting financial goals, and tracking your spending.

Saving and Investing: Learning to save and invest money wisely is crucial for building long-term wealth. This includes understanding different investment options, such as stocks, bonds, and mutual funds.

Credit: Understanding and using credit responsibly is essential for managing your finances. This includes knowing your credit score, how to improve it, and how to avoid debt.

Taxes: Understanding and filing taxes correctly is essential for avoiding penalties and maximizing your deductions.

Insurance: Learning about different types of insurance, such as health, life, and auto insurance, can help you protect yourself and your assets in case of unforeseen events.

Retirement planning: Planning for retirement early can help ensure that you have enough money saved to maintain your lifestyle after you stop working.

Debt management: Understanding how to manage debt, including credit card debt, student loans, and mortgages, is essential for avoiding financial hardship and building wealth.

Financial goals: Setting and achieving financial goals, such as paying off debt, saving for a down payment on a house, or starting a business, can help you stay motivated and focused on your financial future.

Estate planning: Learning about estate planning, including creating a will and setting up trusts, can help ensure your assets are distributed according to your wishes after you pass away.

Financial scams and fraud: Knowing how to recognize and avoid financial scams and fraud can help protect your finances and avoid costly mistakes. This includes awareness of common scams like phishing, identity theft, and Ponzi schemes.

How Women Business Owners Can Save for Retirement and Reduce Taxes

How Female Business Owners Can Save for Retirement and Reduce Taxes

By Greg Farrall, PPC®, CWS®, CPFA®

Women-owned businesses continue to grow in numbers throughout the U.S. In fact, 40% of businesses are owned by women. (1) While many business owners initially focus on building up revenues and reinvesting profits into the business, this can mean income and retirement savings fall by the wayside. 

It’s no secret women tend to live longer than men—five years longer than their male counterparts (2)—yet despite this fact, women are not adequately planning for retirement. Additionally, since women live longer, they are more at risk to experience greater inflation or market instability, making their retirement investments particularly vulnerable. 

Women business owners also tend to have different roles at home. In general, familial caregiving responsibilities, such as for an elderly parent or a newborn, also often fall primarily on the women’s shoulders, giving many women less time in the workforce and ultimately less money to save for retirement. (3)

There are many strategies that we use to help our female business owners save for retirement and mitigate their tax burden. Below, we list a few of the most common retirement and tax-reduction strategies that could help you outline your financial plan. 

Understanding Cash Balance Plans 

Cash balance plans are a great tool to use if you contributed less toward retirement during the lean years when your business was in its infancy. Cash balance plans offer the business owner and her employees a choice of taking a lump-sum amount at retirement or opt for a pension-type payment based on the balance. 

What makes this particularly appealing to business owners is that, unlike other retirement plans, cash balance retirement plans have higher contribution limits that increase with age. For a 65-year-old, the maximum contribution she can make toward a cash balance plan in 2022 is $295,000. (4) The contribution to a cash benefit retirement plan is also tax-deductible, so if you are looking for an efficient way to bolster your retirement while mitigating your tax burden, a cash balance plan may be an effective strategy to use. 

Contribute to a Health Savings Account

HSAs are a really smart method to save on your tax bill while investing in your future. This is because HSAs offer a triple tax advantage. No taxes are paid on contributions that are made as a payroll deduction, and no taxes are paid on withdrawals from the account if they are made for qualified health expenses. Additionally, investment earnings on the HSA are also not taxed. (5) It is also not a “use it or lose it” strategy. You can contribute the annual maximum up to age 65 and roll it over year after year so it’s there when you need it. The only catch is that to invest in an HSA, you have to carry a high-deductible healthcare plan. 

Maximize Deductions

This is an obvious and simple way to cut down on your tax bill, but it is surprising just how many small business owners forget to deduct their qualifying expenses. Do you travel for work? Are you working from a home office? Many of us are primarily working from home and have been since March of 2020 with the COVID-19 outbreak in the United States. Your home office expenses and your work travel expenses can be deducted, which could save you thousands over the course of running your business. Reducing your taxes leaves more surplus cash flow for other investments. It’s always best to consult your tax professional in this area.

Questions? We Can Help

We at Farrall Wealth specialize in designing financial plans and wealth management solutions for women and female business owners. We know that your wealth management plan requires a unique perspective, and we can help design a plan that will allow you to make the best financial decisions throughout your retirement. Call our office at 219-246-2516, email [email protected], or schedule a complimentary consultation online. Be sure to visit our website to learn more and connect with us on LinkedIn, Facebook, Twitter, and YouTube.

About Greg

Greg Farrall is CEO and owner of Farrall Wealth, an independent, boutique wealth management firm that is dedicated to helping women and business owners create customized financial plans that allow them to grow, protect, preserve, and distribute their wealth. Greg is known for being a problem-solver who walks his clients through whatever life throws at them. He prioritizes building long-term relationships and is passionate about going the extra mile for his clients so they can pursue their goals and live the lives they want. Greg has a bachelor’s degree in international business from the University of Wollongong in Australia and a bachelor’s degree in finance and marketing from Indiana University Bloomington. He is a Professional Plan Consultant® (PPC®) and a Certified Wealth Strategist® (CWS®) professional. And he recently received his Certified Plan Fiduciary Advisor (CPFA®) designation. You can listen to him on his financial literacy and business topic podcast, Money Matters With Greg, on iTunes, Google, and Spotify. He’s also on YouTube, Twitter, and Facebook at @FarrallWealth.

Greg is a pillar of his community and served as the 2013-14 co-chair for the United Way campaign, through which he helped raise $1.8 million for 38 nonprofit organizations across Porter County, Indiana. He also served as president of the Valparaiso Rotary Club. Currently, he is on the advisory board for the Kelley School of Business and Dean of Students’ board at Indiana University. He also holds a position on the Culver Academies parents’ board. 

When he is not working, you can find Greg spending time with his family or investing in one of his many passions, which include cooking, Spartan races, fly fishing, and meditation. To learn more about Greg, connect with him on LinkedIn.

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational presentation.

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(1) https://www.fundera.com/resources/women-owned-business-statistics

(2) https://www.livescience.com/why-women-outlive-men.html

(3) https://www.caregiver.org/resource/women-and-caregiving-facts-and-figures/

(4) https://www.cashbalancedesign.com/resources/maximum-contribution-calculator/

(5) https://healthaccounts.bankofamerica.com/triple-tax-savings-advantage.shtml.

Plan Sponsors: How to Know When It’s Time to Update Your Investment Options

Plan Sponsors- How to Know When It’s Time to Update Your Investment Options

By Greg Farrall, PPC®, CWS®, CPFA®

As a sponsor of an employee retirement plan, you have a duty to assess investment options on an ongoing basis to ensure they are in line with your participants’ best interests. Not only that, but keeping your plan compliant requires you to replace poor performing investment options in a timely manner.

With such a huge responsibility, it can be overwhelming to navigate the investment landscape of an employer-sponsored retirement plan. At Farrall Wealth Stewards, we recognize the challenges plan sponsors face, which is why we put together this investment guide. Here are four signs it may be time to add or replace investment options in your company’s retirement plan. 

1. Similar Plans Have Lower Fees

One of the first signs that it may be time to update your investment options is if you start to see similar plans with lower fees. This can indicate that your participants are overpaying for their investments and, if left unchecked, it can put you in violation of your fiduciary duty. You don’t have to offer the lowest fees, but you do have to have reasonable fees that are considered fair for what you’re offering.

Thankfully, reviewing your fees has become easier than ever, especially if you work with a qualified financial professional who can help you sort through the details. When comparing fees, however, it’s crucial to make sure you are looking at similar plans.

For instance, you cannot compare an actively managed fund to a passively managed fund and expect no difference in fees. These are much different investment vehicles and they will have drastically different fee structures. Be sure the plans you are comparing are similar in nature.

2. There Have Been Major Changes to the Investment Structure

Like everything, investments change over time, and the investments offered as part of an employer-sponsored retirement plan are no different. This means that what may have been a well-suited investment option for your plan originally can become inconsistent with your investment policy statement over time. 

Maybe that fund is now owned by a different investment firm, or is investing in a way that no longer aligns with your plan’s needs. Or perhaps the fund has stayed the same but you have decided to offer DEI or ESG investments to your participants. 

No matter what the situation, regularly reviewing the structure, investment philosophy, and holdings of the funds you offer is an important part of being a plan sponsor. If an investment option no longer fulfills the role it needs to, it may be time to reconsider your choice.

3. Long-Term Performance Has Been Poor

This may be the most obvious sign, but if an investment offering has been consistently underperforming based on the appropriate benchmarks, then it could be time to replace it. Keep in mind that no investment will perform perfectly 100% of the time. There are natural ebbs and flows to the market that make it impossible to be in the green at all times. But if you notice a particular investment is always in the red, or seems to drop significantly more than the other investment choices, you may want to consider updating your selection.

Though important, investments should not be judged on performance alone. You should also consider the role it plays in the overall offering. For instance, maybe it’s not performing as well as the other funds in your plan, but it acts as a counterbalance to volatility because it has a low beta (or correlation) with the stock market. 

You can also look at other financial metrics like the Sharpe Ratio to judge a fund’s performance against other investment options. Keep in mind that these comparisons should always be done over the long term to avoid making hasty decisions based on day-to-day market fluctuations.

4. Plan Participants Have Made Negative Comments

In addition to information you gather yourself, you should also pay attention to feedback received from plan participants, with special attention given to any complaints made. As a fiduciary in charge of handling your employees’ hard-earned retirement assets, it is important to consider if plan participants are unhappy with the investment offerings available. 

Though your decision to update your selection shouldn’t be made based on participant complaints alone, they could be helpful in identifying the true needs of your participants and how to structure your plan in a way that meets those needs. After all, a retirement plan is supposed to be for the participants’ benefit. 

Does Your Employer-Sponsored Retirement Plan Need Updating?

Updating your investment options is a natural part of the plan sponsorship process, but it can get overwhelming without proper guidance. At Farrall Wealth Stewards, we strive to help small business plan administrators make informed decisions about their investment offerings. If you would like to learn more about how we can help, or if you would like to review your current investment selections, we would love to hear from you! Please reach out to us at Farrall Wealth Stewards to get started today.

About Greg

Greg Farrall is CEO and owner of Farrall Wealth, an independent, boutique wealth management firm that is dedicated to helping women and business owners create customized financial plans that allow them to grow, protect, preserve, and distribute their wealth. Greg is known for being a problem-solver who walks his clients through whatever life throws at them. He prioritizes building long-term relationships and is passionate about going the extra mile for his clients so they can pursue their goals and live the lives they want. Greg has a bachelor’s degree in international business from the University of Wollongong in Australia and a bachelor’s degree in finance and marketing from Indiana University Bloomington. He is a Professional Plan Consultant® (PPC®) and a Certified Wealth Strategist® (CWS®) professional. And he recently received his Certified Plan Fiduciary Advisor (CPFA®) designation. You can listen to him on his financial literacy and business topic podcast, Money Matters With Greg, on iTunes, Google, and Spotify. He’s also on YouTube, Twitter, and Facebook at @FarrallWealth.

Greg is a pillar of his community and served as the 2013-14 co-chair for the United Way campaign, through which he helped raise $1.8 million for 38 nonprofit organizations across Porter County, Indiana. He also served as president of the Valparaiso Rotary Club. Currently, he is on the advisory board for the Kelley School of Business and Dean of Students’ board at Indiana University. He also holds a position on the Culver Academies parents’ board. 

When he is not working, you can find Greg spending time with his family or investing in one of his many passions, which include cooking, Spartan races, fly fishing, and meditation. To learn more about Greg, connect with him on LinkedIn.

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.

This information was developed as a general guide to educate plan sponsors, but is not intended to be authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does an advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

The Sharpe ratio is a risk-adjusted measure of the excess return (or Risk Premium) per unit of risk in an investment asset or a trading strategy.

Life Lessons My Parents Taught Me

One of the joys of parenthood is passing wisdom on to the next generation (even if kids aren’t
ready to listen just yet!). Growing up, my father and I would go fly fishing together, where
the lessons seemed to flow out of him like the ripples of the river. Lessons like: Have a legacy.
Don’t be average, be excellent. Strive to achieve the impossible. And my favorites: Make a
footprint. Make the world a better place when you leave it. Find your passion. If you are
passionate about something, it won’t feel like work.
My parents imparted many life lessons, but to sum them up in one simple phrase, the best
lesson would be: Be different by making a difference.

A Little About Dad


Dad played football at The Ohio State University. As a short, undersized, half-blind, slow, third-
string right guard, he was told by Coach Woody Hayes to concentrate on an education: “Make
the most of the opportunity, son.” It was great advice and Dad never looked back. After playing
for four years, graduating, and going off to medical school, he became a prominent orthopedic
surgeon in a small town. He used an opportunity to commit a life to helping others: his
difference was healing through medicine.  

Dad found a great wife at Ohio State; she became a nurse, and they built a life together, raising
three great sons (of course I’m the best of the three, the most handsome and the middle child).
Growing up, we would go out to eat as a family, I watched in amazement as we walked through
the restaurant. It seemed like everyone knew my dad. He had set that child’s broken arm, he
had replaced that elderly lady’s broken hip. It was almost comical at times. To me my dad was
cooler than Mick Jagger. 

A Little About Mom


The year was 1977, Jimmy Carter was president, and my dad was five years into his practice.
Inflation was 17%, CD rates were 13%, a good mortgage rate was 21%, and the top tier income
tax was 70%. On his own as an entrepreneur, Dad just wanted to practice medicine. Business
was not his forte, and he was oblivious to the fact that taxes were killing him. On the other hand,
my mom knew something had to be done. She enrolled in night tax classes at local Wittenberg
University to understand tax code; however, her real passion was investing.
I grew up with the dining room table covered with stacks and piles of legal pads listed by stock:
IBM, GE, Ford…this was her investment portfolio. Mom would track the daily closing prices and
write them down on the legal pads almost every night. (Obviously, this was way before stocks
could be filed on an app.) Brokers who called the house always asked for the doctor in the
house. They never knew that Mom ran everything. Dad got a $20 allowance every Sunday and
that was it for the week. One broker from Columbus, Ohio, called and asked for Mom—and she
worked with him for over 20 years. She had found her difference.
And she passed this difference in finance on to all three sons. Today Mom is 83 and we still talk
stocks almost every day.

My Difference


I played college football, once had the sack record as an All Big Ten Defensive End at Indiana
University, and graduated Kelley Business School with a degree in—of all things—finance. I
quickly made my way to the derivative pits of the Chicago Board of Options Exchange (where I
literally played football every day), and my difference turned into 13 years of great success,
trading the .com boom and .com bust, devaluation of the peso, and many other stories. With
partners that I trusted, my difference built a multimillion-dollar firm into something anyone would
want—anyone except me.
Among the many lessons taught by my parents, I was advised not to take, but to give. With
trading you just take. I was unhappy. So I sold my firm and started a new life. I stayed in
finance, and rather than just taking, I began to give. I really found my difference, my passion.
Now I am a financial concierge to a select number of affluent families. Like my dad helped
people heal physically, I help others heal financially. I help them invest their money, grow their

money, preserve their money, distribute their money during their lifetime, and distribute after
death. I am not only helping individuals but generation after a generation. I am making the world
a better place and leaving a footprint. Although I practice in a small town, we are a national firm,
currently in 21 states and growing. I have three great kids and a great wife…and none of it feels
like work.

A Different Approach


If this sounds like a different approach, it is. We are different. Our clients are different. If you are
different or you want to be treated differently, we’d love to connect with you to discuss your
financial goals and how you can make the world a better place before you leave it.
Call our office at 219-246-2516, email [email protected], or schedule a complimentary
consultation online. Be sure to visit our website to learn more and connect with us on LinkedIn,
Facebook, Twitter, and YouTube.

About Greg


Greg Farrall is CEO and owner of Farrall Wealth, an independent, boutique wealth management
firm that is dedicated to helping women and business owners create customized financial plans
that allow them to grow, protect, preserve, and distribute their wealth. Greg is known for being a
problem-solver who walks his clients through whatever life throws at them. He prioritizes
building long-term relationships and is passionate about going the extra mile for his clients so
they can pursue their goals and live the lives they want. Greg has a bachelor’s degree in
international business from the University of Wollongong in Australia and a bachelor’s degree in
finance and marketing from Indiana University Bloomington. He is a Professional Plan
Consultant® (PPC®) and a Certified Wealth Strategist® (CWS®) professional. And he recently
received his Certified Plan Fiduciary Advisor (CPFA®) designation. You can listen to him on his
financial literacy and business topic podcast, Money Matters with Greg, on iTunes, Google and
Spotify. He’s also on YouTube, Twitter, and Facebook at @FarrallWealth.
Greg is a pillar of his community and served as the 2013-14 co-chair for the United Way
campaign, through which he helped raise $1.8 million for 38 nonprofit organizations across
Porter County, Indiana. He also served as president of the Valparaiso Rotary Club. Currently,
he is on the advisory board for the Kelley School of Business and Dean of Students’ board at
Indiana University. He also holds a position on the Culver Academies parents’ board.
When he is not working, you can find Greg spending time with his family or investing in one of
his many passions, which include cooking, Spartan races, fly fishing, and meditation. To learn
more about Greg, connect with him on LinkedIn.
Securities and advisory services offered through LPL Financial, a registered investment advisor.
Member FINRA/SIPC.

The Top Mistakes Plan Sponsors Make: Part 2

In 2021, the Employee Benefits Security Administration (EBSA) collected $1.9 billion in qualified retirement plan violations and other enforcement actions. (1) As such, it’s more important than ever that plan sponsors are up to date on plan requirements and avoid costly mistakes. In our first article, we talked about the top four mistakes that retirement plan sponsors often make. In this article, we’ll continue the conversation with mistakes 5-8 and what you can do to avoid them. 

5. Inconsistent Remittances of Employee Deferrals

Like most aspects of a qualified plan, there are many rules and regulations regarding how and when employee deferrals should be deposited into the plan’s trust account. Plans with fewer than 100 participants have seven days to make the remittance, while large plans are expected to deposit the funds as soon as possible after payroll (typically within two days). 

Due to the different timelines for remittance, many plan sponsors don’t realize the importance of consistent employee deposits. Whichever remittance time frame applies to your plan, it’s critical that the same turnaround time is used consistently for every deferral. Taking seven days to deposit some employee deferrals, but only one day for others is the quickest way to be flagged by the DOL for an audit. It may not even be a large amount of money in question, but if you’re ordered to correct the mistake, it could result in fines, penalties, and manpower that significantly increases the cost.

It’s crucial to coordinate employee deferrals with both payroll personnel and plan sponsors to ensure remittances are both timely and compliant.

6. Not Tracking Loan and Hardship Repayments

When it comes to loans and hardship provisions, there are several common mistakes made by plan sponsors

  • Loans made that exceed the maximum dollar amount permitted
  • Use of the incorrect loan repayment schedule
  • Miscalculating interest owed
  • Mishandling loan default by a participant
  • Not tracking loan and hardship repayments

Though plan sponsors should try to avoid all these mistakes, not tracking loan and hardship repayments is hands down the biggest one on the list. This is because you are required to act as a fiduciary to the plan participants. If you’re receiving money as repayment for a loan or hardship withdrawal and not properly accounting for it, potentially overcharging the participant, or not investing the correct amount back into their plan, you will be considered in direct violation of the fiduciary responsibility.

Be sure you have a clear understanding of who owes what and how repayments are treated before approving loan and hardship withdrawals. 

7. Process, Process, Process 

In the midst of all the decisions that have to be made as a qualified retirement plan sponsor, sometimes it’s hard to stay organized or nail down a specific process for how things should be handled. This is a big mistake that plan sponsors should try to avoid at all costs.

As a fiduciary in charge of handling your employees’ hard-earned retirement assets, the Department of Labor wants to see that you are operating like a well-oiled machine, with a defined process for:

  • Organization
  • Formalization
  • Implementation
  • Monitoring

As mentioned in our previous article, qualified plans typically start out very organized in order to meet all the requirements to be adopted in the first place. But this can quickly fall by the wayside as more plan participants are added or changes are made to the plan structure.

The DOL doesn’t expect you to be perfect in how you manage the funds entrusted to you, but you have to maintain a cohesive process so that your reasoning for important decisions like investment choices is clearly identifiable and easy to follow. Not only does this protect you as a plan sponsor in case of an audit, but it also protects the plan participants by reducing your odds of making a mistake. 

8. Not Having Enough Insurance Coverage

And lastly, a mistake we see quite often is plan sponsors not having enough insurance coverage in the fidelity surety bond required by ERISA. The plan’s fidelity bond must cover at least 10% of plan assets with a minimum of $1,000 and a maximum of $500,000. Many plan sponsors will insure for the correct amount when the plan is first adopted but fail to update the coverage as the plan assets grow. For instance, if the plan assets grow from $1 million to $5 million, the fidelity bond must be updated to maintain compliance. Yet many plan sponsors will keep the same $100,000 coverage no matter how the plan assets are valued.

This is a huge mistake because the fidelity bond is meant to protect the plan against losses. Not having enough coverage can result in costly fines and penalties for the plan sponsors or even financial instability for the plan trust itself. Avoid this mistake by keeping track of your plan’s assets and updating your insurance coverage as needed to maintain compliance.

Protect Your Plan From These Mistakes

Designing and administering an employer sponsored retirement plan is hard. Don’t let these common mistakes make it harder. If you’re a plan sponsor with questions about your responsibilities, click here to learn more about how we can help.

About Greg

Greg Farrall is CEO and owner of Farrall Wealth, an independent, boutique wealth management firm that is dedicated to helping women and business owners create customized financial plans that allow them to grow, protect, preserve, and distribute their wealth. Greg is known for being a problem-solver who walks his clients through whatever life throws at them. He prioritizes building long-term relationships and is passionate about going the extra mile for his clients so they can pursue their goals and live the lives they want. Greg has a bachelor’s degree in international business from the University of Wollongong in Australia and a bachelor’s degree in finance and marketing from Indiana University Bloomington. He is a Professional Plan Consultant® (PPC®) and a Certified Wealth Strategist® (CWS®) professional. And he recently received his Certified Plan Fiduciary Advisor (CPFA®) designation. You can listen to him on his financial literacy and business topic podcast, Money Matters with Greg, on iTunes, Google and Spotify. He’s also on YouTube, Twitter, and Facebook at @FarrallWealth.

Greg is a pillar of his community and served as the 2013-14 co-chair for the United Way campaign, through which he helped raise $1.8 million for 38 nonprofit organizations across Porter County, Indiana. He also served as president of the Valparaiso Rotary Club. Currently, he is on the advisory board for the Kelley School of Business and Dean of Students’ board at Indiana University. He also holds a position on the Culver Academies parents’ board. 

When he is not working, you can find Greg spending time with his family or investing in one of his many passions, which include cooking, Spartan races, fly fishing, and meditation. To learn more about Greg, connect with him on LinkedIn.

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. This information was developed as a general guide to educate plan sponsors, but is not intended authoritative guidance or tax or legal advice.  Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.  In no way does advisor assure that, by using the information provided, plan sponsor will be in complinace with ERISA regulations.

_____________

(1) https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/ebsa-monetary-results.pdf

Wishing You a Happy Mother’s Day! (And a Fun Gift Idea)

Happy Mother’s Day to all the amazing and awesome moms out there! You deserve the very best and I hope you feel spoiled on your special day.

Here’s the age-old question: What do you get an incredible mom who deserves the best? Flowers are the traditional choice (and COVID-free), and a spa treatment is now an option as many of our moms have been vaccinated. But let’s be honest, most moms are tough to buy for.

I have an inexpensive suggestion that might help if you’re looking to return some love to your mom.          

Screen Shot 2022-04-27 at 11.15.32 AM.png

Step 1

Find an old jar or head to the store to buy one. I would recommend a mason jar with a lid so that you don’t lose your thoughts. Also, buy some popsicle sticks or cut out small pieces of paper. Finally, find some pens you would like to use.

Step 2

Write one thing you love about your mom on a popsicle stick or a small, folded note, writing as many as you can. I used small pieces of paper and folded them. It was amazing to have so many ideas come to mind. Memories of my mom came racing back, such as favorite trips, funny moments, and special times. This is also a great gift for your kids to give to their mother. 

Step 3

Decorate your jar however you see fit, using glue to attach ribbons or decorative paper, or simply paint it. Then all you need to do is let the glue or paint dry. I made mine with a ribbon on the lid, but if you are more artistic, feel free to paint whatever designs you think your mom might like.

Step 4

Fill the jar with your special memories and you are done. A simple, inexpensive, thoughtful gift that will surely bring tears to your mom’s eyes and make her feel known, seen, and loved (which is truly what every mother wants).

Happy Mother’s Day to every wonderful mom! Enjoy your day!

The Top Mistakes Plan Sponsors Make: Part 1

Sponsoring a workplace retirement plan is hard. Complying with ERISA regulations, understanding fiduciary responsibilities, and staying up to date on the ever-changing tax law are just a few of the challenges plan sponsors have to navigate. Because of these challenges, it’s not uncommon for plan sponsors to make mistakes. But as many of our clients know, making a mistake as a sponsor of a qualified retirement plan can result in significant consequences, whether it be penalties, fees, or losing qualified status altogether. 

Retirement plan sponsorship is fraught with peril, which is why we’ve put together this two-part guide that outlines the eight most common mistakes made by plan sponsors and what you can do to avoid them. We’ll cover the first four mistakes in this article with a follow-up article next week.

1. Misunderstanding Employee Eligibility 

One of the biggest mistakes we see with retirement plan sponsors is misunderstanding which employees are eligible to participate in the plan and when. This can be a big issue when it comes to maintaining ERISA compliance, since plans have to cover a certain number of non-highly compensated employees to be considered nondiscriminatory and avoid penalties. 

As a plan sponsor, you are probably familiar with the rule that states most employees become eligible to participate in a qualified retirement plan after reaching age 21 and working for at least one year (1,000 hours). (1) But were you aware of the legislative change that significantly updated plan eligibility requirements in 2019? The SECURE Act now requires that long-term part-time employees, those who work between 500-999 in the last 3 consecutive years, be eligible to contribute to a qualified plan. As of January 2021, plan sponsors are required to track part-time employees’ hours to ensure all eligibility requirements are met. (2)

A good way to avoid this mistake is to consult your plan documents when making decisions about employee eligibility, especially as it relates to different types of plan contributions. For instance, long-term part-time employees are generally only eligible for participant deferrals, but not employer contributions. (3) Be sure to take these requirements into consideration when determining eligibility. 

2. Not Following the Plan Document Compensation Definitions

Another common mistake comes from misinterpreting the compensation definitions, which in turn can cause mistakes in how much (or how little) is allowed to be contributed by the employer or the employee. For instance, in reading the plan documents, you may find that eligible employees are allowed to defer up to 10% of their compensation annually. But what does compensation mean in this instance? Does it include bonuses? Stipends? Overtime? Commissions?  Most commonly, compensation consists of three types of income:

  • Wages and salaries
  • Payments for professional services
  • Payments for personal services (tips, commissions, fringe benefits, etc.)

Put simply, you cannot rely on what you think the word “compensation” means. Instead, you must thoroughly review and understand your plan’s definition of compensation as well as what type of compensation each employee receives.

3. Not Maintaining Proper Plan Documentation

Retirement plan sponsors are required by law to keep extensive books and records both for the IRS and EBSA. Maintaining proper documentation will not only keep you prepared in case of an audit, but it will also help you avoid mistakes in other areas of plan administration. For example, proper documentation can help you make the right decisions about employee eligibility because you have the records to back up their hours and employment status, or understand the correct definition of compensation because your plan documents are clear-cut and properly maintained.

Plan documentation usually starts out very organized because it has to be in order for the retirement plan to be qualified and approved by the government in the first place. Over time, however, it can be hard to maintain, especially if there are a lot of participants or if there are changes to the structure of the plan. Avoid this pitfall by prioritizing proper documentation and ongoing organization, periodically reviewing when you can.

4. Not Having an Investment Plan Policy

The goal of a retirement plan is to help participants save for retirement through investments. Plan sponsors have a significant responsibility to work with an advisor to select appropriate investments, replace poor performers, and verify that the fees are reasonable. It’s critical to create and follow an Investment Policy Statement (IPS) to keep your plan’s investments up to date and within DOL guidelines. While an IPS is not legally required for retirement plans, most qualified retirement plan advisors agree it is essential.

Revising the IPS periodically is important to ensure it keeps compliance with changing laws. Also be sure that the IPS aligns with your plan’s documentation and does not conflict in any way. A well-structured, well-followed IPS does more harm than good if it conflicts with the plan document.  

Are You Making Some of These Mistakes?

Don’t let the IRS or DOL find your plan noncompliant! At Farrall Wealth, we are here to help plan sponsors navigate their responsibilities with confidence. If you would like guidance on how to avoid or correct any of these mistakes, click here to get started today and don’t forget to check out the second part of this guide that will be posted next week!

About Greg

Greg Farrall is CEO and owner of Farrall Wealth, an independent, boutique wealth management firm that is dedicated to helping women and business owners create customized financial plans that allow them to grow, protect, preserve, and distribute their wealth. Greg is known for being a problem-solver who walks his clients through whatever life throws at them. He prioritizes building long-term relationships and is passionate about going the extra mile for his clients so they can pursue their goals and live the lives they want. Greg has a bachelor’s degree in international business from the University of Wollongong in Australia and a bachelor’s degree in finance and marketing from Indiana University Bloomington. He is a Professional Plan Consultant® (PPC®) and a Certified Wealth Strategist® (CWS®) professional. And he recently received his Certified Plan Fiduciary Advisor (CPFA®) designation. You can listen to him on his financial literacy and business topic podcast, Money Matters with Greg, on iTunes, Google and Spotify. He’s also on YouTube, Twitter, and Facebook at @FarrallWealth.

Greg is a pillar of his community and served as the 2013-14 co-chair for the United Way campaign, through which he helped raise $1.8 million for 38 nonprofit organizations across Porter County, Indiana. He also served as president of the Valparaiso Rotary Club. Currently, he is on the advisory board for the Kelley School of Business and Dean of Students’ board at Indiana University. He also holds a position on the Culver Academies parents’ board. 

When he is not working, you can find Greg spending time with his family or investing in one of his many passions, which include cooking, Spartan races, fly fishing, and meditation. To learn more about Greg, connect with him on LinkedIn.

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.

This information was developed as a general guide to educate plan sponsors, but it is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

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(1) https://www.orba.com/secure-act-changes-401k-plan-eligibility-and-vesting-part-time-employees/

(2) https://www.zenefits.com/workest/are-you-tracking-part-time-employees-for-401k-eligibility/

(3) https://www.zenefits.com/workest/are-you-tracking-part-time-employees-for-401k-eligibility/