Investment Advisor Sales GuideAmerican Pension Services, Inc.   Lara Hise, AIF2451 McMullen Booth Road          Vice Presi...
What is the Platinum 401k Program?The Platinum 401k is a Multiple Employer Plan established under 413(c) of the Internal R...
What are the benefits to Financial Advisors andRIA’s of the Platinum 401k Program?              Removes the need for the a...
How are the investments selected?The Platinum 401(k) is built using carefully monitored, cost-efficient funds selected fro...
Within the Platinum 401k program, can we……              Accommodate an unusual vesting schedule? – Yes! There’s nearly unl...
Multiple Employer Plan (MEP)                                                         ERISA 3(38)                          ...
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The Platinum 401k Advisor Sales Guide 2011

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Transcript of "The Platinum 401k Advisor Sales Guide 2011"

  1. 1. Investment Advisor Sales GuideAmerican Pension Services, Inc. Lara Hise, AIF2451 McMullen Booth Road Vice President, MarketingSuite 200 American Pension Services, Inc.Clearwater, FL 33759 800.585.7540, X120 LHise@AmericanPension.net
  2. 2. What is the Platinum 401k Program?The Platinum 401k is a Multiple Employer Plan established under 413(c) of the Internal Revenue Code, which allows employers toparticipate together in a retirement plan sponsored by an outside entity that bears responsibility for running the plan. The programremoves the employer as trustee and sponsor of their own retirement plan, transferring liability to an independent fiduciary. Theclient is no longer directly responsible for investment selection and monitoring. The program also eliminates the need for the clientto contract with an accountant and pay for an annual plan audit as part of their annual Form 5500 filings, which also are eliminated.Who are the players? Plan Administrative Services are provided by American Pension Services, Inc. American Pension Services, Inc. is one of the country’s most experienced multiple employer plan administrative firms. Founder and CEO Terrance Power has been involved with multiple employer plan clients for over 20 years, and they currently provide multiple employer plan administration services for some of the retirement plan industry’s largest professional employer organization clients. They’ve been members of the National Association of Professional Employer Organizations since 2000. Terry has spoken at ASPPA, fi360, and Center for Due Diligence conferences on several occasions concerning multiple employer retirement plans. Plan Investment Manager is W. Michael Montgomery, AIF, CLU, CFS, TGPC Mike Montgomery of Montgomery Retirement Plan Advisors, Inc., serves as the plan’s ERISA 3(21)(a) and 3(38) Named Fiduciary. Mike has over three decades of experience in the retirement plan industry. In 2009, his firm secured the coveted “CEFEX Certification” for fiduciary excellence. They are one of less than 100 firms nationally to hold this certification. As the Investment Manager, he selects and monitors the investment fund lineup for the program. Plan Sponsor under ERISA 401(a)(1) is Plan Fiduciary Services, Inc. This Florida-based corporation serves as the plan sponsor of the multiple-employer plan. They receive a set-up and annual fee which is paid directly by the adopting employer within the Platinum multiple employer plan. The plan sponsor is completely independent in every manner from the other parties overseeing the operation of the plans. They do not receive any asset-based revenue. Investment Advisor or broker to the client The Platinum 401k program is marketed through the investment advisory community. As such, you play a critical role in determining their suitability of the program for your clients. You also assume or maintain the role as the ongoing advisor in assisting them in reviewing the investment performance and monitoring reports that are generated for your use with your client. You will maintain a position as the primary contact point for the client and the plan participants concerning all investment-related questions, as well as enrollment and education material support in conjunction with the investment provider that has been selected for use under the program by the client. Content Copyright © 2011, American Pension Services, Inc. All Rights Reserved.
  3. 3. What are the benefits to Financial Advisors andRIA’s of the Platinum 401k Program? Removes the need for the advisor and their broker dealer or RIA to be named as fiduciaries. Reinforces the advisors position in the role of trusted advisor by introducing cutting edge plan design structures. Keeps them informed on investment monitoring via the Platinum 401k Advisor website. Contractually bars the plan’s investment fiduciary from competing with the advisor. Removes the client from cold call solicitations by the advisor’s competitors (they’re ‘off the grid’ in terms of being tracked by services that gather Form 5500 data).Does this plan conflict with the role of the local advisor?No! The local advisor remains the Registered Investment Advisor or Financial Advisor for the retirement plan client and continuesto manage the relationship and all ancillary business. They are compensated through their preference of fees or commission.Who are the targeted clients for the program? Existing retirement plans that are currently subject to an annual audit. (generally those with more than 100 eligible employees). Existing plans with over $1,000,000 in current plan assets. Existing plans who have fiduciary liability or 408(b)(2) compliance concerns. Existing plans who seek to truly outsource investment management and plan compliance. Existing plans seeking to aggregate assets for pricing leverage. Employers ‘spinning off’ from a PEO or other multiple employer plan. Frozen plans that are subject to an annual audit.What does the Platinum 401k program cost? $250 initial application fee per adopter. $250 annual administrative fee per adopter. $7.00 per-participant fee per quarter (only deducted from individuals who have account balances). Plan fees are fully transparent, with excess revenues guaranteed by contract to be returned to the plan. Adopter-level asset charges are based on existing plan asset level. See proposals for complete breakdown of fees. Content Copyright © 2011, American Pension Services, Inc. All Rights Reserved.
  4. 4. How are the investments selected?The Platinum 401(k) is built using carefully monitored, cost-efficient funds selected from thousands of available options. The planis monitored and benchmarked by Mike Montgomery as a CEFEX certified independent fiduciary that assumes ERISA 3(38)(Investment Manager) and 3(21)(a) responsibility, and who issues regular reports on funds, fees and fiduciary due diligence to theadvisors and adopting employers. A wall of separation has been put in place between the independent fiduciary, plan sponsor andadministrator to preclude conflicts of interest or potential competition with our advisor partners.How do plans get into the MEP?Existing plans will merge into the MEP after an extensive plan compliance review by American Pension Services to insure alladopters are in compliance prior to entering the plan. Existing plans do not need to terminate and no qualifying (distributable)event is created as a result of the merger.New adopters will complete an adoption agreement making plan design elections specific to them as employers. The Platinum401k program offers significant flexibility in plan design from employer to employer.How are deposits made?Payroll deposits are handled just as in a single employer plan and establishing the process between the provider and employer’spayroll would be part of the initial set up process. Payroll deposits as well as any required employer contributions are monitoredby the plan to ensure ongoing compliance in that area.What if an individual employer becomes non-compliant?Plan Fiduciary Services, Inc., as plan sponsor, retains the right to de-adopt an adopter at any time for the overall good of the plan.Issues such as timely deferral remittance, top-heavy concerns, etc. are carefully monitored.How does an MEP transfer differ from a single employer plan transfer?Adopting into a MEP is not just a change of investment manager, but a plan to plan transfer. As such, there are specific actions tobe completed. Participants must re-enroll in the plan, not only making new investment elections, but a new deferral election. Newbeneficiary forms will be required as well.Other differences include outside assets not being allowed in the plan. Mapping of existing assets to new investments is notallowed, with the exception of defaulting everyone into the MEP’s QDIA election.Auto enrollment is not allowed in the multiple employer plan.What about the blackout notices?If plans are changing investment providers, then blackout notices would be required. However, if the merge into the MEP is withina single provider, then blackout notices may not be necessary. Blackout notices will be provided by American Pension Services,Inc. It is important that our blackout notices be used, and not the one typically provided by your internal plan installation team sincethis is not just a change of investment providers within a single plan, but an actual plan-to-plan transfer/merge. Content Copyright © 2011, American Pension Services, Inc. All Rights Reserved.
  5. 5. Within the Platinum 401k program, can we…… Accommodate an unusual vesting schedule? – Yes! There’s nearly unlimited flexibility. How about different eligibility dates/ages? – Yes! These can also vary by adopter. Opt for a Safe Harbor Match or Safe Harbor Non-Elective contribution by the employer? – Yes! Can we do profit-sharing? Such as Cross-testing? – Yes! We can utilize up to 4 different allocation groups for Cross-Testing programs. Pro-rata and integrated (permitted disparity) formulas are also available. How about fixed formula or discretionary employer matches? – Yes, and Yes! Can you put an annual dollar limit on the match amount to an employee as well? –Yes! If the employer doesn’t want to participate themselves, can we ‘carve out’ the HCE’s? – Yes! This eliminates ADP/ACP testing problems. It’s especially useful if there are many non-highly paid employees and the owner doesn’t want to contribute to the plan. Is Roth available? – Yes! How about loans and hardship withdrawals? Age 59½ in-service withdrawals? – Yes, Yes, and Yes! Do we need new enrollment and beneficiary forms? - Yes! Since this is a change in plans, a new deferral election form is needed in addition to a brand new beneficiary designation form. The investments may be ‘defaulted’ into the QDIA election (eliminating the need for the participant to make an investment election at enrollment). “Mapping” of investment fund elections is not allowed in this plan-to-plan transfer. What funds are included in the investment lineup that’s available in the Platinum 401k plan? - Contact Lara Hise at American Pension Services (contact information is below) for the most current lineup of funds that are available under the program. How do I get paid? - You are paid directly by the investment provider on the plan as you would on any retirement plan case. As the Plan Sponsor on the program is located in Florida, you most likely would need to be licensed in Florida as a requirement to be compensated on the sale since technically that is where the client resides. Check with your firm’s licensing department or your investment provider wholesaler for more information on this matter.How do I get more information?Lara Hise, AIF is Vice President/Marketing at American Pension Services, Inc. in Clearwater, Florida.Her role is to assist you, as the advisor to your client, through the entire sales process by providing you with the tools andknowledge necessary to confidently present the Platinum 401k Program to your clients.Your entire Platinum 401k team is also available for conference call or webex sales support, and if the case warrants it, on-sitesales presentations to your prospects.Lara can be reached at 800.585.7540 x120, or LHise@americanpension.net.Information on the program can also be found at www.ThePlatinum401k.com. Content Copyright © 2011, American Pension Services, Inc. All Rights Reserved.
  6. 6. Multiple Employer Plan (MEP) ERISA 3(38) Investment Manager Co-Fiduciary Services “Warranty” What Kind of Fiduciary Are They?When you’re looking for relief from the personal liability and financial risks of being a 401(k) plan fiduciary, not all fiduciary protectionis alike. You don’t stop being a plan fiduciary just because a vendor signs on as a plan fiduciary or gives you a certificate! Fiduciary Warranties: Warranties offer to pay court costs or claims if the fund menu is deemed not to meet certain minimum standards. Limitation – They usually cover only a fraction of actual fiduciary exposure and often clearly state that the 401(k) provider is not a plan fiduciary. Co-Fiduciary Services (ERISA 3(21)(a)): This term includes a wide array of fiduciary services ranging from a vendor that accepts minimal responsibility for the appropriateness of its funds to advisors or independent services that assist you with investment oversight. Limitation – Co-fiduciary support can be helpful, but the plan sponsor is still liable and needs to follow sound fiduciary due diligence processes. ERISA 3(38) Investment Manager: Through a written contract, the plan sponsor formally delegates all responsibility for selection, monitoring and replacement of the 401(k) plan’s investment funds to an outside expert. This results in a significant transfer of investment fiduciary liabilities. Limitation – The plan sponsor still retains other plan fiduciary responsibilities, and also needs to monitor the qualifications and performance of the Investment Manager on an ongoing basis. Multiple Employer Plans: Multiple Employer Plans have been called “the platinum standard of fiduciary risk reduction”. The adopting employer is no longer the plan sponsor and has no responsibility for investment oversight, nor are they a “Named Fiduciary”. Properly structured, an MEP can remove nearly 100% of fiduciary liability. They can also eliminate the costs associated with annual plan audits, Form 5500 filings, document restatements and more! Limitation – Some employers want to pick their own fund menu rather than delegate this function to an outside expert. This responsibility comes with fiduciary liability to the employer and potentially to the advisor as well.Multiple Employer Plans – The Platinum Standard of Fiduciary Risk ReductionThis summary is not intended as legal or tax advice. Consult with your ERISA attorney for further information. Content Copyright © 2011, American Pension Services, Inc. All Rights Reserved.

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