Investing August 8, 2017

Institutional Investors Post Seventh Quarter of Positive Returns

Corporate funds led gains for the second quarter of 2017, according to the Wilshire TUCS.
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Institutional assets tracked by the Wilshire Trust Universe Comparison Service (Wilshire TUCS) saw a median return of 2.88% for all plan types in the second quarter and a median one-year gain of 11.31%.

Corporate funds saw a quarterly gain of 3.13% and a one-year return of 9.58%. Public funds’ quarterly and one-year returns were 2.9% and 12.41%, respectively, and foundations and endowments returned 2.78% and 11.70%, respectively. Taft-Hartley defined benefit (DB) plans saw a quarterly return of 2.65% and a one-year return of 11.57%, while Taft-Hartley health and welfare funds experienced quarterly and one-year returns of 1.70% and 6.35%, respectively.

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“This quarter marked the seventh consecutive positive quarter, the longest string of positive quarterly returns for all plan types since June 1998, which marked a string of 14 positive quarters in a row,” says Robert J. Waid, managing director, Wilshire Associates.

Wilshire TUCS returns were supported by continued strong performance across all major asset classes. The Wilshire 5000 Total Market Index returned 2.95% for the second quarter and 18.54% for the year ending June 30, while the MSCI AC World ex U.S. (Net) for international equities rose 5.78% in the second quarter and 20.45% for the year. The Wilshire Bond Index also gained 1.95% in the second quarter and 1.64% for the year.

In the second quarter and for the year ending June 30, larger public funds and foundations and endowments outperformed smaller ones. Large foundations and endowments continued to have significant exposure to alternatives, although the median exposure did decline to 37.58% in the second quarter.

All plan types with assets greater than $1 billion experienced median returns of 3.15% for the second quarter and 12.01% for the year ending June 30, compared to plans with assets less than $1 billion, which experienced median returns of 2.72% for the second quarter and 11.12% for the year.
Ask the Experts August 8, 2017

(b)lines Ask the Experts – Why Some 403(b)s May Delay Form 5500 Filing

“I am fairly new to the employee benefits field, but was shocked to find that our employer, a private university, delays its 403(b) retirement plan Form 5500 filing until the last possible moment (October 15, since our calendar year is a plan year).
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“When I questioned this, I was told that ‘everybody does it.’ That doesn’t make much sense to me from a best practices perspective. Why does ‘everyone’ delay their filings in this fashion, and do the Experts have any thoughts as to best practice?”                                                       

Stacey Bradford, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer: 

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Well, “everybody” might be a stretch, but indeed many retirement plan sponsors, including 403(b) plan sponsors, do file an extension of time to file their Form 5500s (note that the extension requires the completion of Form 5558). The primary reason for this is twofold:

1)      Most plans (plans with less than 100 participants are a notable exception) must complete a financial audit, and audited financial statements take a lot of time and effort to produce (particularly for 403(b) plans, where assets are often held in individual contracts, as opposed to a trust); and

2)      For calendar year filings (and most plans have a calendar plan year), the regular deadline (July 31) comes during the summer, when, for many entities in  general, and universities in particular, there are less resources on hand to finalize a filing due to summer vacations.

As for best practice, obviously waiting until the last possible day (October 16, 2017, for 2016 calendar year filings, since October 15 falls on a Sunday this year) can be problematic, since, if any last-minute issues are discovered, there is no time to resolve them.  Also, a data traffic jam on the Department of Labor’s (DOL)’s electronic filing web site (EFAST) could prevent a timely filing. Thus, plan sponsors should set a goal of filing their 5500s (and Form 8955-SSAs) well in advance of the extended deadline. In fact, an increasing number of plan sponsors are setting a goal of filing prior to July 31 for calendar year plans, so that an extension would not be required (though such sponsors generally file an extension as well, in the event of unexpected delays).

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.  

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Rebecca.Moore@strategic-i.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future Ask the Experts column.

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