Compliance May 31, 2006

IRA Could be Tapped To Cover Criminal Fines

May 31, 2006 (PLANSPONSOR.com) - The US District Court for the Eastern District of Washington said in a memorandum opinion that an individual retirement account (IRA) could be considered part of a defendant's income, and might be used to cover a criminal fine.
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Defendant Terry Smith argued that under Washington law, his IRA is “exempt from execution, attachment, garnishment, or seizure by or under any legal process.” He also cited a US Court of Appeals decision that found only Employee Retirement Income Security (ERISA)-governed retirement funds can be used to cover criminal fines, which excludes plans that are not employee benefit plans.

The court had to decide whether a federal preemption to pay criminal fines overrode Washingtonlaw exempting    IRAs from garnishment.  

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In US District Judge Alan McDonald’s opinion , he wrote that “it is appropriate to consider the IRA funds as part of defendant’s income, earning capacity, and financial resources in determining whether to impose a fine.” The court found that, despite Washington’s exemption of IRAs, there was a “reasonable basis to believe” that Smith’s IRA could be used to settle the $5,000 fine.

Investing May 30, 2006

FRC: April Asset Flows Pick Up

May 30, 2006 (PLANSPONSOR.com) - Stock and bond funds experienced net inflows of $31.5 billion in April, according to Financial Research Corporation (FRC) data.
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The April showing represented the first time this year with a month-over-month increase in asset inflows – up from March’s $28.3 billion showing in 2006 (See  Fund Flows Continue Weak Cycle in March ).

According to the FRC report of April’s data, International/Global funds led the way with net inflows of $22.5 billion, followed by Domestic Equity funds with a $6.9 billion net intake. Corporate bond funds were ahead by $3.18 billion while government bond funds gave back $955 million.

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Per Morningstar fund category, it was Foreign Large-Cap Blend leading the way with a $4.39 billion April gain, while Foreign Large Growth followed at $3.19 billion and World Stock at a $3.11 billion gain. Intermediate Term Bond was up $2.89 billion and   Target-Date 2015-2029 was up $1.87 billion.

Fund Families

American Funds topped all complexes with $6.7 billion of net inflows while Fidelity Investments was the closest challenger at $5.83 billion. Barclays Global Investors Fund was ahead by $2.95 billion and the Vanguard Group had a $2.80 billion inflow over the month.

In terms of total assets, American Funds and Vanguard Group held the top fund group spots in April, with $864 billion and $863 billion, respectively.  Behind the two sizeable fund families in the April total asset race were:

  • Fidelity Investments – $805 billion
  • Franklin Distributors Inc. – $269 billion
  • Barclays Global Investors Funds – $206 billion.

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