Randall Webb - TJSDD - Common Pitfalls and Deficiencies Found in Plan AuditsDowney Brand LLP
At the 2015 Savannah Fiduciary Seminar, Randall Webb of TJS Deemer Dana presented the most common deficiencies identified during plan audits and how plan sponsors should correct those deficiencies going forward.
Rick Pummill - TRPC - Effective Plan Design and AdministrationDowney Brand LLP
In his presentation at the 2015 Savannah Fiduciary Seminar, Rick Pummill of The Retirement Plan Company presented on how to make 401(k) or Defined Contribution Plan operations more effective, from design tips to electronic delivery of disclosures.
Randall Webb - TJSDD - Common Pitfalls and Deficiencies Found in Plan AuditsDowney Brand LLP
At the 2015 Savannah Fiduciary Seminar, Randall Webb of TJS Deemer Dana presented the most common deficiencies identified during plan audits and how plan sponsors should correct those deficiencies going forward.
Rick Pummill - TRPC - Effective Plan Design and AdministrationDowney Brand LLP
In his presentation at the 2015 Savannah Fiduciary Seminar, Rick Pummill of The Retirement Plan Company presented on how to make 401(k) or Defined Contribution Plan operations more effective, from design tips to electronic delivery of disclosures.
HunterMaclean ERISA and employee benefits attorney Rebecca Sczepanski made this presentation at the 2015 Savannah Fiduciary Seminar. Her presentation covered a summary of the legal issues regarding fiduciary status, including how to identify ERISA and state law fiduciaries. She provided tips for avoiding or mitigating risks associated with defined plan fiduciary status as well as an update on major fiduciary litigation.
CTKnowledgeShare: CT Corporation is dedicated to educating our customers on the most current and essential topics for corporate legal and compliance professionals.
PEO companies bill for their services in many different ways, which can be confusing and difficult for even the most seasoned broker to understand. The Guide to Understanding PEO Billing Reports provides a breakdown of both bundled and unbundled PEO bills, including how they’re organized and how the items on the invoices should be calculated.
In this eGuide, you will learn how to:
- Break down your clients' PEO reports effectively
- Find the “hidden fees” in bundled billing
- Save your clients by saving them money
Course Description
If you own or manage a business that uses independent contractors, you need to know when you can or cannot treat a worker as an independent contractor. This presentation answers some of the common questions about worker classification.
INTRODUCTION
Misclassification of employees as independent contractors is now a common phrase uttered by state and federal legislators and regulators. State task forces have been formed to crack down on businesses that do not pay unemployment insurance and workers’ compensation premiums or withhold taxes for workers whom the state believes are employees and not independent contractors.
The attached outlines the CPE workshop we can host on our Combined Qualified Plan to help address the tax planning needs of HNW business owners and professionals. Our firm designs, administers (DC/DB), and implements funding for clients who want large tax deductible contributions that can total hundreds of thousands of dollars per participant and can immediately reduce quarterly estimates. Also with the inclusion of our Aggregated Benefit (PRIME - Post Retirement Individual Medical Expense Benefit) as authorized under IRC §401(h) we can get an additional 33% more to the maximum pension contribution. Our plans designed with PRIME is used to fund for Healthcare in post-retirement one of the many unique attributes of our plans.
All plan designs are approved by the IRS through submission for favorable letters of determination and controlled by pension law in accordance with the Pension Protection Act of 2006 and the extensive body of regulations that have since followed...We welcome an opportunity to host a CPE workshop. Thank you.
Brian Wurpts addresses share redemption and share re-leveraging as other strategies to manage plan funding decisions, and their implications on repurchase obligation, in Part II of an article that appeared in the August 2011 Client Alert. Mychelle Holloway discusses when and how to use the new Form 8955-SSA, and all about the changes to the Form 5558, released by the Internal Revenue Service earlier this year.
Can real estate investors have a 401(k) plan - Kurt AltrichterKurt S. Altrichter
There are several ways to invest in real estate. However, it depends on a few factors if real estate investors can have a 401k plan.
While the joys of being a real estate investor are many, so are the stressors. One of the main stressors is that you have to plan for retirement by yourself, unlike when you are employed.
Luckily, there are various retirement savings plans that were created to house all kinds of professions. One such plan is the 401k plan. This is a retirement savings plan that allows individuals to save a certain percentage of each paycheck directly to a long-term investment account. So, to answer the question “can real estate investors have a 401k plan,” the answer is yes.
There are many people creating new entities in order to protect their assets and liability. This small presentation of running an S-Corporation has been provided to offer some "Basic" understanding of certain requirements that are often overlooked when choosing the S-Corporation entity type.
Changing Jobs? Take Your 401(k) and ... Roll It!Dolf Dunn
If you have recently lost your job, or are changing jobs, you may be wondering what to do with your 401(k) plan account. It is important to understand your options
American Incorporators has been helping businesses incorporate for more than 35 years. Here, we break down the pros and cons of the most common business entities: C-Corporations, LLCs and S-Corporations.
When a business owner decides to sell the company, there are different scenarios to consider ensuring the sale benefits the seller as much as possible. It’s imperative that the owner should understand the tax implications and how they relate to the company’s corporate structure. When starting a business or changing your business structure, one of the most common options business owners evaluate is whether to form an S corporation or C corporation. These are the two most common ways to incorporate, and the choice really depends on your business goals.
HunterMaclean ERISA and employee benefits attorney Rebecca Sczepanski made this presentation at the 2015 Savannah Fiduciary Seminar. Her presentation covered a summary of the legal issues regarding fiduciary status, including how to identify ERISA and state law fiduciaries. She provided tips for avoiding or mitigating risks associated with defined plan fiduciary status as well as an update on major fiduciary litigation.
CTKnowledgeShare: CT Corporation is dedicated to educating our customers on the most current and essential topics for corporate legal and compliance professionals.
PEO companies bill for their services in many different ways, which can be confusing and difficult for even the most seasoned broker to understand. The Guide to Understanding PEO Billing Reports provides a breakdown of both bundled and unbundled PEO bills, including how they’re organized and how the items on the invoices should be calculated.
In this eGuide, you will learn how to:
- Break down your clients' PEO reports effectively
- Find the “hidden fees” in bundled billing
- Save your clients by saving them money
Course Description
If you own or manage a business that uses independent contractors, you need to know when you can or cannot treat a worker as an independent contractor. This presentation answers some of the common questions about worker classification.
INTRODUCTION
Misclassification of employees as independent contractors is now a common phrase uttered by state and federal legislators and regulators. State task forces have been formed to crack down on businesses that do not pay unemployment insurance and workers’ compensation premiums or withhold taxes for workers whom the state believes are employees and not independent contractors.
The attached outlines the CPE workshop we can host on our Combined Qualified Plan to help address the tax planning needs of HNW business owners and professionals. Our firm designs, administers (DC/DB), and implements funding for clients who want large tax deductible contributions that can total hundreds of thousands of dollars per participant and can immediately reduce quarterly estimates. Also with the inclusion of our Aggregated Benefit (PRIME - Post Retirement Individual Medical Expense Benefit) as authorized under IRC §401(h) we can get an additional 33% more to the maximum pension contribution. Our plans designed with PRIME is used to fund for Healthcare in post-retirement one of the many unique attributes of our plans.
All plan designs are approved by the IRS through submission for favorable letters of determination and controlled by pension law in accordance with the Pension Protection Act of 2006 and the extensive body of regulations that have since followed...We welcome an opportunity to host a CPE workshop. Thank you.
Brian Wurpts addresses share redemption and share re-leveraging as other strategies to manage plan funding decisions, and their implications on repurchase obligation, in Part II of an article that appeared in the August 2011 Client Alert. Mychelle Holloway discusses when and how to use the new Form 8955-SSA, and all about the changes to the Form 5558, released by the Internal Revenue Service earlier this year.
Can real estate investors have a 401(k) plan - Kurt AltrichterKurt S. Altrichter
There are several ways to invest in real estate. However, it depends on a few factors if real estate investors can have a 401k plan.
While the joys of being a real estate investor are many, so are the stressors. One of the main stressors is that you have to plan for retirement by yourself, unlike when you are employed.
Luckily, there are various retirement savings plans that were created to house all kinds of professions. One such plan is the 401k plan. This is a retirement savings plan that allows individuals to save a certain percentage of each paycheck directly to a long-term investment account. So, to answer the question “can real estate investors have a 401k plan,” the answer is yes.
There are many people creating new entities in order to protect their assets and liability. This small presentation of running an S-Corporation has been provided to offer some "Basic" understanding of certain requirements that are often overlooked when choosing the S-Corporation entity type.
Changing Jobs? Take Your 401(k) and ... Roll It!Dolf Dunn
If you have recently lost your job, or are changing jobs, you may be wondering what to do with your 401(k) plan account. It is important to understand your options
American Incorporators has been helping businesses incorporate for more than 35 years. Here, we break down the pros and cons of the most common business entities: C-Corporations, LLCs and S-Corporations.
When a business owner decides to sell the company, there are different scenarios to consider ensuring the sale benefits the seller as much as possible. It’s imperative that the owner should understand the tax implications and how they relate to the company’s corporate structure. When starting a business or changing your business structure, one of the most common options business owners evaluate is whether to form an S corporation or C corporation. These are the two most common ways to incorporate, and the choice really depends on your business goals.
What the Document Management System Revolution Means for Your Business- Busin...Business.com
As the needs of businesses have changed and technology has advanced, document management software (DMS) has too. From new features that allow content to be stored in HTML format to accessible translation services, a DMS revolution is taking place. This whitepaper shares what trends have emerged and how each can positively impact your business.
While a key and obvious advantage of a POS system is the gain in efficiency with respect to processing and recording a purchase transaction, there are numerous additional benefits that have ramifications across the enterprise. In this whitepaper, we break down the advanced features of a modern POS system and we'll walk you through the steps to choose the correct vendor.
Guide to Promotional Items- Business.com Business.com
There are numerous benefits for gifting promotional items to existing or potential customers, or to long- term or high-performing employees. However, a few of these benefits are cited as the main reasons organizations use these items. Promotional items can help a business improve sales, bolster a reputation, and perform better financially. This whitepaper will help you do just that.
IntroductionComment by Exploring Series This is listed as a Head.docxvrickens
Introduction Comment by Exploring Series: This is listed as a Heading 2, but it should be Heading 1. Please change this heading to a Heading 1 style.
It is never too early to save for your retirement. For a start, you can estimate the amount that you need to have before you can retire comfortably using financial calculators found on sites such as CNN Money, Kiplinger, Motley Fool, and TIAA-CREF financial services. The good part is, there are many different types of retirement plans that you can participate, individually or with your employers. To help you save for retirement, there are many government-regulated and government-approved retirement accounts that you can contribute a certain amount to annually. Why should you enroll in a retirement plan NOWnow? Did you know that your retirement can last for 30 years or more? A common rule to follow is that a retiree will need up to 80% of his/her annual income today to retire comfortably. Unfortunately, the average benefit amount paid monthly by the Social Security Administration is only $1,177.
Below are many advantages why you should start saving NOWnow:
· Tax on employee and employer contributions is deferred until distributed.
· Investment gains in the plan are not taxed until distributed.
· Retirement assets can be carried from one employer to another.
· Contributions can be made easily through payroll deduction.
· Saver’s Credit is available.
· Flexible plan options are available.
· Better financial security at retirement.
Future Retirement Savings Value - Assuming 6% annual return Comment by Exploring Series: You need to insert a caption for this table and the next table.
Monthly Savings
5 years
15 years
20 years
$50
$3,506
$14,614
$23,218
$200
$14,024
$58,456
$92,870
$500
$35,059
$146,136
$232,176
Source: http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Benefits-of-Saving-Now
A contribution is defined as the amount that an employee and an employer can put into a retirement plan. There are, however, varying limits on how much we (including both employers and employees) can contribute to any of the retirement plan. Each plan has its own rules and criteria, and must specifically state that contributions or benefits cannot exceed certain limits. Employees can participate in contributions via salary reduction. Employers can match employees’ contributions or contribute outright a certain amount into the employees’ retirement account.
Traditional Individual Retirement Arrangements (IRAs) Comment by Exploring Series: Please change all headings formatted with Heading 3 to Heading 2 style.
There are two major kinds of IRAs – traditional and Roth. A traditional IRA is a way to save for retirement that gives you tax advantages. It allows you to make tax-deferred investments to provide financial security when you retire. Your traditional IRA contributions may be tax-deductible. The deduction may be limited if you or your spouse is covered by a retirement pla ...
In today’s dynamic employment landscape, offering competitive benefits is crucial for attracting and retaining top talent. Among these benefits, a 401(k) retirement plan stands out as a cornerstone of financial security for employees. However, navigating the intricate web of 401(k) tax laws can be daunting, even for seasoned professionals. At SBA Tax Consultants, we understand the importance of providing comprehensive guidance on 401(k) plans to ensure both employers and employees maximize their benefits while remaining compliant with IRS regulations. In this blog, we delve into the nuances of 401(k) tax laws, empowering SBA Tax Consultants and their clients to secure their financial futures effectively.
Michael Silver & Company CPAs recently published an article on retirement plans for businesses. Whether you have a small, independent business or a large company, we discuss the advantages and disadvantages for each plan available.
Michael Silver & Company CPAs has recently published an article on the benefits of retirement plans. Whether you have a small, independent business or a large company, we describe the advantages and disadvantages of each possible plan for each possible business.
A Safe Harbor 401(k) Plan is a relatively new type of 401(k) Plan that automatically meets certain IRS non-discrimination requirements, unlike a traditional 401(k) plan, if the employer commits to making one of two types of employer contributions. The first is a 3% of pay non-elective (profit sharing) contribution required to be made on behalf of any participant who has met the eligibility requirements for salary deferral contributions,whether or not the participant actually participates in the salary deferral arrangement.The second type of contribution is an employer matching contribution whose formula,in the aggregate, may not be less than 100% on the first 3% of a participant’s pay deferred to the plan and 50% on the next 2% of a participant’s pay deferred to the plan.A participant must actually participate in the salary deferral arrangement to be eligible for the employer matching contribution.
The employer’s chosen Safe Harbor contribution must be 100% vested when made for each participant, but there are certain withdrawal restrictions that apply to these types of contributions resembling those that apply to salary deferral contributions.
Five Common Questions About Deferred CompensationCBIZ, Inc.
Is a deferred compensation plan right for you? Here are five common questions about deferred comp.
Corporate deferred compensation plans for highly compensated employees are a planning tool that companies and key executives should explore. They are attractive because of the significant increase in ordinary income tax rates on compensation. Such plans are also a fringe benefit that can attract and retain key executives.
Impact of the SECURE Act 2019 on NQDC Plans and Retirement Distribution Elect...Fulcrum Partners LLC
This Fulcrum Partners Executive Benefits Advisory Report, “Impact of the SECURE Act 2019 on NQDC Plans and Retirement Distribution Elections,” addresses effects the SECURE Act will also have on nonqualified deferred compensation (NQDC)plans, specifically looking at the matter of retirement distribution elections.
Clark Schaefer Hackett created this buyer’s guide to help you and other plan fiduciaries make an informed decision when hiring a quality auditor for your employee benefit plan audit. This guide covers your fiduciary responsibilities, the timing of a plan audit, audit quality, finding the right auditor and more.
Future Selling in B2B Media: Yes, There is a FutureBusiness.com
Business.com CEO Tony Uphoff's presentation from the Business Information & Media Summit held by ABM, SIPA, and SIIA in partnership with infocommerce about marketing automation, programmatic buying and retargeting.
Even though our world is becoming increasingly paperless, the copier is a ubiquitous staple that's not going anywhere. That's not to say the changing of the times hasn't had an affect on the copier biz; sales are down, and copiers have changed functionality to allow for more paperless options, i.e. scan to email.
In order to get you up to speed on the latest and greatest in the world of photocopying, we created the Business.com Guide to Copiers.
Stay Connected with the Right Phone System for Your Business Business.com
A variety of modes of communication exist to help us connect with clients, customers, and each other, but few can take the place of the telephone. They help us connect with people from all over the world in real-time, and next to an in-person meeting, are the best way to communicate with one another.
Companies small and large alike rely on telephone systems to help them do business, and thanks to new and emerging technology, there are more options than ever to choose from.
When choosing a phone system solution for your business, it’s vital that you identify the needs of your company and its clients before shopping. Depending on your needs, a variety of telephone system functionality exists, including features like automated directory, call forwarding, music on hold, and speed dial, to name a few.
Though traditional phone systems are still prevalent, a new system has recently emerged to provide even more telephone functionality at a lower cost. VoIP systems, or Voice over Internet Protocol systems, use high-speed internet to connect parties on both ends.
The Business.com Guide to Telephone Systems was created to educate you on the types of phone systems available, and assist in identifying which kind will work best for your business.
It’s a common goal to find a job that you love, but it’s not sheer conviction that keeps us going to work day after day, year after year—it’s money. Your hard work, and that of your employees, deserves to be rewarded with consistent and dependable pay. Though at face value, paying your employees for their hours worked seems relatively straight-forward, there are many important factors to consider concerning your company’s payroll.
A variety of payroll services and solutions have long existed to aid companies in their payroll management needs, a new wave of web-based options have emerged to give businesses even more functionality. These new solutions can not only help you save money as compared to their older counterparts, but can also help with headache-inducing federal and state taxes.
Everything You Need to Know About Taking PlasticBusiness.com
Consumers are so used to the convenience of credit and debit cards that it's no longer an option for a merchant to take plastic -- it's a necessity. Consumers expect to be able to use plastic to pay for everything, even small items. From their point of view, that's the end of the transaction but it's a whole different story for the merchant.
From credit card readers to securing the networks to transmitting information to the bank, there are multiple steps that must happen before the money is finally deposited into the merchant's account.
The point-of-sales is where a retail transaction is conducted, which used to mean a cash register was located, typically near a store exit.
Today, it means any place where a sale is conducted and money is exchanged for a product/service and a receipt is given.
In addition to an electronic cash register, this could occur via smartphone, tablet, touchscreen, barcode scanner, or dedicated mobile device or terminal.
The Business.com Guide to POS Systems makes it easy to figure out which system is right for you.
Download the guide and:
- Learn the various features of POS systems.
- Get tips on choosing a vendor.
- Figure out how to calculate the costs.
- Get access to a helpful comparison checklist.
Overview of Recruitment Management Systems- Business.comBusiness.com
Recruitment Management Software greatly reduces otherwise labor-intensive data entry and record-keeping associated with job creation, advertising, screening and employee selection. Use this Business.com guide to get top tips for evaluating the best RMS available- to make your HR duties a little more manageable.
80% of consumers turn to websites to find out more about a company before making a purchase. Which is why there's no time like the present to streamline your site. Use this Business.com guide to understand which type of website you should really have, how to create a beautiful site, and how much it will cost you.
Time and Attendance Software- A Business.com GuideBusiness.com
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There are many benefits to owning a postage meter within a business setting, and there are many types and sizes available that allow any kind of business to save time when sending large amounts of differently sized or weighted packages anywhere in the world. This guide breaks down the types of postage meters and provides quality purchasing tips too.
Order Fulfillment Services- A Business.com GuideBusiness.com
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Recent revelations by National Security Agency (NSA) renegade contractor Edward Snowden have resulted in many businesses paying more attention to how secure their computer systems are. But even the most “cyber-savvy” businesses can have their computer networks hacked and compromised. Use this whitepaper to understand your threats, protective options, and trends in internet security for businesses.
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Any organization that require the structured storage and retrieval of documents can benefits from investing in a document management system (DMS). Use our guide to discover the many benefits of purchasing a DMS, along with practical tips on choosing a system that best fits the needs of your small business.
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A business security system will provide you with a peace of mind, lower insurance rates, and a safer working environment. Our guide will walk you through the major types, features, and options of modern commercial security systems.
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For a more robust employee management system through your payroll services providers, you may choose to add benefits management, 401(k) management, or other enhancements to the basic payroll processing service. Here are some common HR obstacles and ways in which payroll services can mitigate these challenges.
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2. CONTENTS
OVERVIEW OF 401K PLANS 3
TYPES OF PLANS 6
CHOOSING A PLAN 8
CALCULATING COSTS 10
PURCHASING TIPS 12
COMPARISON CHECKLIST 13
GLOSSARY OF TERMS 15
3. 3
WHAT
The 401(k) plan takes its name from the U.S. Internal
Revenue Service Code, where section 401(k) allows
businesses to establish tax-favored retirement savings
accounts for their employees. 401(k) plans have grown
to become a major source of retirement savings due
to their unique benefits. About one-quarter of all
retirement savings in the U.S. are held in 401(k) plans.
The 401 (k) plan is just one of many alternative ways
the U.S. government provides for tax-favored savings
for retirement. 401(k) plans differ from Individual
Retirement Accounts (IRAs) in that IRAs are usually
held by individuals-as the name suggests-rather than
by companies. In 2011, 61% of Americans had a
401(k) or other employer-provided retirement account,
39% had an IRA account, 31% had both an IRA and
a 401(k), and 31% had neither, according to the
Investment Company Institute.
OVERVIEW OF 401K PLANS
“THE 401 (K) PLAN IS JUST ONE OF MANY
ALTERNATIVE WAYS THE U.S. GOVERNMENT PROVIDES
FOR TAX-FAVORED SAVINGS FOR RETIREMENT.”
4. 4
WHY
401(k) plans can only be set up by employers, and
usually involve employers making tax-deferred, direct
contributions to employee retirement accounts.
With IRAs, most if not all of the contributions come
from the employee, who usually has control over
how the funds are invested. With 401 k plans, both
employers and employees usually contribute, and a
custodian provides limited options that employees
can choose between when investing their savings.
The paperwork requirements are also different for
IRAs and 401(k)s. Employers do not have to file
any paperwork with an IRA, other than showing
the amount of compensation directed to the IRA
account on an employee’s W-2 annual summary
wages and deductions. Companies with a 401k
plan must file Form 5500 with the IRS each
year, and must satisfy annual anti-discrimination
testing to ensure that highly compensated
employees are not benefiting in an unbalanced
way from the company’s 401(k) contributions.
“WITH 401 K PLANS, BOTH EMPLOYERS AND
EMPLOYEES USUALLY CONTRIBUTE, AND A
CUSTODIAN PROVIDES LIMITED OPTIONS THAT
EMPLOYEES CAN CHOOSE BETWEEN WHEN
INVESTING THEIR SAVINGS.”
5. 5
HOW
The main benefit of 401(k) plans is their tax-favored
status. Employee contributions are deducted before
taxes are calculated, and earnings on the investment
are also not subject to taxes when earned.The
contributions and the gains are only taxed when
distributed, typically after retirement, and usually at a
lower tax rate. Employer contributions to 401(k) plans
are tax-deductible to the employer.
Many 401(k) plans include some employer matching of
employee contributions to their retirement funds. 401(k)
programs are extremely popular with employees, so much
so that employers offering these plans find it easier to
attract qualified employees. In a recent study by the U.S.
Office of Personnel Management, 91% of employees rated
retirement benefits as a major reason for accepting or
continuing employment-more than any other benefit-even
including health-care coverage (89%)!
“FREQUENTLY, PARTICULARLY IN LARGER
COMPANIES, A CMMS IS A MODULE OR INTEGRATED
PACKAGE OF A LARGER ENTERPRISE-WIDE
SOFTWARE SYSTEM.”
6. 6
The IRS allows for some variety of structures for 401(k)
plans.These include a Roth 401(k), a Safe Harbor
401(k), and a SIMPLE 401(k). Let’s quickly take a look
at these options.
Traditional 401(k): Employers may contribute, but
are not required to. Contributions are not taxed, nor
are earnings, until funds are distributed-usually after
retirement. Early distributions for other than approved
reasons incur both income taxes and penalties. Major
advantages of a traditional 401(k) are that employer
contributions may be vested over time, and employees
can borrow against the funds. One disadvantage
is the increased reporting requirements, and thus
administrative costs, compared with SIMPLE or Safe
Harbor plans.
Roth 401(k): Employers may contribute, but are not
required to. Unlike a traditional 401(k), contributions
to a Roth account are made after taxes are taken out.
Earnings on a Roth account are usually tax-free if
distributed after the age of 59.5, whereas earnings on
a traditional 401(k) are taxed when distributed. Roth
accounts are usually offered in addition to a pre-tax
savings plan. These accounts work well for very young
savers and people who believe they will be in a higher
tax bracket when funds are distributed than when funds
are contributed.
TYPES OF PLANS
“ONE DISADVANTAGE OF TRADITIONAL PLANS IS THE INCREASED REPORTING
REQUIREMENTS, AND THUS ADMINISTRATIVE COSTS, COMPARED WITH SIMPLE OR
SAFE HARBOR PLANS.”
7. 7
Safe Harbor 401(k): This is similar to a traditional
401(k) plan, except that the employer contribution of
funds must be vested immediately. The paperwork for
these IRAs is simplified, and no anti-discrimination tests
are required each year. Employees may not borrow
against these funds. Safe Harbor plans are usually used
by companies with highly compensated employees
who want to contribute large amounts without anti-
discrimination limits.
SIMPLE 401(k): This 401(k) is designed to provide
a cost-efficient way for small employers to offer an
affordable retirement savings plan to their owners
and employees. Like a Safe Harbor plan, employers
must vest contributions immediately, and are not
required to perform anti-discrimination tests and other
paperwork. Employers must contribute to SIMPLE plans,
matching employee contributions up to 3% of wages,
or contributing a minimum of 2% of wages. You can’t
borrow against these plans, and contributions must be
made through payroll deductions. SIMPLE plans are
limited to employers with fewer than 100 employees who
earn more than $5,000 per year, and can’t be used if
the employer offers another type of retirement plan. The
benefits of using a SIMPLE plan? Easy to set up and
lower administrative costs.Your first inclination might be
to decommission the oldest equipment. But a CMMS can
run a report that details the fact that the four-year-old
equipment has broken down an average of three times.
“SIMPLE 401(K) IS DESIGNED TO PROVIDE A
COST-EFFICIENT WAY FOR SMALL EMPLOYERS
TO OFFER AN AFFORDABLE RETIREMENT SAVINGS
PLAN TO THEIR OWNERS AND EMPLOYEES.”
8. 8
Once you’ve decided what type of 401(k) plan makes
sense for your business, you’ll have a wide variety
of plans to choose from. When choosing the right
plan for your business, there are three important
questions to ask:
What are the administrative costs?
There are several different ways in which plan
administrators charge for their services. They include set-
up fees, annual fees, monthly fees, per-employee fees,
percentage-of-assets fees, reporting fees, trustee fees-
plus transactions charges for distributions, loans, and
moving assets between funds. The checklist below will
help you make sure you’ve asked about all the possible
fees, and ensure that there are no other hidden costs.
What is the annual rate of return?
Qualified retirement accounts are required to report
their annual rates of return for each type of fund, as
well as administrative costs. When comparing funds, be
sure to look at the average annual return after fees. You
can’t compare true rates of return unless you also know
the total annual costs of the plan, not just their nominal
rate of return. Most funds will list rates of return going
back several years so that you can see how their funds
perform over the long term, not just last year.
What variety of funds does the custodian offer?
Most 401(k) providers offer a family of plans that
employees may choose from, depending on their risk/
return preferences. For example, high-growth funds
usually invest in equities that pay little or no dividends,
whereas income funds have a lower risk, but also lower
rates of return from assets that don’t tend to fluctuate in
value. The variety of funds offered is a major factor in
choosing between providers.
CHOOSING A PLAN
“QUALIFIED RETIREMENT ACCOUNTS ARE
REQUIRED TO REPORT THEIR ANNUAL RATES OF
RETURN FOR EACH TYPE OF FUND, AS WELL AS
ADMINISTRATIVE COSTS.”
9. 9
Other Factors Involved in Choosing a Provider
Beyond the big three issues of administrative costs,
rate of return, and variety of investment vehicles
offered, there are a number of other factors that might
influence your choice of provider. Here are some other
issues you might want to consider:
Enrollment Procedures. How is the plan set up?
How do employees get started? What options are
available? With some plans, all employees are enrolled
automatically. Others require employees to opt-out
if they don’t wish to participate. Most plans have
restricted enrollment periods-specific times when
employees can enter the plan.
Employee Training Programs. Many plans include
instruction for employees on how the retirement plan
works; what choices they have; and what dates they
need to be aware of with respect to contributions,
distributions, and other transactions. Find out whether
there are extra charges for employee training, or if a
certain level of training is included in the plan price.
Customer Service. One reason for creating a SIMPLE
401(k) plan is that it eliminates a lot of the customer-
service issues inherent in traditional 401(k) plans. How
good is the provider at answering employee questions
about the plan, allowing for movement of money
between funds (rebalancing), assisting with enrollment,
and processing distributions? Once you’ve narrowed
down your choice of providers, you should do an online
reputation check on your finalists to see whether people
are praising or slamming them.
Investment Advising Capabilities. Some providers
have great tools to help employees understand and
manage their 401(k) investments. Look for quizzes
that help establish risk tolerance, and simulators that
show the effects of shifting a portfolio more toward
income versus growth. You might find that paying a little
more in administrative costs for a provider with a lot
of tools saves money in staff time devoted to assisting
employees with their investment choices.
10. 10
Most plans will provide you with a stated cost of
administering the plan, a projected annual rate of
return, and a history of the performance of the funds
they manage. It’s fairly easy to compare providers on
these criteria.
Where it gets tricky is all the hidden fees, costs to the
employer, and the value of customer-service capabilities.
Providers can be very clever about slipping in unexpected
fees. The checklist below will help prevent any surprises
when deciding between plans.
Here are some typical costs for 401(k) plans:
Basic Fees
• Set-up charge $500 - $5,000 (typical is $1,000)
• Annual base fee $250 - $3,000
• Monthly base fee $100 - $500
• Annual charge per employee $0 - $50
• Investment fee - annual $40 - $100
• Investment fee - percentage .15% - 1.0% of asset value
CALCULATING COSTS
“PROVIDERS CAN BE VERY CLEVER ABOUT
SLIPPING IN UNEXPECTED FEES. THE CHECKLIST
BELOW WILL HELP PREVENT ANY SURPRISES WHEN
DECIDING BETWEEN PLANS.”
11. 11
Additional Fees
• 12b-1 fee (.15% - 1.0% of assets)
• Enrollment charge
• Fund-switching charge
• Distribution charge
• Loan fees
“MOST PLANS WILL PROVIDE YOU WITH A STATED
COST OF ADMINISTERING THE PLAN, A PROJECTED
ANNUAL RATE OF RETURN, AND A HISTORY OF THE
PERFORMANCE OF THE FUNDS THEY MANAGE.”
12. 12
Don’t go outside the box. Investment funds have
been around long enough so that most provide very
similar packages, rates of return, and fees. Unless you
really know what you’re doing, stay away from funds
where the investment vehicles are unusual or the rates
of return seem inflated. When it comes to investing your
employees’ retirement funds, extra caution is warranted.
Avoid investment seminars. The North American
Securities Administrator Association (NASAA) released a
report showing a high level of investment fraud resulting
from in-person seminars. Avoid situations where sales
reps have you trapped. Do your homework online so that
you have access to a wide variety of resources.
It’s the service, not the fee. While your employees
may be focused only on a rate of return, as an employer
you should make an effort to compare customer-service
features and reputations. If the fund is generating great
success in returns after expenses, is it because it has
shifted the costs of service onto you, the employer? With
most major investment funds thoroughly regulated, rated,
and reviewed, the major differences between providers
may come down to customer-service amenities. Ask about
customer service, and check reputations online. You could
be paying a lot more for the “least expensive” fund than
for one with full-featured customer support.
PURCHASING TIPS
13. 13
This checklist will help you quickly assess
the best vendor for your needs.
Basic Setup
Traditional or Roth?
SIMPLE or Safe Harbor?
Employer Matching?
Vesting Period Allowed
Loans Allowed
Rollover Restrictions
Anti-discrimination Testing
Required to File IRS Form 5500
Administrative Costs
Average Total Annual Fees
Setup Fee
Flat Annual Fee
Percentage-of-assets Annual fee
Trustee Fees
12b-1 Fees
Per-employee Fees
Loan-processing Fees
Reporting or Compliance Fees
Any Other Fees
My Needs Vendor 1 Vendor 2 Vendor 2
401k CHECKLIST
14. 14
This checklist will help you quickly assess
the best vendor for your needs.
Rate of Return
Average Annual Rate of Return
Average Annual Return After Fees
5-year Average Rate of Return
5-year Average Return After Fees
Number of Years of Experience
Customer Service
Live Online Help From CRM Expert
Live Phone Help From CRM Expert
Training Videos Available
Free Training Available
My Needs Vendor 1 Vendor 2 Vendor 2
15. 15
Anti-Discrimination Testing: Tests performed to ensure
that highly compensated employees are not benefiting
disproportionately from a company’s contributions to
employee retirement accounts.
Asset Allocation: The distribution of an employee’s
retirement account between different assets, such as
equity funds, bond funds, real estate funds, growth funds,
income funds, etc.
Balancing: Portfolio balancing is the art of distributing
funds between assets with risk/reward profiles that blend
to achieve one’s financial goals.
401(k): A form of employer-sponsored retirement savings
account setup under Internal Revenue Service Code
section 401(k), which lays out the rules and rights for such
funds.
Form 5500: Annual federal tax return employers are
required to file documenting activities in a company’s
401(k) plan.
403(b): Similar to a 401(k) plan, a 403(b) plan can only be
used by nonprofit organizations, including certain schools,
hospitals, and ministries.
Individual Retirement Accounts (IRAs): The U.S.
Congress enabled these accounts to allow people to save
for retirement on a pre-tax basis, thus encouraging saving.
GLOSSARY OF TERMS
16. 16
Roth IRA: An individual retirement account where
contributions are made after-tax, earnings grow tax-free,
and distributions are not subject to income tax. Usually
offered in addition to a pre-tax retirement account.
Safe Harbor 401(k): A retirement savings account
specifically designed for highly compensated employees.
It does not have to meet anti-discrimination tests.
SIMPLE 401(k): A retirement savings account designed
for small businesses, with more rigid rules and lower
reporting requirements and administrative costs.
12b-1 Fee: A fee charged by some supposedly “no-
load” mutual funds for fund operation expenses. Can run
anywhere from .15% to 1.0% of assets.
Vesting: Vesting is when an employer funds a contribution
to employee retirement savings accounts. Many employers
vest their contributions at the end of the year. Some plans
require immediate vesting, while others allow employers to
vest their contributions over a lengthy period of time.
“VESTING IS WHEN AN EMPLOYER FUNDS
A CONTRIBUTION TO EMPLOYEE RETIREMENT
SAVINGS ACCOUNTS. MANY EMPLOYERS VEST THEIR
CONTRIBUTIONS AT THE END OF THE YEAR.”