Brooks Mosley is president of Jackson-based Independent Pensions Solutions, a retirement plan administrator catering to small companies in the region. IPS is a subsidiary of Security Ballew that oversees more than 7,000 participants in 250 plans and specializes in teaching small business owners about changes in 401(k) plan administration, including new rules taking effect in 2012. Mosley is a Starkville native who holds an accounting degree from Mississippi State University. He and wife, Sherri, have three children.
Q — What 2012 regulatory changes will affect retirement plans?
A — What is happening next year is that you’ve gotten certain fee disclosures that have to go out. And we see this as a good thing. We think it’s important for people to know what they’re paying and what they’re paying for. Plan administrators are going to have to disclose every fee (including administrative fees).
The other side of that is … when the government changes things and makes rules and they’ve got real good intentions, I’m not sure it doesn’t create a mountain of work. I don’t know what the repercussions are going to be. When all this stuff comes out, we’ve got the folks here who can explain it to people.
Q — How much do people need to save if they want to retire in their early 60s?
A — What’s scary is, if you want to have 80 percent of your income (in retirement) you’ve got to save 20 percent of your income (every year). Some of that can come from you and some can company from a company match.
According to the 2010 Employee Benefit Research Institute, “47 percent of Americans today between ages 56-62 would run out of funds necessary to pay for basic retirement expenditures if they retire at 65.” It is stunning to think that close to 50 percent of Americans within that age group cannot possibly retire at 65 without running out of funds.
Retiring at 62 is just not going to happen for most people. The age of 70 or 75 is a much more reasonable retirement age.
Q — You have been at IPS since it opened in 1988. How have retirement plans changed over the years?
A — This business has changed so much. We started off with basic profit sharing plans; where, if you’re a business owner, you set it up, and you fund it. And you invest it with a broker. And the employees don’t have any choices. They get one statement a year.
And then you got to where 401(k)s came out, and all the technology wasn’t up to speed. Employees have three or four investment choices and get four statements a year. Everything’s coming in manually. Then you start getting stuff sent in electronically. Now you start adding more investment choices to it, and it gets bigger and bigger.
Back in the ‘70s many companies had what they called a defined benefit plan, where … the employer put all the money up, and you were promised a certain benefit when you retire. Sometimes it might be 50 percent of your salary … like a traditional pension plan.
The idea of a promised monthly benefit is really pretty nice. Now it’s on us: If I make poor selections in my investments and they do terribly, or if I just don’t save, now I’m 65 years old and thinking, “I’ve got nothing. How am I going to eat?” You’re going to end up working longer.
Q — What types of clients does IPS serve?
A — I work with doctors, manufacturing companies, law firms, grocery store chains. We’ve got white, collar, blue collar, the whole gambit. The personalities of the different industries are neat.
Q — Who are your competitors?
A — We’re small. Principal Life Insurance Company is a competitor of ours. We actually have a friendly relationship with them because we’ve done some work with them, but they’re huge. And they probably administer more plans that anybody in the country.
Q — What are growth areas for IPS?
A — Here’s the two places where we want to grow:
(1) One is kind of a niche. If you’ve got a big 401(k) plan and you the business owner want to buy farm land in the Delta as an investment, most of the big providers don’t want to fool with that. We have several very large plans that have unusual things in it like that.
(Other examples are) buying a condominium as an investment within the plan or a Reg D offering – basically an offering designed for an accredited investor. The bigger companies would not be able to take money from their mutual funds and go buy the stock in a local bank, because it’s not a publicly traded stock. (So we’re able to let people make investments in their local communities.)
(2) Another area is “multiple employer plans.” Now, there’s “multi” and “multiple,” and this is multiple. We found a lead employer to serve as the lead employer. What that means is, if you and I have a business – say we have two employees – well, it’s not cost-effective to put a whole 401(k) in. But if it’s a multiple employer plan, you can do it because you’re coming through the main plan, and it just can do it much more inexpensively. So a lot of smaller business owners can come under a multiple employer plan and get a lot of the bells and whistles that bigger companies get.
You have your own separate plan, but it’s all under one document. At the end of the year the leader employer files a tax return for everybody in the plan, so you’ve got one 5500. The thing is it’s really cost-effective. For you to set up a plan by yourself would be $1,200 or $1,500 more. Plus, the investment costs will be a lot less.
You have different mutual funds for your employees to choose from. You’ve got some flexibility on the match. (Company B) might do a little bit different match, but what I do doesn’t affect what (Company A) is doing, and (Company A) can’t see what Company B is doing.
To my knowledge, no one else in Mississippi offers a multiple employer plan. We got the idea from a Florida company that offers it.
More on Mosley:
—Interviewed by Amy McCullough
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