Will you be ready when the DOL comes knocking?

2/11/2014 10:15:23 AM

Manal Fouz
Azzad Chief Compliance Officer

Deferring taxes can be a powerful investment decision. Qualified retirement plans such as 401(K) plans allow you to defer significant amounts of money. Moreover, combining tax free contributions with tax-deferred growth can be a sound long term investment. The dollars that would have gone to pay taxes remain in your account. It’s more money working for potential returns.

If you’re an employer who sponsors such plans, it also means meeting your fiduciary responsibilities. Your plan is subject to the Employee Retirement Income Security Act (ERISA) which is administered by the Department of Labor (DOL). Under ERISA, you have important responsibilities because you act on behalf of participants (employees) in a retirement plan and their beneficiaries.

The following 7 tips will help you consider some of your responsibilities:

  1. Are the plan and all fiduciaries appropriately bonded?
  2. How is the investment asset mix determined, modified, monitored and re-balanced?
  3. Who is rendering appropriate investment advice, is this entity a fiduciary and has it acknowledged its fiduciary status in writing?
  4. Are employees in a Safe Harbor 401(K) plan receiving annual disclosures about the plan (download a template from our website)?
  5. Are you reporting all employees on the annual employee census form?
  6. Are you aware of and in compliance with all of the new fee disclosure requirements?
  7. Are employee elective deferral contributions (e.g. 401(k) contributions) made as soon as administratively practicable as required by law? Are employer contributions made in accordance with plan documents?

As your investment advisor representative, we are fiduciaries to your plan. We explicitly state so in our formal agreement with you. That means you’re relieved of many (but not all) of your responsibilities. Call today so we can review your qualified retirement plan: 888.86.AZZAD. 

Opinions expressed are those of the author or fund manager, are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security and should not be considered investment advice.

Fund holdings and sector allocations are subject to change and are not a recommendation to buy or sell any security. Click here for Azzad Ethical Fund current top 10 holdings. Click here for the Azzad Wise Capital Fund current top 10 holdings.

Past performance does not guarantee future results.

The Azzad Ethical Fund is non-diversified and may invest a larger percentage of its assets in fewer companies exposing it to more volatility and/or market risk than diversified funds. The Fund may not achieve its objective and/or could lose money on your investment in the Fund. Stock markets and investments in individual stocks can decline significantly in response to issuer, market, economic, political, regulatory, geographical, and other conditions. Investments in mid-cap companies can be more volatile than investments in larger companies. Investments in growth companies can be more sensitive to the company’s earnings and more volatile than the stock market in general. Because the portfolio may invest substantial amount of its asset in issuers located in a single country or in a limited number of countries, it may be more volatile that a portfolio that is more geographically diversified. See the prospectus for more details about risks.

Investments in smaller and medium sized companies involve additional risks such as limited liquidity and greater volatility. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower rated and non-rated securities present a great risk of loss to principal and interest than higher rated securities.

The Azzad Wise Capital Fund is non-diversified with a high concentration of securities in the financial sector which can expose the Fund to more volatility and/or market risk than diversified funds. The Fund may not achieve its objective and/or could lose money on your investment in the Fund. The Fund mainly invests in securities issues by foreign entities which expose the Fund to country specific risks such as market, economic, political, regulatory, geographical, and other risks. The Fund intends to invest in certain instruments that may be illiquid. As a result, if the Fund receives large amount of redemptions, the Fund may be forced to sell such illiquid investments at a significant loss to be able to meet such redemption requests. See the prospectus for more details about risks.