Client Service May 3, 2016

Small-Business Client Optimism Barometer Drops

Conventional wisdom says that as confidence falls, thirst for advice climbs. 
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The tone of the presidential election; rapidly rising health care premiums; little time or support for retirement planning; tepid stock market performance—these are just a few of the concerns cited by small-business owners responding to a new Bank of America survey.

According to Bank of America’s Small Business Owner Report, the uncertain economic and political environment in the U.S. has business owners worried. Few are feeling confident about hiring or making big investments in their workforces, for example.

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The main sources of concern cited by small-business owners won’t be surprising to anyone who follows the news headlines. Nearly four out of five (79%) express concern over the effectiveness of U.S. government leaders. In addition, 67% think the presidential election will affect their business “a lot” or “somewhat,” while 53% believe the outcome of Congressional elections will have an impact.

When asked what issues are most important to them in the upcoming elections, small-business owners cite “taxes and health care policy, as well as the economy and job growth,” explains Robb Hilson, small-business executive for Bank of America. 

“Interestingly, while anxiety over the U.S. and global stock market has also increased since spring of 2015, concern over all other economic factors we surveyed for has declined, including corporate tax rates, the strength of the U.S. dollar, commodities prices, consumer spending, interest rates and credit availability,” Hilson says.

PLANADVISER research has shown that small-business owners represent an important and growing marketplace for the services of retirement-specialist advisers, especially at a time when regulatory pressures, litigation risks and general economic challenges leave small-business owners working as hard as ever to make ends meet.

“This spring, small-business owners’ optimism that local, national and global economies will improve is significantly down from previous years,” Hilson adds. “At the same time, they are feeling less optimistic about expected revenue growth, while their intent to hire and apply for loans has also declined.”

The full Small Business Owner Report is available here, including business owners’ presidential election predictions.  

Compliance May 2, 2016

Fiduciary Who Filed Bankruptcy Still Owes Retirement Plan Contributions

A retirement plan fiduciary had previously been ordered by a court to restore unremitted contributions to the plan.
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A plan fiduciary ordered to restore unremitted contributions to his now-defunct company’s retirement plan cannot discharge this debt in bankruptcy, a court has ruled.

In December 2009, the U.S. Department of Labor (DOL) filed a complaint in U.S. District Court for the Middle District of Pennsylvania alleging that the fiduciaries of the Dalton Mechanical SIMPLE IRA Plan, including Scott Louis Slocum and Dalton Mechanical Inc., breached their statutory duties to the plan participants under the Employee Retirement Income Security Act (ERISA). From 2006 through 2009, the plan trustees specifically failed to ensure employee contributions were remitted to the plan as required by ERISA. The total amount due to the plan participants, including lost interest, was determined to be $41,093.44.

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Dalton Mechanical Services Inc. is a now defunct HVAC contractor formerly located in Clarks Summit, Pennsylvania.

In May 2011, a consent judgment was entered requiring Slocum to make payments to the plan, which he did initially. However, he fell into default subsequently with late and missed payments. The judgment also provided that if Slocum filed for bankruptcy prior to the full restitution to the plan, he would not oppose the Secretary of Labor having the debt to the plan declared non-dischargeable.

On August, 24, 2015, Slocum filed chapter 7 bankruptcy, and the department filed an adversary action. On April 4, 2016, the court entered a default judgment declaring Slocum’s debt to the plan non-dischargeable in bankruptcy. The total outstanding amount is $28,180.64.

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