One of the basic concepts of saving for retirement via a retirement plan or Individual Retirement Account (IRA) is that earnings grow tax deferred until withdrawn. There are certain investments such as Master Limited Partnerships (MLPs) that could result in current income taxation despite being held as an investment within a retirement plan or IRA. Careful consideration should be taken before investing in an MLP within a retirement plan or IRA.
Topics: retirement plans, Retirement Plan Investments, Bernard Kaplan, IRA, Master Limited Partnership, MLP
In this series to date, and in our more detailed and comprehensive whitepaper, we have discussed the responsibilities of retirement plan sponsors with a special focus on valuing and reporting on plan investments. To wrap up the series, we’re presenting a brief overview of how to determine fair value in accordance with Generally Accepted Accounting Principles (GAAP).
Topics: Larry Kaplan, ERISA-Qualified Retirement Plans, Retirement Plan Investments
A fundamental responsibility of a plan sponsor is to prove the values of the investments in the retirement plan.
If your plan is invested solely in assets with readily determinable fair values, such as mutual funds or marketable securities, you’ll typically obtain fair values from nationally recognized pricing services such as Interactive Data Corporation (IDC) or Bloomberg. However, if your plan invests in assets without readily determinable fair values, the reported values may be based on the best information available, which may or may not be fair value.
To obtain the fair value for alternative investments, a process should be developed to determine the reliability of the evidence obtained and when the use of specialists is needed.
There are three acceptable techniques that can be used to determine the fair value of an investment:
Topics: Larry Kaplan, ERISA-Qualified Retirement Plans, Retirement Plan Investments
Topics: Larry Kaplan, ERISA-Qualified Retirement Plans, Retirement Plan Investments