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The Mega-Trend Dilemma

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The Mega-Trend Dilemma

The Mega-Trend

In the wealth management industry, it is well known that we are undergoing one of the largest generational transfers of wealth in known history – estimated at approximately $85 trillion over the next couple of decades. According to the Fidelity Center for Family Engagement, approximately 70+ million Baby Boomers currently own half of all private businesses in the U.S. and about 70% of investible assets. They are aging and will all be over 65 by 2030. Interestingly, despite their aging, 64% of these have not discussed the passing of assets with their families and 71% have never discussed this with their financial advisors. In fact, 68% of Americans have not had an end-of-life conversation with their families.

This lack of communication interestingly affects all strata of wealth. The 2023 UBS Global Family Office Report, which surveyed 230 family offices that manage on average $900 million of assets, found that globally just 42% of family offices have a wealth succession plan for family members; smaller family offices with $100 to $250 million of AUM are “especially likely to fall short of best practices.”

How are wealth managers responding? As an industry, wealth managers are tasked with managing wealth for either growth or preservation and working toward the most tax-efficient transfer of wealth to the next generation. Tools and technology have become more sophisticated, as have the strategies involved to maximize value and return. Clients that can afford it generally have access to the most promising investments, be they traditional or alternative, and also to the most experienced attorneys and accountants versed in the most optimized tax strategies of our day. The challenge, though, is that the wealth management industry is also being affected by this mega-trend. Financial advisors are aging and approximately 37% of them will be retiring in the next ten years, impacting the industry that is not seeing enough new entrants to replace these retirees. As such, consolidation is expected to accelerate in this industry.

The Dilemma

In light of this mega-trend of wealth transfer, why are more families not better prepared for succession and why is the wealth management industry not doing more to better prepare families for this transition? Even in today’s media, shows like Succession portray the difficulties of transition in wealthy families, especially when business continuity and family continuity are inextricably linked.

First, succession and end-of-life conversations are messy, emotionally charged, and highly personal. The 2023 UBS Global Family Office Report put it this way:

Illustrating the difficulties of managing soft issues such as family governance, one London-based CEO commented: “How easily does your family talk about inheritance and hopes and dreams? These things are so personal that it’s very difficult, and especially so for the finance professionals who are used to dealing with less emotional topics.”

Finance professionals are trained to be impartial advisors and are generally equipped to remove emotion from conversations. This way, they can implement strategies that make sense and are logic- rather than emotion-based. This is referred to as financial discipline and is directly opposed to emotion which often lands investors in hot water when emotional investment decisions are made. Encouraging emotionally charged conversations is risky for advisors who do not want to lose the relationship or the assets under management. When reason and emotion conflict, emotion most often comes out ahead.

Moreover, feeling wealthy is comparative, not absolute. Therefore, everyone interprets differently the notion of ‘how much is enough’ differently. Most families agree that leaving an inheritance for the next generation is a good thing. However, when it comes to amounts, opinions vary. Warren Buffet famously said, “You should leave your children enough so they can do anything, but not enough so they can do nothing.” Charles Schwab’s 2023 Modern Wealth Survey provides some insight into the variance of this conundrum. The insight shows that perception of wealth is relative. 47% of Americans feel that being able to afford a similar lifestyle as their friends makes them feel wealthy, and 37% of Americans compare their lifestyle to that of their families and friends on social media. These percentages are significantly higher for Gen Z and Millennials. For ultra-high net worth families, the terminology simply changes to having “private jet wealth” or “non-private jet wealth.” Interestingly, when questioned to describe wealth, Americans generally choose non-financial assets such as having a fulfilling personal life or enjoying experiences to describe their wealth.

Lastly, planning is fraught with barriers. While families understand that a smooth succession requires a plan, many if not most families don’t even have a basic financial plan, let alone a family succession plan. According to the Schwab survey cited above, only about a third of Americans have a documented financial plan. Even for wealthy families with investible assets of $1 million or more, one in five don’t have a will. Reasons for this include the perception of not having enough money to need a plan (44%), the perception of complications in creating a plan (21%), or not having enough time to develop a plan (20%). Additionally, proper guidance and understanding from the advisors is lacking. The J.D. Power 2023 U.S. Full-Service Investor Satisfaction Study found that among full-service wealth management clients, only 57% say they have a financial plan. Of these clients, 29% say that they do not feel their advisor understands their financial goals and needs. Thirdly, laying out a succession plan, let alone taking steps to put one in place, is often hard for a business founder because this means relinquishing control. Switching from quarterback to coach is challenging as is bringing the whole family together to discuss, understand, or agree to a succession plan.

The Solution

As Rod Zeeb of The Heritage Institute succinctly stated, “The goal in planning be it financial planning or succession planning is to simplify complexity and to prepare the next generation for inherited wealth.” As we discussed, the barriers are many and these can be categorized into three general categories: Wealth planning in general or the lack thereof can cause significant anxiety and worry; wealth in general but especially significant wealth can cause a distorted view of life; comparing our wealth status to that of our peers is a slippery slope. Here are some approaches that we have found to successfully address these challenges.

A Plan Prevents Worries

Worrying is meditation on the wrong things and can be mitigated with proper planning. Benjamin Franklin said, “By failing to prepare, you are preparing to fail.” So, take the first step of creating a financial plan that defines your goals, your priorities, and your desired lifestyle. View this as the guardrails of your life that will prevent you from overspending and running out of money before you pass away or alternatively living too miserly to enjoy life but passing with a massive sum of money under your mattress. Have an honest conversation with a wealth advisor that you trust and verbalize how you think and feel about money and what aspects of your lifestyle are your priority. We have found this is a very rewarding experience for those who take the time and ask the right questions. When done together with a spouse, this allows both individuals to get on the same page regarding finances and retirement – sometimes for the first time in their marriage!

Taking the time to create a financial plan regardless of wealth size is the precursor to a holistic review. The financial plan with desired goals and objectives will lead to the review or development of both the estate plan and risk management. These are not “once-and-done” reviews; they should be discussed and reviewed regularly, especially as life events such as births, deaths, weddings and divorces occur in a family. It is amazing how many families with established plans do not review them on at least a yearly basis to keep even simple things like beneficiaries up-to-date. It is critical to continually focus on five areas: wealth maximization, tax minimization, wealth transfer, wealth protection, and philanthropic maximization. Managing these promotes peace of mind and helps families sleep a little better at night.

Once these are in place, we recommend that all family members come together to openly discuss the family’s values and purpose, which is incorporated into a family mission statement. This guiding principle will define the family culture and allow the family to more harmoniously discuss family governance structures and succession. While sometimes difficult conversations to have, doing this “prep work” is often the heavy lifting that leads to smoother subsequent discussions. In all of this, we recommend that you hire a facilitator or moderator who is personable and knowledgeable and can firmly set the rules for engagement in all discussions. This helps greatly in preventing or reducing conflict.

Definition Prevents Deceit

Reflecting on your wealth and defining how you want your wealth to benefit your family and your community is vitally important. This becomes your purpose. Your purpose, in turn, should incorporate your values – those beliefs that motivate you to act one way or another. Ultimately, your values define you, are of greater importance than your wealth, and will ultimately define your family culture.

Author and leadership guru Simon Sinek famously said, “Happiness comes from what we do. Fulfillment comes from why we do it.” He also spoke of the importance of keeping this ‘why’ at the top of mind when he said, “All organizations start with why, but only the great ones keep their why clear year after year.” This is relevant for families as well. All families, regardless of the level of wealth, should ask themselves: “Why do we have this wealth and what impact do we want our lives to have?” If you died today, how would you be remembered and is this how you would want to be remembered?

Stories are powerful. So, think of stories from your own life that you could share that represent your values and your intentions for your wealth. We encourage you to discuss this openly with your whole family, write it down, and make it your family mission. You may be pleasantly surprised by the feedback you receive from next-generation family members. This will also provide alignment among family members of all generations, which can then be incorporated into family governance and estate planning to achieve continued alignment. Nothing destroys a family like unequal estate distributions that had been cloaked in secrecy until the death of a parent and nothing destroys a person like the receipt of great wealth that the person is unprepared to handle. Both situations can be mitigated if handled properly. On the flip side, I am convinced that a family that gives together (on mission), stays together.

Good Counsel Keeps Desires in Check

Having proper counsel in your life helps improve the probability of success (defined as achieving your desired goals). We have found that this industry attracts many phenomenal advisors including financial advisors, attorneys, accountants, and consultants of various kinds. These can be relied on for their expertise and provide valuable and much-needed services related to wealth management and the passing on of wealth. Harness their knowledge and resources for your benefit. However, require that they take the time to truly understand your situation and keep your and your future generation’s best interest in mind. You don’t want your advisors working with limited information in their respective silos.

To be especially effective, find someone to represent you in the space between the family and the advisors, whose role it is to enable all parties to pursue the family’s purpose, values, and mission in all decision-making. This is both a relational person and a knowledgeable person – a quarterback per se – that truly understands the family, their values, and the answer to why they have been entrusted with their wealth– the ‘familyness.’ There is no such thing as an independent financial decision; instead, every decision affects everything and everyone else. As families realize this, they will begin to seek out and incorporate this role into their lives.

So what are the characteristics of an advisor that drive family satisfaction? We have found the following: First, this person must be trustworthy – a person of integrity with relevant expertise or credentials. Secondly, this person should understand your financial needs, goals, and preferences and prioritize these above anything else. It takes time and relationship-building by the advisor to really get to know each person in the family. Lastly, the advisor should be able to take on the role of an educator to promote understanding among all family members and align all goals and priorities.


Ultimately, our goal as wealth advisors is to prevent families from going ‘from shirtsleeves to shirtsleeves in three generations.’ This refers to the unfortunately common pattern of the first generation creating entrepreneurial wealth, the second generation managing the wealth, and the third generation squandering the wealth. It does not have to be this way. Plenty of families effectively succeed and empower future generations, who are often eager to participate and contribute in some way. It is the methodology and the steps that are taken along the way that determine success. As mentioned above, many pitfalls exist. However, the good news is that these can be prepared for and mitigated once their reality is admitted as well as everyone’s vulnerability to succumb. We have seen successes and continue to see successes. Families are engaging and experiencing the fruits of their labor. So, engage your family, get a second set of eyes to evaluate your legacy readiness, surround yourself with effective advisors who take time to get to know you and your kids and have your best interests in mind, and be informed of best practices in this field. Your future generations will thank you.

We want to hear from you. Please contact me with questions or comments at:

Rene Paez
EisnerAmper Wealth Management & Corporate Benefits

Scudillo Featured in Financial Advisor Magazine

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An article from Financial Advisor magazine published on February 24th featured Marc Scudillo discussing the Russian invasion of Ukraine and its effects on markets.

While investors are not panicking over the invasion of Ukraine by Russia and the resulting market volatility, some have questions, according to advisors who discussed clients’ reactions in late February.

Marc Scudillo, managing officer of EisnerAmper’s wealth management and corporate benefits practice, said he has been getting questions from clients about the events in Ukraine. “They want to know how far the situation will go and what it means for them,” Scudillo said. “There are heightened emotions but we assure them we understand their concerns and they are not going to be down 10%, like the general market. We tell them our planning has set them up to react to both good and bad markets.”

Some of EisnerAmper’s clients even want to know how they can take advantage of the downturn in the market. “They said they have been wary of buying when the market was so high and they want to know how to use the crisis. They have confidence” in their planning, Scudillo says.

Some economic experts at universities are also encouraging advisors to advise clients to hold their positions, stating opinions like Putin has overreached and that markets could rebound before the crisis is over. There are varying opinions about how to invest during this crisis. Some say investing in the Russian market can be risky because so many companies are state-owned. Others believe the energy sector is likely to see movement following the invasion. The invasion may keep inflation high and inflation may become a global issue.

But it’s also possible the Federal Reserve will slow its increase of interest rates, or even bring rates down, benefiting stock valuations. When the crisis does end, this could help lower fear and drive markets back up, limiting its impact over the course of time.

If you have any questions about how EisnerAmper Wealth Management & Corporate Benefits can help protect and grow your portfolio regardless of economic conditions, please contact us:

Read the entire article here:–advisors-say-66560.html?section=43

Marc Scudillo is the managing officer of EisnerAmper Wealth Management and Corporate Benefits LLC ( He is a certified public accountant and a Certified Financial Planner™ and Certified Business Exit Consultant®.


ERISA 3(38) Fiduciary Services

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ERISA 3(38) Fiduciary Services

Most companies and organizations’ human resources departments and C-suites are seeking efficiencies and risk mitigation for their entities. For those, and a myriad of other, reasons 3(38) fiduciary discretionary investment management services are getting a closer look by plan sponsors.
In exploring these 3(38) services it is important to understand that when you hear “3(38)” or “3(21)” it is understood that these are sections of ERISA that provide definitions for certain types of fiduciaries. As a result, it is important to understand there are significant differences between an ERISA 3(21) and 3(38) advisor in terms of investment services provided to the plan.

Simply stated, the ERISA 3(21) advisor makes investment  recommendations to the plan fiduciaries (committee), but the
decision to implement the recommendations and attendant legal responsibility still fall on the plan fiduciaries (oftentimes an authorized committee). “You can’t blindly follow the recommendations of the 3(21) advisor. You have to make an independent decision, and though that’s usually what the advisor recommends, you’re not excused from making an informed decision just because the advisor recommended it,” says Carol Buckmann, Esq.1

Buckmann cautions, “You don’t get told about the tremendous level of risk that you take on as the plan fiduciary when you start a 401(k)” …. Carol’s insight revealed “…a litigation landscape littered with the lawsuits of plan sponsors who didn’t do their due diligence.” … (in a 3(21) environment)1

The ERISA 3(38) advisor encompasses the 3(21) responsibilities plus makes the actual investment selections and decisions based on plan needs and goals as conveyed to him by plan fiduciaries, so the 3(38) advisor is responsible for its own mistakes or mismanagement including reasonableness of performance and expenses. The plan fiduciaries are responsible for prudently selecting a good 3(38) and monitoring performance. But in terms of financial liability, if an ERISA 3(38) advisor is prudently appointed and monitored by the authorized fiduciary, the plan sponsor should not be liable under ERISA for the acts or omissions of the investment manager and will not be required to invest or otherwise manage any asset of the plan which is subject to the authority of the investment manager.2

A 3(38) Fiduciary may be a better choice for you if you want to maximize fiduciary liability protection for selection and monitoring plan investments, and/or have no internal plan fiduciary with the requisite expertise & credentialing to assume investment decisions and liabilities. Note that even a 3(38) cannot completely remove plan fiduciaries from all investment liability, as they retain the responsibility of monitoring the 3(38) advisor with regards to their suitability for the plan. However, the outsourcing of investment-related fiduciary responsibilities should also lessen the amount of time and attention that plan sponsors need spend administering their plan.
A 3(21) Fiduciary may be a better choice if you have the time, interest and investment expertise needed to monitor investment performance regularly, evaluate the 3(21)’s recommendations, and evidence that your investment decisions are in best interest of your plan participants while assuming the liability for determining reasonableness of investment costs and performance. The 3(21) advisor’s job is to identify investments that are appropriate for the purposes of the plan and make appropriate recommendations to the plan’s fiduciaries. The plan’s investment committee is responsible for determining suitability for their plan from cost/benefit, risk/reward perspectives as well as appropriateness for your participants and plan goals.

Newly available pooled employer plans (you may have heard them referred to as PEPs) often incorporate a 3(38) investment advisor and other elements/entities meant to help plan sponsors offload even greater fiduciary responsibilities, potentially lower costs and streamline administration. If you are interested in learning more, ask your NFP/RPAG advisor about either 3(38) services or PEPs as an alternative.

1 Carol Buckmann is a founding partner at Cohen & Buckmann PC, a boutique law firm practicing exclusively in the areas of employee benefits, executive compensation and investment adviser law.
2 ERISA Section 405(d)(1)

What is an appropriate interest rate for plan loans?

Both, ERISA and the IRS requires that DC plan loans reflect a “reasonable rate of interest”.

DOL Reg Section 2550.408b-1 states that “a loan will be considered to bear a reasonable rate of interest if such loan provides the plan with a return commensurate with the interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances.” A pre-existing DOL Advisory Opinion, 81-12A, suggests that plan sponsors should align their plan interest rate with the interest rate banks utilize.

The IRS has a similar requirement where they informally state that the Prime Rate plus 2% would be considered to be a reasonable rate. Some plans use the Prime Rate plus 1%, or a rate based on the Moody’s Corporate Bond Yield Average. Plan sponsors should document justification for the plan loan interest rate selected.

To remove yourself from this list, or to add a colleague, please email us at or call (908) 595-6436

Securities offered through APW Capital, Inc. Member FINRA/SPIC 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866 (800) 637-3211. Advisory and Financial Services offered through EisnerAmper Wealth Management & Corporate Benefits, LLC. EisnerAmper Wealth Management & Corporate Benefits, LLC and APW Capital, Inc. are unaffiliated. ACR# 4142217 01/22

Thanks for the Memories: Gratitude and Financial Wellness

So much about financial wellness has to do with cultivating a mindset that favors delayed versus immediate gratification. In the language of behavioral economics, the tendency to prefer short-term rewards is called hyperbolic discounting. This often leads to more impulsive decision-making, and it can feed excessive personal debt and hamper retirement readiness over time, whereas those (typically in the minority) who will wait for a larger reward are frequently described as “present-based.”

So how do you help your employees resist the “urge to splurge” and prioritize saving for retirement instead? It certainly seems like a tall order, given that it runs counter to tenets of fundamental human psychology. But what if the answer could be as simple as a little well-timed gratitude?

Interestingly, research out of the University of California, Riverside, Harvard Kennedy School and Northeastern University suggests that may just be the case. In a revealing experiment, subjects were offered either $54 immediately or $80 in a month. The participants were randomly divided into two groups and asked to write about an event from their past that elicited either happy, neutral or grateful feelings. Depending on what they wrote about, the researchers found that the subjects made quite different money decisions.

Those directed to write about a “grateful” memory were more likely to wait for the larger, delayed payout. Interestingly, subjects in the happy memory group were just as impatient as the neutral memory group. These findings are striking, especially given that that the recalled memory didn’t have to be spending- or even money-related.

But how do these findings relate to financial decision making in the real world?

The Price of Impatience

While in this study the “cost” of impatience was limited to $26, employees that struggle with delaying gratification and prioritizing saving for the future will no doubt pay a much higher price. They may need to remain in the workforce longer. They’ll also likely experience higher levels of stress, especially as they approach the date they hoped to retire by. They may also accrue excessive debt, which may adversely impact their standard of living — especially during their golden years.

How Employers Can Help

According to Forbes, building a culture of gratitude in the workplace has a tremendous upside — for both workers and employers. Employees tend to find working in a more grateful environment a more positive and rewarding experience. And being appreciated by people other than one’s supervisor can provide a boost in morale. Teamwork is encouraged even as it exists alongside healthy competition. And while all of these organizational benefits take hold, it turns out that you may also be helping workers with their long-term financial decision making.

Companies are creating ecosystems of gratitude in a variety of ways. Some have instituted “Thankful Thursdays,” where employees have the chance to publicly show appreciation for coworkers who’ve gone above and beyond with an award or small prize, followed by snacks for all as a tangible show of thanks on behalf of the company.

Fostering a culture of gratitude is like financial wellness programming “with benefits” — ones that can enhance your entire organization.


Key Dates as You Approach Retirement

At what age can retirement plan distributions begin? When can a person begin to receive Social Security? As you get closer to your retirement date you may start to wonder about your eligibility for certain withdrawals and programs you are entitled to. Refer to this timeline to remember important dates as you get closer to retirement.

Changing Rules for Hardship Withdrawals

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A Reminder about the Changing Rules for Hardship Withdrawals

The opportunities to take in-service distributions from retirement plans are limited prior to age 59½. An exception is hardship withdrawals.

The requirements for hardship withdrawals are changing as follows:

  • No Plan Loan – To qualify for the safe harbor for hardships, plans no longer have to require that participants take the maximum loan available before requesting a hardship withdrawal.
  •  No Suspension of Deferrals – Also, to qualify for the safe harbor, plans no longer have to suspend employees from making deferrals for six months after receipt of a hardship withdrawal.
  •  Withdrawal of Earnings – Earnings on elective deferral contributions may now be included as part of a hardship withdrawal. This does not apply to earnings on elective deferral contributions in 403(b) plans.
  •  Withdrawal of Qualified Non-elective Contributions (QNECs), Qualified Matching Contributions
    (QMACs), and Safe Harbor Plan Contributions – QNECs, QMACs, and safe harbor plan contributions may now be available for a hardship withdrawal along with earnings. This includes post 1988 earnings on deferrals

It should be noted that plan sponsors have always been free to define the circumstances under which employees qualify for hardship withdrawals. The requirements to take a loan and suspend contributions are part of the safe harbor which most employers have chosen to adopt. Where the safe harbor is adopted, the IRS will not challenge hardship withdrawals. Some employers have elected to follow the safe harbor with the exception of the suspension of contributions.

Adopting these changes in the hardship rules will require a plan amendment. Those sponsors using a service provider’s prototype or volume submitter document are best advised to wait for the provider to update its procedures and prepare the necessary amendment.

At this point, it is unclear whether employers may continue to impose the requirements to take a loan and suspend contributions and still qualify for the safe harbor. We hope further guidance from the Department of Treasury will answer this question.

These changes are effective for plan years beginning on or after January 1, 2019.

Retirement Plan Fees

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Retirement Plan Fees

Retirement plan fees are complex. Between administration, investment management, recordkeeping, consulting, revenue sharing, sub-TA and 12b-1, it isn’t always clear to plan participants or plan sponsors exactly the purpose and value of all of these fees. It also isn’t clear as to who these fees are benefiting and who, therefore, should pay for them.

ERISA Section 408(b)(2) states that plan fiduciaries have to determine whether the services agreements and compensation of service providers are “reasonable.” The rule requires service providers to supply plans with disclosures to help them determine if fees are “reasonable.” EisnerAmper Wealth Management & Corporate Benefits, LLC helps fiduciaries with this complex determination by identifying:

  • Total plan cost and its component parts
  • The primary drivers of retirement plan pricing
  • The role and appropriateness of revenue sharing

Cost Components

The three main components are administrative fees, investment fees and financial professional fees. Financial professional fees are often paid by the plan sponsor. Administrative fees can be shared between the plan sponsor and the participants. Investment fees are typically paid by participants and deducted from plan assets.

Primary Pricing Drivers

Several key factors can impact plan pricing. Typically, the larger the plan in terms of assets and average participant account balance, the lower the plan fees. Other factors include:

  • Number of plan participants
  • Service requirements
  • Plan design features

Revenue Sharing

Revenue sharing includes payments made by investment managers to service providers or plan consultants for a portion of the revenue generated from the management of a particular fund or funds. Historically, such allowance may or may not be known to a plan sponsor. Regardless, it’s imperative that plan sponsors with fiduciary oversight of their organization’s retirement plan understand the distribution systems that most investment management organizations use and how they share revenue.

The most common forms of revenue sharing can include 12b-1 fees, shareholder servicing fees and sub-transfer agent (sub-TA) fees. In some instances, a portion of the investment management fee for proprietary funds may include some revenue sharing. The diagram below illustrates potential fund expenses.

Fiduciary Best Practices

Best practices dictate that plan fiduciaries must go through a prudent, comprehensive, and measurable process of monitoring and documentation to ensure that only reasonable fees are being paid. This process includes:

  • An experienced consultant with expertise on retirement plan fees & their components
  • Analyzing and documenting all fees from service providers
  • Reviewing fee annually compared to normative data as a second opinion on reasonableness
  • In-depth, live-bid benchmarking of fees, services and investments compared to alternative providers every three years to ensure reasonableness, competitiveness and appropriateness of fees and services

About EisnerAmper Wealth Management & Corporate Benefits, LLC (“EAWMCB”)

At EAWMCB, our top priority is helping you pursue retirement plan success by aligning your corporate culture to your corporate retirement plan. Offering a competitive and flexible retirement plan that grows as your business grows is critical to building—and keeping— talent. Our clients benefit from our application of industry best practices focusing on plan design, enhanced participant outcomes, retirement readiness, regulatory changes, fiduciary risk management, mitigation and liability transference, and participant education. We help devise customized retirement plan solutions that include your choice of our unique blend of service offerings integrated with a consistent compliance framework providing fiduciary piece of mind for your leadership team.

We go well beyond the “usual” through the implementation of our Corporate Advocacy Retirement Experience™ (CARE™). CARE™ is a proprietary fiduciary compliance system that sets a high standard of oversight and customization for your retirement plan. CARE™ provides you with fiduciary protection and oversight by creating a process focused on compliance with U.S. Department of Labor and Internal Revenue Service guidelines.

About Retirement Plan Advisory Group

RPAG™ is an exclusive alliance of independent retirement financial professionals and institutions inspired to create successful outcomes by protecting plan fiduciaries and engaging plan participants. RPAG supports thousands of financial professionals across the U.S., who collectively serve over 65,000 plan sponsors, $700+ billion in assets under influence, and more than 6 million plan participants. Learn more at

Beware of the IRS and DOL: Four Red Flags They Seek on Form 5500

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Beware of the IRS and DOL: Four Red Flags They Seek on Form 5500

The Form 5500 is an ERISA requirement for retirement plans to report and disclose operating procedures. Financial professionals use this to confirm that plans are managed according to ERISA standards. The form also allows individuals access to information, protecting the rights and benefits of the plan participants and beneficiaries covered under the plan. Make sure you are compliant. Be aware of red flags that the IRS and DOL look for on Form 5500 filings:

1. Not making participant deferral remittances “as soon as administratively possible” is considered a fiduciary breach and can make the plan subject to penalties and potentially disqualification. Delinquent remittances are considered to be loans of plan assets to the sponsoring company.

2. An ERISA fidelity bond (not to be confused with fiduciary insurance) is a requirement. This bond protects participant assets from being mishandled, and every person who may handle plan assets or deferrals must be covered.

3. Loans in default for participants not continuing loan repayments, or loans that are 90 days in arrears, are a fiduciary breach that can make the plan subject to penalties and disqualification.

4. Corrective distributions, return of excess deferrals and excess contributions, along with any gains attributed must be distributed in a timely manner (typically two and a half months after the plan year ends). In some cases, these fiduciary breaches can be self-corrected if done within the same plan year in which they occurred and may be considered additional breaches if they extend beyond the current plan year.

This is a partial, not exhaustive list of common Form 5500 red flags. If you’re concerned about ERISA compliance, contact your financial professional sooner, rather than later.

For more background on Form 5500, visit the Society for Human Resource Management online. See “Regulatory 5500: What is Form 5500, and where are instructions for completing it?”

IRS Limits on Retirement Benefits and Compensation

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IRS Limits on Retirement Benefits and Compensation

Highlights of Changes for 2022

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan has increased to $20,500.

The catch-up contribution limit for employees aged 50 and over who participate in these plans remains unchanged at $6,500. The limitation regarding SIMPLE retirement accounts for 2022 has increased to $14,000.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements
(IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2022.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or his or her spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor his or her spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.)

Here are the phase-out ranges for 2022:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $68,000 to $78,000, up from $66,000 to$76,000.
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $109,000 to $129,000, up from $105,000 to $125,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $204,000 and $214,000, up from $198,000 and $208,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is $129,000 to $144,000 for singles and heads of household, up from $125,000 to $140,000. For married couples filing jointly, the income phase-out range is $204,000 to $214,000, up from $198,000 to $208,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $68,000 or married couples filing jointly, up from $66,000; $51,000 for heads of household, up from $49,500; and
$34,000 for singles and married individuals filing separately, up from $33,000.

Key limit remains unchanged

The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

Details on these and other retirement-related cost-of-living adjustments for 2022 are in Notice 2021-216 (PDF)1, available on

RPAG is not in the business of providing legal advice with respect to ERISA or any other applicable law. The materials and information do not constitute, and should not be relied upon as, legal advice. The materials are general in nature and intended for informational purposes only.

Marc Scudillo Discusses Series I Bonds in Forbes Magazine

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Marc Scudillo Discusses Series I Bonds in Forbes Magazine


For those unfamiliar with Series I bonds, here are some quick facts about them:

  1. Series I bonds are a type of U.S. savings bond designed to protect the value of your cash from inflation; interest is calculated using a “composite rate” based on a formula containing a fixed interest rate and an inflation-adjusted rate.
  2. Today’s I bond yield far surpasses that of any other government-guaranteed interest rate available from any bank, brokerage or other insured source, according to a Forbes source.
  3. Series I bonds are exempt from state and local income taxes, but not federal taxes—unless they are used for higher education expenses. The owner is responsible for paying any tax due even if the bond was a gift.
  4. Investors can buy up to $10,000 worth of I bonds annually through the government’s TreasuryDirect website. You can purchase up to another $5,000 with your tax refund, upping the potential annual total purchase amount of Series I bonds to $15,000 per person. Minimum purchase amount is $25.
  5. I bonds earn interest monthly, though you don’t get that until you cash out the bond. You must own the bond for at least five years to receive all of the interest that is due, otherwise you forfeit the prior three months of interest.
  6. Electronic I bonds can be redeemed via the TreasuryDirect website. Paper bonds can be cashed in at a local bank.
  7. There is no secondary market for trading I bonds, meaning you cannot resell them; you must cash them out directly with the U.S. government.

Marc Scudillo, managing officer of EisnerAmper Wealth Management and Corporate Benefits LLC, likes I bonds for conservative investors. “Buying I bonds can be an attractive college savings strategy option as an alternative or in addition to 529 plans, which also grow tax free for qualifying higher education,” Scudillo says.


Series EE bonds are also sold by the U.S. government. Here are a few of their similarities and differences:

  1. EE bonds and I bonds are sold at face value, and they both earn interest monthly that is compounded semiannually for 30 years.
  2. Both I bonds and EE bonds may be redeemed or cashed after 12 months. If cashed during the first five years, you forfeit three months of interest payments.
  3. The interest rate on EE bonds is fixed for the life of the bond while I bonds offer rates that are adjusted to protect from inflation.
  4. EE bonds offer a guaranteed return that doubles your investment if held for 20 years. There is no guaranteed return with I bonds.

Scudillo suggests that investors should consider that series EE bonds are guaranteed to double over 20 years and I bonds offer no similar payout guarantee. If interest rates and inflation remain low, then EE bonds, with their guarantee to double in 20 years would perhaps be best. Given lower trending inflation rates over the last couple of decades it would take longer to double your money. However, should inflation increase substantially, then I bond holders would win out. Unfortunately, the only way to tell which bond earns more over time is in hindsight.

I bonds are an excellent choice for conservative investors seeking a guaranteed investment to protect their cash from inflation. Although illiquid for one year, after that period you can cash them at any time. The three-month interest rate penalty for bonds cashed within the first five years is minimal in light of the fact that they preserve your initial purchase amount and you would find similar penalties for early withdrawals from other safe investments.

I bonds are appropriate for the cash and fixed portion of most investment portfolios. Today, the I bond returns handily beat those of certificates of deposit (CDs). Parents might also consider accumulating I bonds to assist with future college payments.


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Marc Scudillo is the managing officer of EisnerAmper Wealth Management and Corporate Benefits LLC ( He is a certified public accountant and a Certified Financial Planner™ and Certified Business Exit Consultant®.

Investment News Features Marc Scudillo

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Investment News Features Marc Scudillo

In a recent article in Investment News—”The Gates divorce: Lessons for financial advisers”—Marc Scudillo weighed in on the issue of how advisers should prepare for divorce between high-net worth couples.

From the article:

The Melinda and Bill Gates divorce will mark one of the largest division of assets by a couple at an estimated $146 billion, according to the Bloomberg Billionaires Index. The split of the Gateses’ assets falls just behind the approximate $157 billion breakup of Inc.’s Jeff Bezos and MacKenzie Scott.

While advisers’ married clients won’t be billionaires on the scale of the Gateses or Bezoses, there are common threads for all families going through a divorce: the need for privacy and the opportunity to heal and move forward personally and financially.

Advisers should note that no matter how stable a relationship may seem, contingencies should be baked into estate and financial plans in case of divorce, especially for wealthy clients, experts say.

One of those experts was Marc Scudillo.

“The big takeaway: Divorces are emotional events, and advisers need to manage those emotions and help clients to focus on the strategies and tasks that will yield the best results for achieving their goals and their best financial life,” said Marc Scudillo, managing officer of EisnerAmper Wealth Management and Corporate Benefits.


“For many divorcing couples, the challenge is not so much the process of splitting the assets but determining how they are to be split between the two parties,” Scudillo said. “It can be especially difficult in a case like the Gateses, whose assets will include billions worth of Microsoft stock and hundreds of millions in real estate, in addition to collectibles like cars, books and artwork, and holding companies.”

“Updated valuations for each asset will be needed, followed by the paperwork and filings to appropriately split the assets in accordance with the final divorce decree,” he said. “There will also be significant time devoted to follow-up and providing information and guidance during the process to ensure that everything is done accurately.”

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EisnerAmperWMCB On Yahoo News: When It Comes to Investing, Boring Is Better

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EisnerAmperWMCB On Yahoo News: When It Comes to Investing, Boring Is Better


Marc Scudillo was recently featured on Yahoo News, and GoBankingRates.

“Many investors look for the thrill in the investment process,” said Marc Scudillo, managing officer of EisnerAmper Wealth Management and Corporate Benefits LLC. “However, the gambler mindset is not an appropriate mindset for accumulating wealth in the long term.”

Scudillo and other financial pros agree that when it comes to investing, “boring” may be better.

“Sticking with a consistent investment game plan will yield the best results, even though it may not appear a flashy strategy,” Scudillo said. “This is proven best in many retirement plans. Retirement plans have long track records and studies have shown that those participants that have utilized the asset allocation programs have fared much better than those ‘do-it-yourself’ retirement plan participants. Why? Because most of those who do it themselves follow the trends or the investment choice that had the best performing statistics. A pattern of continually chasing past performance trends will lead to lower performance and higher risk.”


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