Independent Guide, Trusted Partner

In-plan Roth Rollovers: the latest topic

December 3rd, 2014

Get out your red pen, folks: serious revisions to the rollover options for your plan. Today we’re looking at how you will need to revise your Plan Document in order to offer in-plan Roth rollovers and a few highlights.

In-plan Roth rollovers of otherwise non-distributable amounts are treated as eligible rollovers, meaning that no withholding applies. Since this amount is not distributable, no part of the rollover may be withheld for voluntary withholding. An employee making an in-plan Roth rollover may need to increase his or her withholding or make estimated tax payments to avoid an underpayment penalty. Concerning the rollover process, here is a critical section to know from IRS Notice 2014-74:


If you do a rollover to a designated Roth account in the Plan

You cannot roll over a distribution to a designated Roth account in another employer’s plan. However, you can roll the distribution over into a designated Roth account in the distributing Plan. If you roll over a payment from the Plan to a designated Roth account in the Plan, the amount of the payment rolled over (reduced by any after-tax amounts directly rolled over) will be taxed. However, the 10% additional tax on early distributions will not apply (unless you take the amount rolled over out of the designated Roth account within the 5-year period that begins on January 1 of the year of the rollover).

If you roll over the payment to a designated Roth account in the Plan, later payments from the designated Roth account that are qualified distributions will not be taxed (including earnings after the rollover)…

Remember, if you’re making revisions to your Plan Document, then Best Practices direct you to get an ERISA attorney, and make sure you’re fulfilling your fiduciary responsibility.


Katherine Brown is a Research Associate at Castle Rock Investment Company with a Master’s degree in Global Finance, Trade, and Economic Integration from the University of Denver. She can be reached at

How May I Help You?

November 13th, 2014

Castle Rock is dedicated to making retirement transition easy for you. One of the best ways to do that is to be with you in retirement transition and throughout the different stages of your retirement. We are excited to announce that we will soon offer a Retirement Transition Service to ease the retirement process for individuals, and to provide our clients with the piece of mind that all participants are taken care of.

Because we want you to have a part in how we build this new service, please reach out to me at with your comments and goals for retirement. We will try to incorporate as much as we can into the best service for you.

Stay tuned as we introduce the details of this program!

Sometimes life isn’t fair…for a fiduciary.

October 8th, 2014


Sometimes the law isn’t fair.

But sometimes, it seems unfair because you don’t know the rules.

In the recent case of Santomenno v. John Hancock, poor understanding led plan sponsors to agree to terms that led to excessive fees charged by the service provider to the plan. Either the plan sponsors were unaware of what they signed up for, or the service provider duped them. On September 26, 2014, the Third Circuit Court of Appeals affirmed the District Court’s decision to grant John Hancock’s motion to dismiss, ruling that John Hancock was not a fiduciary – therefore, it was not required to watch out for imprudent or disloyal activities such as excessive fees.

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Regulatory Changes Concerning Municipal Bonds

September 17th, 2014

There are some concerns that the new GASB statements for municipal bonds will impact retirement plans. Here is our response to your concerns, so that you can distinguish the true indications from the surrounding media noise.

Due to the changes to GASB statements no. 67 and 68, how will retirement plans be impacted by recent and potential future downgrades to municipal bonds?

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Save Up to Break Stuff: Retirement Saving Should Not be Taken Lightly

July 28th, 2014

By: Katherine Brown, Research Associate, Castle Rock Investment Company

My grandmother loved to drive. After they took away her license, she enthusiastically offered the use of her 1989 Crown Victoria to anyone who was visiting her, whether they had a car of their own or not. She also purchased a motorized scooter to get around her elegant, eerily silent retirement home. Often, the only sound was the elevator music playing through the halls and the whirring of the small motor on her scooter.

My grandmother loved to drive fast. Gran’s scooter was notorious for knocking down other nursing home residents, potted living and plastic plants, and the occasional painting from a wall. Ever the charmer, she would convince the staff not to take away her precious wheels. And she always paid for the damage that she caused because her husband and children set up a generous retirement fund for her.

This chart is intended for hypothetical illustration only, and is not intended to be representative of the past or future performance of any particular investment. It assumes a 7% average annual total return with no withdrawals or distributions, and reinvesting of all dividends and capital gains. Actual rates of returns cannot be predicted and will fluctuate. It does not reflect an actual investment, nor does it account for the effects of taxes, any investment expenses or withdrawals. Returns are not guaranteed and results may vary. Investment returns cannot be predicted and will fluctuate. Investor results may be more or less.These stories aren’t possible without comfortable retirement savings. Rather than a funny family story, this could easily be a sad tale of an elderly woman who crashed into something and had to move out of her residence because the cost of damages were too high. In a worldwide Future of Retirement survey, 18% of US citizens said they would never be able to retire from all paid employment.

You don’t know where your passions will take you, or whether your spouse’s bad driving will become the stuff of family legend. Saving for retirement should not be taken lightly. Though you may not like to think about growing old, you will need an income one day when you’re no longer capable of earning one. Care for your 401(k) by saving as early as you can.

In case you can’t picture it, Merrill Lynch offers a free face aging service on their website. If you’d like to peek into the future and see what you’ll look like at 90, try it out.


Katherine Brown completed a Master’s degree in Global Finance, Trade, and Economic Integration from the University of Denver. Her research and writing focus on international monetary economics and central banking. She can be reached at

Water Cooler Wisdom – First Quarter 2014

April 16th, 2014

Water Cooler Wisdom 1Q12Water Cooler Wisdom 1Q12A great deal happened in the world during the first quarter of 2014. The ECB may be pursuing quantitative easing, the Federal Reserve continues to send mixed messages about tapering, China is slowing down, the U.K. is set to grow the faster than any other advanced nation, and Gwyneth and Chris have split…or have they? According to the International Monetary Fund, the global growth outlook is positive, although the recovery is somewhat shaky and uneven. While there is a widespread fear of deflation worldwide, the hawks still stand by their position that uncontrolled inflation may still be in the future. In this economic environment, it is necessary to sift through a significant amount of noise to see the real economic picture.

The United States economy continues to grow but it is not going gangbusters. The polar vortex, along with the seemingly unending winter weather in the Eastern part of the United States, slowed economic growth during the first quarter of 2014. Regional economic indicators, including vehicle sales and employment, increased during the somewhat more temperate month of March, undoubtedly leaving residents and businesses looking forward to sunnier weather ahead. The unemployment rate remained unchanged at 6.7% and GDP increased by 2.6%. According to some analysts, the current inflation rate of 1.6% (see: Consumer Price Index) represents a lower bound to US inflation, The Federal Reserve continues to be committed to tapering but it seems somewhat reluctant to say ‘when’ due to continued concern about inflation. While the market will likely continue to experience spasms at every word Janet Yellen breathes, it may be more business as usual for the Fed in the near future.

Equities (see: Returns and Valuations by Style) have increased slightly but remain in what some would consider normal territory. It is important to note, however, that some sectors of the equities market have increased by 275.2% since the market low in March 2009. Overall, the market growth is not enough to risk substantial changes in inflation or interest rates but also not slow enough to decelerate overall growth. Essentially, it’s smooth-sailing.

As of April 9, 2014, the Office of the Comptroller of the Currency, the Federal Reserve and the FDIC approved a new rule requiring the eight largest U.S. banks to greatly increase their leverage ratio (essentially, they need to hold more capital). This rule is in response to the increased emphasis on macro-prudential regulation and the fact that many are still shaking in their boots from the aftershocks of the Global Financial Crisis. This rule will help to ensure that systemically important banks have the capital to lend in any economic environment, guarding against a credit contraction if market conditions were to negatively change. This may mean easier lending for smaller banks whose leverage ratio is not quite as high but since this rule does not take effect until 2018, the real results are yet to be seen.

Since the start of 2014, the discussion of unconventional monetary policies has been more, well, unconventional. The European Central Bank may be in the process of become policy bedfellows with the Federal Reserve, Bank of Japan and Bank of England by implementing quantitative easing as a monetary policy tool. The ECB has been considering this as well as negative interest rates to protect from decreasing inflation. These negative interest rates would affect deposits at the ECB since these banks would be required to actually pay to park their money. The monetary policy motive for this would be that these banks, avoiding the extra ‘tax,’ would rather lend out their money to the private sector. This would spur growth and ideally protect against the low inflation. Quantitative easing is a little trickier for the Eurozone. Whereas the US and UK can purchase bonds from their own individual markets, the ECB has 18 countries to choose from. Buying from France could give an unfair advantage, whereas purchasing bonds from Greece could throw Germany into an uproar. Some economists suggest that the ECB purchase Treasuries from the Fed to help unwind our rounds of quantitative easing. What a ‘taper tantrum’ that might cause.

While the economy is improving, there is still a long road ahead. However, given that holding cash yields a 0% return, it is still an attractive time to invest, regardless of the current interest rate climate (see: Asset Class Returns). So, go out, get invested, become diversified and have a wonderful spring.

Laurel Mazur is Castle Rock Investment Company’s Research Associate. Laurel Mazur is a graduate student at the University of Denver pursuing a dual Master’s degree in Economics and Global Finance, Trade, and Economic Integration. Most of her research and writing focuses on international monetary economics and central banking. She can be reached at


Castle Rock Investment Company Participates in PLANSPONSOR National Conference Panel

September 13th, 2013

Michele Suriano, President of Castle Rock, recently participated in a panel at the PLANSPONSOR National Conference in Chicago, “Metric Taking: Going beyond the participation rate when gauging retirement plan success.” The panel encompassed the following topics:

  • Leading Indicators: Suriano uses the following leading indicators: median deferral rate broken down by HCE and NHCEs, percent using auto-escalate, percent using catch-up, percent maximizing company match, percent of assets in auto-diversified options and percent using auto-rebalancing.
  • Benchmarking: Suriano uses the Plan Design Optimization Report from Fiduciary Benchmarks, Inc. to benchmark retirement readiness. She also recommends creating a median-participant “avatar” to measure plan success, which is a composite representative of a particular plan, taking into account the median age, salary, deferral rate and account balance of that specific population. Suriano then compares the avatar against the National Savings Rate Guidelines for Individuals.
  • Fees: Suriano stressed that fees have become a huge issue, although they have very little impact on participant outcome, compared to deferral rate. She recommends using the 401K Averages Book to evaluate plan fees. She has done conducted RFIs with price requests for her clients as an educational tool, which may reveal advancements in the marketplace that aren’t being provided by the current provider. She stressed the importance of researching fees because, “What gets measured gets improved.”
  • Goals and Objectves: Suriano determines her clients’ goals and objectives upfront and includes it on the first page of their quarterly report. She recommends writing down the plan’s goals and objectives since there is turnover on committees.

Click Here to Listen to the Full Panel

For more information, please contact Castle Rock Investment Company at 303-725-7086.

Metric Taking: Going beyond the participation rate when gauging retirement plan success

August 16th, 2013

Michele Suriano, President of Castle Rock, recently participated in a panel at the PLANSPONSOR National Conference, “Metric Taking: Going beyond the participation rate when gauging retirement plan success.” The panel encompassed the following topics:

Part I:  What should plan sponsors be thinking about and keep in mind
Part II:  What benchmarks are available today? Pros and Pitfalls
Part III:  What is the future of benchmarks for plan success

Click Here to Listen to the Panel

For more information, please contact Castle Rock Investment Company at 303-725-7086.

Webinar: Retirement Drain: Fees, Fees, Fees…

May 31st, 2013

Did you miss our webinar, “Retirement Drain: Fees, Fees, Fees…?” Don’t despair, we recorded the whole thing.

Click here to listen to the webinar

This webinar builds on the PBS FRONTLINE presentation, “The Retirement Gamble,” and the fees associated with retirement savings plans. We review:

  • The impact of unnecessary fees
  • What hidden fees to look for
  • Talking to your employees about investments and fees
  • Benefits of hiring a fiduciary

If you have questions about the webinar, or regarding the Frontline program, please contact Castle Rock Investment Company at 303-725-7086.

Surprise! Here’s Your 401K Distribution

May 12th, 2013

(one great way to annoy and piss off your customers)

by Celeste Jacroux (Guest Blogger)

Today I arrived home, got the mail and noticed an important-looking envelope from an investment house that rhymes with “Midelity”.  Generally, I don’t get interesting mail.  Most of it consists of direct mail, bills, and the cherished Title 9 or REI sale catalog.  I open this letter from “Midelity” and see a check.  Woohoo!  Money!  But wait, why are they sending me money?

Back in December, I had sent in paperwork to rollover my entire 401k from “Midelity” to Vanguard.  I had put a lot of thought into consolidating all of my retirement investments and had sought advice from a trusted financial advisor friend.  The bulk of the money had rolled over in December or January.  Apparently, there was some sort of distribution in the funds or stock I held after the transfer and on an arbitrary date in May, Fidelity, I mean “Midelity”, went through all accounts of those that were no longer employees and had less than a certain amount of money, and sent checks to those people.  Made out to the individuals.  Minus taxes.  Yeah, that’s right.  I now had a check made to me, less almost $200 that was already sent to the U.S. government.  Thanks “Midelity”!

Now, I happen to have worked for another mutual fund company in my lifetime and was fairly certain that this was not a good thing in many ways.  I called Midelity to ask why this was sent and got the answer that it was a “sweep” of accounts.  Apparently I had not called them after a letter was sent to me asking how I wanted the funds distributed.  With no response from me, did they distribute the funds the same way the previous rollover was done?  Of course not!  Their default process was to distribute funds directly to the owner.  As many of you know, my options at this point are:

  1. Keep the money and, in addition to paying taxes, pay the 10% penalty for early withdrawal on the entire amount.
  2. Sign over the check (within 60 days), less the taxes to a rollover account, knowing that I will get a refund of some of those taxes, but will also be penalized 10% for the amount of the tax withdrawal.
  3. Cash the check, then write a new check for the gross amount of the distribution and deposit into a rollover account. No penalty and I will receive my taxes back….. when I file them next year.
  4. Convince, threaten or cajole the 401k company to rectify their mistake.  Good luck with that.

This is wrong on so many levels!  As an investor, I am livid!  As a marketer, I have ridiculous amounts of scorn and a boatload of passion to take the time to call out companies that have violated the most basic ‘customer first’ rules. With a background in investing, Iknew that I needed to take extra steps but had to confirm what they were.  The average person would have no idea that there was a problem or know to fix it. So, here is my list of what “Midelity” did wrong and what they can do to fix it.

  1. All of this could have been avoided if “Midelity” simply followed the directions for the initial rollover.  The money would have been transferred to my rollover account, and I would have noticed it on my next statement.  If it is all about CYA (and I have no doubt that it is), just have a box that can be checked on the initial rollover forms that states that any additional funds that are added to the account after the initial transfer will simply be transferred in the same way at a later date.
  2. A single letter to notify a person that you are about to take money out of their bank account (to make up the tax withdrawal), force a possible tax penalty and cause headaches is not enough.  There are numerous ways to communicate with customers..  A single form of outdated communication is not enough today.  Make the effort.  Because if a company doesn’t, they will soon find out how many forms of communication can hurt them.
  3. Defaulting a process to the most painful choice for your customers is NOT a way to win loyalty.  There was no need to default to a distribution, unless the sole reason is that a company doesn’t want to maintain low balance accounts.  If that is the case, shout that loud and clear.  Make your audience abundantly aware that you don’t want their business before making life difficult for them.  Otherwise, change the process so that the default is not obnoxious, annoying and irritating.  Those are never great words to describe a business.
  4. After receiving my call and hearing my annoyance, nothing was done to rectify the situation on their end.  No admission of a mistake and no offer to reverse the situation.  Companies make mistakes once in a while.  That’s okay.  It’s in how they handle it that shows what kind of company they are.  In fact, rectifying mistakes is how you gain your most loyal customers.  Give more power to your front line people.  And have your policy makers answer phones just a single day of every month to learn the effects of their policies.Don’t blame the mistake on the company plan.  I realize that the customer service rep has to follow the plan rules, but who helped the company set up those rules in the first place?  Why hasn’t someone pointed out to the plan sponsor that their rules are not good?

It doesn’t matter how big you are.  If you don’t treat your customer fairly, someone else will.  Thanks for letting me guest blog!

Celeste Jacroux
Guest Blogger for Castle Rock Investment Company

Tip: Plan sponsors can instruct their recordkeepers to follow the original distribution instructions when liquidating a participant account.  It’s a good customer service practice that is rarely instituted.