In any situation, we will help you make the best choice.
PLAN DESIGN. Whether you are buying a car or a coffee drink, sometimes it seems that there are too many choices. Retirement Plans can be the same way. There are dozens of choices to consider in starting or updating a plan.
Do you need a matching component, safe harbor or cross-tested plan?
Do you want to offer loans, hardship withdrawls or in-service withdrawals?
Do you want a plan with electronic access to statements, investment advice or even online loans?
While there are many, many options, Powers Stromberg understands both the regulatory and practical implications of making these choices. We will help you design a plan that meets your requirements, whether that is maximizing contributions for owners, providing incentives for employees to retain their positions or helping employees to retire comfortably, or any combination of these. Whether you are interested in having employees make their own contributions or including a profit sharing component, in any situation, we will help you make the best choices for your plan.
Here are some of the choices to consider in designing a plan:
- Employee contibution or employer contributions, or both?
- Individual participant accounts or pooled accounts?
- Profit Sharing component?
- Safe harbor component to avoid annual compliance testing, and, if so, with a fixed or flexible contribution amount or by employer match of employee contributions?
- Is your company appropriate for a Cross-Tested Plan?
- Is your company appropriate for an Age-Weighted Plan?
- Do you want to make loans available and, if so, for any reason or only for hardship reasons?
- Do you want to make hardship withdrawals and, if so, at plan sponsor discretion or under IRS safe harbor guidelines?
- Should your plan accept rollovers?
- Should your plan allow for Roth contributions?
- Should your plan allow for in-service withdrawals and, if so, under what criteria and from what contribution sources?
- Do you want a vesting schedule so that employees have to remain employed by the company for 2-6 years to receive the full benefit of the employer contributions?
- Should you use a daily valued investment platform like those offered by John Hancock or American Funds?
- Does your existing plan have enough assets to qualify for better pricing?
- Should your plan utilize outside investment fiduciaries?
- Should employees pay most, some, or none of the fees associated with maintaining your plan?
- Do you have a specific reason or purpose in establishing a plan that needs to be considered?
- Is your plan easy to administer for your in-house contact?
This list is long and complex to indicate how many choices go into plan design. Powers Stromberg has the experience and knowledge to help you understand your options and design the best plan for your company and employees.
ANNUAL TESTING. After your plan is designed and in place, the IRS and Department of Labor require annual testing to make sure that your plan remains in compliance. Here are some of the things we do every year to make sure your plan is compliant with the rules and regulations:
- Calculate and allocate contributions, forfeitures and trust investment earnings. Prepare trust accounting and reconciliation for the allocation of trust earnings, as necessary.
- Performance of annual compliance testing, including:
- Coverage Testing under Code Section 410(b);
- Nondiscrimination testing under Code Section 401(a)4;
- ADP and ACP testing under Code Sections 401(k) and 401(m), including identifying highly
compensated employees and /or necessary corrections for failed tests;
- Monitoring for maximum deferral limitations under Code Section 402(g);
- Determination of participants eligible for catch-up contributions under Code Section 414(v) and whether any contribution made by any participant qualifies as a catch-up contribution;
- Monitoring of maximum contribution limits or benefit limits under Code Section 415;
- Calculation of maximum deduction limits under Code Section 404;
- Top heavy testing under Code Section 416, including determination of key employees and
calculation of required minimum top heavy benefits or contributions;
- Calculation of vesting of employer contributions;
- Incidental insurance limit testing;
- Assist Plan Sponsor in determining whether defaults under participant loans have occurred;
- Assist Plan Sponsor in determining eligibility for hardship or other distributions, including exclusion from eligiblilty to make deferrals following a hardship distribution, and assist Plan Sponsor in making distributions of benefits from the Plan to eligible participants;
- Such other compliance monitoring or testing as may be required by future changes in law or applicable regulations; and
- Preparation of an annual report on Form 5500 that summarizes plan activity.
ONGOING COMPLIANCE WORK. Powers Stromberg has two attorneys on staff who monitor the regulations and laws applicable to retirement plans. There are an almost overwhelming number of recommendations, proposed changes and rule modifications made every year, along with new laws, regulations and requirements. It is our job to make sense of this sea of information and make sure your plan is designed and run in compliance. You can rest easy that we will be there to communicate changes to you and answer any questions you have.
We will also work with your existing attorney, accountant, investment professional and other advisors to make sure we understand your circumstances and needs.