Actuarial Consultants, Inc

End of year checklist that will keep Plan Sponsors off the naughty list

2011-12-16T09:00:00.000-08:00

By Yariel Chiong & Alison Murray

With the end of the year right around the corner there is more that you need to worry about than what you are doing on New Year’s Eve. Plan Sponsors should review if any legislative actions or disclosures are required for their Qualified Retirement Plan(s).

Proactive TPA’s will let their clients know if any actions are required for their plan before the clock strikes midnight on December 31, 2011. The following are a few housekeeping items that you should be aware of for 2012:

Safe Harbor 401(k) Plan Annual Notice
Plan Sponsors must provide participants and eligible employees with information about features of their 401(k) Safer Harbor Plan including the safe harbor nonelective contribution or matching contribution under the plan. You’ve already provided this notice by December 1, 2011 for existing participants if you declared your plan safe harbor for 2012. What you need to remember is don’t forget about your newly eligible participants during 2012. This notice needs to be provided to them as well, a reasonable period of time before they become eligible.

401(k) Automatic Enrollment Notice
Plan Sponsors must provide participants and eligible employees with information about automatic enrollment, including deferrals that will be made for a participant if no election has been made by them. You’ve already provided this notice by December 1, 2011 for existing participants if you declared your plan safe harbor for 2012. What you need to remember is don’t forget about your newly eligible participants during 2012. This notice needs to be provided to them as well, a reasonable period of time before they become eligible.

Qualified Default Investment Alternative Notice (QDIA)
Plan Sponsors must provide participants and eligible employees with information about how their funds will be invested absent their investment election. You’ve already provided this notice by December 1, 2011 for existing participants if you have a QDIA. What you need to remember is don’t forget about your newly eligible participants during 2012. This notice needs to be provided to them as well, a reasonable period of time before they become eligible.

Summary Plan Descriptions and Summary of Material Modifications
Don’t forget to hand out your Summary Plan Descriptions and Summary of Material Modifications to newly eligible participants or beneficiaries throughout the year.

Partnership Elections

Partnership Elections must be completed by December 31st. Even if a partner deferred out of their draw and has already deferred the maximum allowable for 2011, a partnership election must be completed.

Enrollment forms

Enrollment forms must be completed before a participant becomes eligible. You need to give the employee enough time to make an election before their entry date. If you do not do this, you may have caused a lost deferral opportunity which would result in an unanticipated employer contribution.

Minimum Required Distributions

You have an employee who terminated employment in 2011 whose already attained the age of 70 ½ and has a first minimum distribution due by April 1, 2012. Don’t forget to mention this to your TPA if you do not provide them with the 2011 census information early enough to make this determination.

The above is just a short list of what to look out for during this time of the year. Contact ACI if you have any questions regarding your plan.

310 212-2600

2011-10-20T10:31:00.000-07:00

October 20, 2011

Retirement Plan Limits for 2012 Announced

On October 20, the Internal Revenue Service announced the cost-of-living adjustments that will be applied to the dollar limits in all tax-qualified retirement plans in 2012. The limits apply to calendar year plans, if you have an off-calendar plan year end, contact your plan administrator to see if there are any changes to your plan.

Defined Benefit Plan Limits
The limitation on the annual benefit under a defined benefit plan is increased from $195,000 to $200,000.

Defined Contribution Plan
Individual Contributions
The limitation on contributions made on behalf of an individual to a defined contribution plan is increased from $49,000 to $50,000. Individuals will still be limited to contributions of 100% of compensation or $50,000, whichever is less.

401(k) Deferrals
This dollar limitation on employee deferrals into 401(k) plan is increased from $16,500 to $17,000. This is a calendar year limit regardless of plan year end.

Catch-Up Contributions
For individuals age 50 and over, the catch-up contribution remains unchanged at $5,500. This is a calendar year limit regardless of plan year end.

Annual Compensation Limits
The maximum annual compensation that may be recognized by a plan is increased from $245,000 to $250,000.

Key Employees
The dollar limitation for determining whether an employee is “Key” for officers in a top-heavy plan will increase from $160,000 to $165,000.

Highly Compensated Employees
The dollar limitation on compensation used to determine which employees are considered highly compensated is increased from $110,000 to $115,000. Thus, employees who earn in excess of $110,000 in the plan year beginning in 2011 will be considered highly compensated for the plan year beginning in 2012 and employees who earn in excess of $115,000 in 2012 will be considered highly compensated employees in 2013.

ACI makes the Los Angeles Business Journal’s Top 20 List

2011-09-16T09:19:00.000-07:00

By Yariel Chiong

We’ve made the Los Angeles Business Journal’s list again of the Top 20 largest firms in L.A. County handling employee benefits. In this complex economy ACI continues to stand its ground never stepping down from a fight. We couldn’t have done it without putting the client first. Our deep understanding of the retirement industry helps us provide simplified administration and a comprehensive approach to managing your company’s retirement plan. We help bring efficiency to the process by providing vertical case management, consolidating all your plans administrative needs under one case manager. Navigating through new legislative updates and requirements can be daunting but it doesn’t have to be. We do this so you can focus on what’s most important: helping your employees retire.

Contact ACI for more information 310.212.2600 information@acibenefits.com

Safe Harbor Deadline Is October 1, 2011

2011-09-07T14:45:00.000-07:00

By Yariel Chiong and Tobi Cogswell

One of the most popular plans for small business owners with employees is the Safe Harbor 401(k) Plan. Would Safe Harbor help you?

■ Does your Plan fail discrimination tests?
■ Is your Plan top-heavy?
■ Are you seeking to maximize deferrals and profit sharing allocations for highly compensated employees?
■ Is your company making significant matching contributions to a 401(k) plan to accommodate deferrals made by highly compensated employees?

If you answered “yes” to any of these questions, you might want to consider a safe harbor plan design. An existing 401(k) plan cannot become safe harbor until the first day of the next plan year (usually that will be January 1, 2012) but profit sharing plans that have never had 401(k) provisions can add safe harbor provisions for 2011. There is some urgency here because this must be inplemented by October 1st.. .

What is Safe Harbor?
401(k) plans that take advantage of “Safe Harbor” contributions avoid ADP and ACP testing. In practical terms, this means that highly compensated employees may defer the maximum allowable amount of compensation into the plan ($16,500 in 2011 plus a $5,500 catch up for anyone 50 or older) without worrying about deferral refunds due to failed ADP tests.

Plan sponsors have two contribution options: First, sponsors may make a 3% profit sharing contribution to every nonhighly compensated employee; or they may provide a minimum matching contribution of 100% of the first 3% of compensation deferred, plus 50% of the next 2% of compensation deferred to all deferring employees. ACI can help you decide which is right for you.

Disadvantages of Safe Harbor
The drawbacks for some employers are the size of the safe harbor contribution, the immediate vesting and no last-day requirements associated with the plan contribution. There is also a notice requirement to the participants.

The Reward of a Safe Harbor 401(k) Plan
This contribution makes non-discrimination testing a thing of the past. As long as the employer faithfully makes the promised contribution, the plan is deemed non-discriminatory. A safe harbor profit sharing contribution also satisfies top heavy, and the first 3% “gateway” if you have a cross-tested profit sharing allocation. It’s a beautiful thing.

Contact ACI to learn more about starting a Safe Harbor Plan.

Tobi Cogswell
Tobi.Cogswell@acibenefits.com
310 212-2623

DOL Extends 408(b)(2) Regulation

2011-07-22T10:18:00.000-07:00

By Yariel Chiong

The Department of Labor (DOL) has once again delayed the deadline for 408(b)(2) in order to provide covered service providers more time to adhere to the new rules. Although the delay is beneficial to service providers it is not helping plan sponsors find out what fees they are being charged for their plan. The 408(b)(2) rule originally had an effective date of July 16, 2011 was later moved to January 1, 2012. The new extended deadline for the regulation is April 1, 2012.

Plan sponsors should know what they are paying for services now. It is in their best interest to start having conversations with their service providers and find out exactly what fees they are being charged and what services are being provided. Clients of ACI have the advantage of already knowing what we are charging them. ACI has been a front runner in disclosing all fees to our clients; they will not be shocked by hidden fees that other firms will be disclosing to their clients come April 1, 2012. Don’t wait until the deadline to find out from your covered service providers what you are being charged.

If you are an advisor, have these conversations with your clients now. Be part of their solution.

Don’t leave any extra money on the table for Uncle Sam

2011-06-27T10:51:00.000-07:00

By Yariel Chiong & Tobi Cogswell

The Internal Revenue Service (IRS) requires qualified retirement plans to undergo different compliance tests depending on the type of plan. For 401(k) plans one of those tests is the ADP/ACP test, which stands for actual deferral percentage/average contribution percentage. The purpose of the test is to determine if there is discrimination against non highly compensated employees (NHCE’s) in favor of highly compensated employess (HCE’s). The HCE’s are normally any greater than 5% owners and anyone who earned more than $110,000 in the prior year (this amount is indexed each year).

ADP/ACP tests are run annually, but you may wish to run an “interim”, or snapshot test that will tell you if you need to reduce the HCE deferrals for the rest of the year. It may also tell you if the HCE’s can increase their deferrals. Why leave a single dollar undeferred and subject to tax by Uncle Sam.

For example: A 401(k) plan that has 12 NHCE’s and 5 HCE’s.

As of 6/30, the actual deferral percentage for the 12 NHCE’s is 2.4% (participation has been poor).

The actual deferral percentage for the 5 HCE’s is 3%. They’ve had test failures in past years so they are deferring very small percentages.

Based on this example, the HCE’s could actually be putting in up to an average of 4.4%, yet they are at 3%.

There are ways to increase percentages closer to the end of the year with change dates, amendments to allow special deferrals during the month of December and so forth. But as we end June, now is the perfect time to do an interim test for calendar year plans.

Most TPA’s and bundled recordkeepers do charge for an interim test. The plan sponsor needs to weigh the cost of the interim test against the planning opportunities of allowing their HCE’s to put more money away in their retirement plan. Contact your consultant or administrator for more information on performing an interim ADP test.

ASOP #41 - Fact, Not Fable

2011-06-10T12:12:00.000-07:00

By Pat Byrnes, MSPA, EA, MAAA

The actuarial profession has a common Code of Conduct, an Actuarial Board for Counseling and Discipline (ABCD) and an Actuarial Standards Board (ASB). One of the ASB’s Actuarial Standards of Practice (ASOP # 41) is entitled “Actuarial Communications.” It went into effect in May 1, 2011 and covers all forms of actuarial communication (including emails and verbal conversations). The goal of ASOP #41 is to provide guidelines for clear communication and to acknowledge that “communication is an ongoing and interactive process.”

ASOP #41 may change the process that actuaries follow, the amount, or format, of materials we communicate to your clients. The goal is to have our Plan Sponsors be better informed throughout the year of the status of their Defined Benefit or Cash Balance plans. We are committed to do this at the least possible cost.

ACI is a pro-active firm, dedicated to protecting your clients while positioning them for a great retirement. ASOP #41 compliance is a perfect example of this. Please call us should you have any questions.

Not properly reviewing your Form 5500 can lead to big penalties

2011-05-27T09:45:00.000-07:00

By Yariel Chiong

Have you ever read the statement above the signature line on your Form 5500? It says:
“Under penalties of perjury and other penalties set forth in the instructions, I declare that I have examined this return/report, including accompanying schedules, statements and attachments, as well as the electronic version of this return/report, and to the best of my knowledge and belief, it is true, correct, and complete.”

If you are signing the form it is ultimately your responsibility that it is correct. That is why it’s important that your third party administrator (TPA) or whoever is preparing the form, sends it to you for signature with plenty of time for your review You must do your part by providing them with complete and accurate census when requested.

Poor preparation on behalf of your preparer is not an excuse that the government will accept. Ensure that you have properly reviewed the 5500 and accompanying schedules and are confident in it. Ask questions. If you are currently not an ACI client you can contact us for a limited review of your Form 5500 by one of our highly experienced staff.

Some background on the Form 5500:
The Form 5500, Annual Return/Report of Employee Benefit Plan, including all required schedules and attachments must be filed by the 7th calendar month after the end of the plan year unless a Form 5558 is filed and received by the Internal Revenue Service (IRS) before the due date. This will give you an additional 2 ½ months to file the form without penalties. So for example, if your plan is a calendar year end plan your Form 5500 will be due August 1, 2011 since July 31, 2011 lands on a Sunday this year. And if a Form 5558 is filed for extension, your Form 5500 will be due October 17, 2011.

All plans filing on or after 01/01/2010 are now required to be filed electronically through the Department of Labor’s Employee Benefits Security Administration (EBSA) website www.dol.gov/ebsa.

Penalties:
If your form is late, IRS penalties are $25 per day up to a maximum of $15,000. Department of Labor (DOL) penalties can be up to $1,100 per day with no maximum. In addition, for willful violations on your Form 5500, individuals can face up to $100,000 fine and/or imprisonment up to 10 years.

What to do?:
Ask questions! Do not sign and submit the forms until you are satisfied with the answers. If you have any questions for which you cannot get answers, call us!

New 408(b)(2) Compliant Engagement Contracts Will Expose the Industry’s Hidden Fees

2011-05-24T09:21:00.000-07:00

By Yariel Chiong
With the Department of Labor’s (DOL) regulation coming into effect this January 1, 2012 ACI has revisited its engagement contract to go above and beyond the requirements set by the DOL

With the passing of 408(b)(2), plan sponsors will for the first time know what their third party administrator (TPA) and other vendors to their retirement plan have been keeping from them in revenue sharing or hidden fees. ACI has been an industry leader disclosing all fees and distributing revenue sharing to clients for some time now. ACI discloses indirect and direct compensation to its clients, returning 80% of revenue sharing to clients, keeping 20% only to offset the cost of the accounting required to distribute the monies.

As a “responsible plan fiduciary” you must ensure that you review and understand all vendors’ contracts raising any questions you may have to them. Vendors are required to send you a 408(b)(2) compliant agreement contract which among various other things must:

1. Clearly describe the services provided to you

2. State all fees charged to the plan sponsor

3. Disclose any direct and indirect fees received

Click here for a link to the Spring Issue of The ASPPA Journal for more information on what you should find in your service agreement from your Third Party Administrator.

ACI has been certified with CEFEX for the last 3 years and currently holds the Service Provider Seal mentioned in the article. As a responsible fiduciary, working with a certified TPA makes sense. You can rest assured that your agreement goes above and beyond the DOL’s requirements and that your plan will not become disqualified. Contact us to find out more information or to have an in-depth review of your plan.

ACI "Boot Camp" keeps your retirement skills sharp

2011-05-04T14:07:00.000-07:00

By Yariel Chiong

Just in time to get your retirement skills fit for summer ACI is holding its May seminar “Boot camps.” Our next seminars will be on Wednesday, May 18th at our Torrance office. Don’t miss out on these very popular seminars, seating is limited. To sign up contact Yariel Chiong @ Yariel.Chiong@acibenefits.com to register. CPE credit is available.

ACI regularly holds both “Annual Plan Basics” and “401(k) Plan Basics” seminars in 1 action packed day. Here attendees will find out about the newest IRS and Federal regulations, hot water issues which can disqualify their plan or lead to costly corrections and a behind the scenes look at what exactly a Third Party Administrator (TPA) does every day for your plan or client.

These seminars are led by 2 of our top “Drill” instructors with a combined 36 years of experience in the industry. You are guaranteed to leave these seminars with a better understanding of how annual plan administration and 401(k) plans work. Previous attendees or “recruits” have had great things to say about the seminars, “The presentations and material were given at a very good pace. The real-life examples used based on the years of experience in 401(k) plans were entertaining and very beneficial in explaining key points.”

Contact Yariel Chiong @ Yariel.Chiong@acibenefits.com to register. Be sure to include the date of the seminar, name, company, title and email address.

For additional information visit our website at http://www.acibenefits.com/sections/library/speeches-and-seminars.html

It's Bond...Fidelity Bond

2011-04-22T08:37:00.000-07:00

By Yariel Chiong

Qualified Retirement Plans generally have two types of bonds that are required: (1) the Employee Retirement Income Security Act (ERISA) bond commonly known as a fidelity bond and (2) the small plan filer bond. The bonding requirements may be satisfied with one bond. Two separate bonds may have to be purchased if the surety company will not issue one bond that exceeds the $500,000 bonding limit of the ERISA bond.

ERISA requires employee benefit plans to be bonded. The amount of the bond may not be less than 10% of the amount of funds being handled and need not be greater than $500,000. However, the maximum liability increases to $1,000,000 if the plan’s assets are invested in securities of any sponsor or contributing employer. If a plan sponsor files a Form 5500-EZ you are not subject to any bond.

The small plan filer bond is required if less than 95% of the plan's assets are invested in "qualifying plan assets" and the plan sponsor does not want a written opinion from an independent qualified public accountant. The amount of this bond may not be less than the value of the plan assets which are not qualifying plan assets, without regard to the bonding limit described above.

Qualifying plan assets are any of the following types of investments: (1) qualifying employer securities, (2) participant loans, (3) assets held by a regulated financial institution, (4) registered mutual funds, (5) investments and annuity contracts issued by an insurance company, and (6) assets in participant-directed accounts.

It is important to point out that fiduciary liability insurance is not the same as an ERISA bond. An ERISA bond is required and protects the plan against fraudulent or dishonest acts on the part of fiduciaries or persons who handle plan funds. Fiduciary liability insurance is not required and does not protect the plan from fraudulent or dishonest acts. Fiduciary liability insurance does protect the fiduciaries from liability occurring by reason of other than fraudulent or dishonest acts. However, fiduciary liability insurance must permit recourse by the insurer against the fiduciaries.

It is important for fiduciaries to verify they have the proper amount of coverage. It may take a single or multiple bonds to comply with current Department of Labor (DOL) guidance. Ask your ACI administrator or consultant to review if you are ERISA compliant. The U.S. Treasury Department published an updated list of approved surety bond providers. You can access the approved list by visiting: http://www.fms.treas.gov/c570/c570_a-z.html. If your annual return indicates that you do not have a fidelity bond from a provider on the approved list, you may be contacted by the DOL requesting an explanation.

If your bond was issued by a company who does not appear on the approved list, contact your insurance agent regarding obtaining a bond from an approved company.

Do You Have a "To-Don't" List?

2011-04-04T16:19:00.000-07:00

Taken from BNET.com

What you don't do may be as important as what you do.

Some ideas are so good we wish we could take the credit for them. Unfortunately, we can't call this one original, so our hats go off to Tom Peters for first introducing this concept this way and Daniel Pink for introducing us to Tom.

A "to don't" list is "an inventory of behaviors that sap energy, divert attention, and ought to be avoided." You know, those things which keep you from executing your best ideas. The little things (or even big things) that block you from following up on your best intentions. Daniel Pink reports he keeps a list of these activities tacked above his desk.

What keeps you from focusing on your best ideas? Is it too much time on Facebook? Tracking a fantasy sports team online? Reading trashy magazines? Sometimes pursuing "too many good ideas" is something that deserves to be on a to-don't list. Pick the best and stick to them... don't chase every shiny new idea you come up with.

Make a to-don't list. Write them down. Keep them handy. They'll help you focus on the to-dos in your life.

What you should know before meeting with a 401(k) prospect

2011-03-18T11:06:00.000-07:00

Beginning with Calendar year 2009, 5500’s had to be filed electronically with the Department of Labor. All 5500’s were available on public information within 24 hours of filing. This is great for you as an advisor and I will tell you why.

When you review a 5500 before a prospect meeting you will walk into the meeting armed with talking points and questions. You will show your prospect that you took the time to be curious about them. You will make them feel special and you will be smarter. Some things to look for are:

1) If you go to the DOL website (www.efast.dol.gov/welcome.html) and the plan is not there, it is not a calendar year plan. When you talk to the prospect, tailor your conversations around their urgency, their deadlines. Look at their most current form on www.freeerisa.com instead.

2) Look at the effective date of the plan in 1c. If it was more than a couple years ago, has anyone looked at the plan since then? Is it still meeting the needs of the plan sponsor? When the plan was amended and restated for EGTRRA, were they given the opportunity to make other changes at the same time? This would have saved them money and will make you look like a star for mentioning it.

3) Look at the signature. If it is a typed name, it was filed electronically by the plan sponsor. If a signed copy is attached to the back of the package, that means the plan sponsor had the forms filed on their behalf. Their signature is now on public information! Were they aware of this before they submitted this way?

4) The Pension benefits listed in Question 8a or 9a will give you a good idea of the plan provisions. Code “2F” is an instant conversation point for you. It is an indication that this plan is intended to comply with ERISA section 404(c). 404(c) compliance is a way to abate Fiduciary liability. It is about process. It is almost assured that the plan is not complying with this code section. Have a small discussion about this code section and prove your value. Your prospect will want you back for more.

5) For plans large enough to require an audit, the audit will be attached to the filing. This is huge for you. It will give you an overview of the plan provisions. It will give you the assets held for investment! You can do a little homework and walk into that meeting with alternate investment suggestions. This was not easy for you to do before now.

This touches on only part of the 5500. There is so much more. Send me your contact information and the name of a prospect. I will assist you in developing talking points. When that prospect engages you, I want them to engage both of us. Together we will provide them with what all plan sponsors deserve, stellar service, a pro-active TPA and a fabulous advisor who will ensure a great retirement for themselves and their employees!

Tobi Cogswell,
Director, Consulting Practice
Tobi.Cogswell@acibenefits.com
310.212.2623

Is It Real, Or Is It Memorex

2011-03-11T08:52:00.000-08:00

By Tobi Cogswell

Have you ever noticed how Bundled Providers speak to clients as if they’re reading from a gospel? In their world, everything seems so rigid and matter-of-fact. They’ve been known to adopt document provisions on behalf of your clients -- and not even inform your client of the elections that were chosen. Bundled Providers seem to do it their way.

But, what about your clients’ preferences? What’s best for them? Who should decide?

Here’s an example that helps make the point:

You have a client whose plan has an Automatic Contribution Arrangement. The plan document has the provision that participants can opt out within 90 days of their first deferral.

The notice prepared by the bundled provider states: “If you process any fund exchanges, loans or withdrawals within your account, you are no longer eligible for this withdrawal”

And, here is the critical point. Did they talk to your client about this? My guess is no. Was this approach in the plan document? Not likely. Is this provision in the law? No. It isn’t.

Protect your clients.
This is exactly why you and your clients need to partner with a consultant who will keep their interests at the forefront, and who will design and administer a plan that meets their needs. We may ask them some tough questions, like “why did you want this plan in the first place?” and “what do you want to accomplish with it now?” That will enable us to design, or re-design a plan that’s strong, flexible, attractive to their employees and something we all can be proud of. Something that will meet the needs of your clients now and as their businesses evolve.

We’re advisors. Your client is the boss. They should get what they need!

Now is the perfect time to talk to your clients about unbundling their administration and moving the compliance to ACI. They deserve to work with a firm that’s pro-active and always focused toward them. Our goal is to save them money and let them concentrate on doing what they do best – running their own businesses.

Call us before they pay for another year of average work.

Tobi Cogswell

Director, Consulting Practice

(310) 212-2623

The Year In Review – New Year’s Wishes from ACI

2010-12-31T11:19:00.000-08:00

It’s that time of the year again, when we make some wishes and resolutions for next year. 2010 is coming to an end in what seems to have been too quick and 2011 is peaking from around the corner. Excitement and hopefulness abound. This year we saw the groundbreaking enactment of healthcare reform and the regulations on 408(b)(2) come one step closer to final, Republicans took over the House, the Bush Tax cuts were extended and the stock market bounced up and down unsure of which way it wanted to go. A volcano which most of us can’t even attempt to pronounce “Eyjafjallajökull” erupted in Iceland keeping our Director, Consulting Practice, Tobi Cogswell, out of the country longer than expected (we did get her back) and finally ending in other good news: 33 miners were rescued in Chile.

ACI would like to wish you all a Happy New Year and a prosperous 2011. Here are some wishes from our staff:

May 2011 bring prosperity to your business and a new awareness to your plan participants as to the importance of saving for their own retirement.
May your 2011 be successful and may you leave your work at the office when you go home.
-Alison Murray, QKA, QPA, ERPA
Lead Administrator, Manager
To good health and may you also realize your goals both personally and professionally in 2011.
-Yariel Chiong
Marketing Manager
May you prosper in 2011!
May you have enough prosperity to make a substantial contribution to your plan!
May your employees learn the art of saving for their retirement!
May you have peace, love and joy!
-Gerri Wheeler
Consulting Administrator
My wish for you: curiosity, excitement, wonder and success, both personally and professionally. Call and tell me, I’ll be so happy for you.
-Tobi Cogswell
Director, Consulting Practice
May you balance the benefit of savings versus consumption to allow you to have greener balance sheets both personally and professionally.
-Cortney White
Business Development Manager
Cheers to a new year and another chance for us to get it right. Let ACI become a part of your team and you will have your chance to get it right this year.
Happy New Years!
-Sabrina. Fendley
Assistant to the President
May we all retire in 2011!
But if we don’t, may we fit into one of two categories:
* Those of us heading to a dreamy retirement with a plan at ACI, and
* Those of us at ACI helping plan your retirement dreams.
-Jeff Esmond, ERPA, CPC, QPA, QKA
Consulting Administrator
As we begin a new decade my wish for our clients and their advisors for 2011 is to get America retired, starting with the Baby Boomers. In my view it takes a proactive team to accomplish this result.

We would love to be on your team.

Happy New Year!
-Pat Byrnes, COPA MSPA, EA, MAAA
President

There's still time to implement a qualified retirement plan for 2010

2010-12-10T10:58:00.000-08:00

The clock is ticking. Business owners who wish to implement a qualified retirement plan for 2010 in order to take a corporate deduction and pay less taxes, must sign a plan document by December 31, 2010. Money does not need to be contributed by December 31st but a document must be signed.

Regardless of how old you are, or how many employees you have, we will work with you and your CPA to meet your needs.

One beautiful scenario is to implement a profit sharing plan for 2010, and activate 401(k) provisions effective 1/1/11. This will allow you to make a profit sharing contribution and take a tax deduction for 2010, and allow you and your employees to personally begin to participate preparing for your retirement in 2011. This will also give your financial advisor time to determine the appropriate recordkeeper for you, complete the contracts and enroll your employees before the first 401(k) deferral (generally the first payroll in January).

You have until September 15, 2011 to contribute the profit sharing contribution that you deduct for 2010.

It's a win win WIN but time is running out. Contact us right away to design the best plan for you.

Cortney White Tobi Cogswell Jeff Esmond (Hawaii Office)
(310) 212-2607 (310) 212-2623 (808) 389-5979

2010-10-29T13:51:00.000-07:00

October 28, 2010

Retirement Plan Limits for 2011 Announced

On October 28, the Internal Revenue Service announced the cost-of-living adjustments that will be applied to the dollar limits in all tax-qualified retirement plans in 2011. The limits apply to calendar year plans, if you have an off-calendar plan year end, contact your plan administrator to see if there are any changes to your plan.

Defined Benefit Plan LimitsThe limitation on the annual benefit under a defined benefit plan remains unchanged at $195,000.

Defined Contribution PlanIndividual ContributionsThe limitation on contributions made on behalf of an individual to a defined contribution plan remains unchanged at $49,000. Individuals will still be limited to contributions of 100% of compensation or $49,000, whichever is less.

401(k) DeferralsThis dollar limitation on employee deferrals into 401(k) plan remains unchanged at $16,500.
This is a calendar year limit regardless of plan year end.

Catch-Up ContributionsFor individuals age 50 and over, the catch-up contribution remains unchanged at $5,500.
This is a calendar year limit regardless of plan year end.

Annual Compensation LimitsThe maximum annual compensation that may be recognized by a plan remains unchanged at $245,000.

Key EmployeesThe dollar limitation for determining whether an employee is “Key” for officers in a top-heavy plan will remain unchanged at $160,000.

Highly Compensated Employees

The dollar limitation on compensation used to determine which employees are considered highly compensated remains unchanged at $110,000. Thus, employees who earn in excess of $110,000 in the plan year beginning in 2010 will be considered highly compensated for the plan year beginning in 2011 and employees who earn in excess of $110,000 in 2011 will be considered highly compensated employees in 2012.

401(k) Rollover Bill Passed by Congress- H.R. Bill 5297

2010-09-24T16:24:00.000-07:00

By Alison Murray & Yariel Chiong

With the recent passing of H.R. Bill 5297, 401(k) participants of eligible plans can immediately roll over all or part of their account balances into a Roth 401(k) Plan. To allow for this the plan will need to be amended. Consideration should also be made as to the viability of allowing Roth conversions within the Plan as well as allowing for Roth deferrals. If the rollover is made this year, the participant can elect to pay the tax on the money rolled over in equal parts in 2011 and 2012 helping to ease their tax burden. These rolled over funds will earn tax-free investment income and will not be taxed when the participant receives a distribution.

Depending on the participant’s tax bracket and future tax bracket this could reduce their tax liability. Participants considering this should ask themselves:

Can I afford to pay the taxes over the next 2 years?
Do I anticipate being in a higher tax bracket when I retire?
Do I feel confident that the taxes I pay now would be less than the taxes I would pay later if I did not convert funds into a Roth 401(k) resulting in a financial benefit to me?

Contact your ACI Plan Administrator if you would like more information.

Ever Wonder What Clients Think About Your Business?

2010-09-17T09:33:00.000-07:00

By Yariel Chiong

At ACI, we have built a brand that truly believes in being client centered; always putting the client first and listening to their comments and suggestions. We wanted to take a moment and just brag on ourselves by sharing with you some of the great compliments our clients have told us recently:

“Alison - You are truly an amazing speaker who held my interest and explained everything thoroughly.”

“Hannah - You know no one ever really chooses to be put between a rock and a hard place but I'm just really glad that I came across you to help me with this. Know that I appreciate all you're doing.”

“Tobi - I have put ACI before my mother on my speed dial.”

We appreciate all the great compliments we receive from our clients and our ACI team shares them internally. ACI has been in business for over 26 years; one of the reasons we have been able to accomplish this is by having a staff who believes in creating happy and satisfied clients. ACI is able to repeat this experience for all our new and existing clients.

Tell us what you think. We’re not resting on our laurels here. Our goal is to make you a raving fan and then brag about what you say next!

BONDS COVERING NONQUALIFYING PLAN ASSETS

2010-07-20T16:43:00.000-07:00

By Gerri Wheeler

If you have nonqualifying assets in your plan, you now know that the insurance companies are charging higher premiums to cover those assets. Recently, a client of mine received a quote for $3,000 for a one-year bond that covered $1.75 million of assets. In contrast, if he did not have non-qualifying assets, his bond would have been about $600 for a three-year bond, which is an $8,400 difference.

Creative Workaround

Consider obtaining two or more general ERISA bonds from separate approved bonding companies. The IRS issued Field Assistance Bulletin No. 2008-04 that provides guidance to agents who review plans under audit. In that bulletin, guidance states that a plan can obtain multiple bonds from multiple surety companies as long as the company is on the Department of Treasury’s list of certified surety companies.

Let’s take the client referenced in the first paragraph; he could obtain an ERISA fidelity bond for $1,000,000 from his current certified surety company. Then obtain an additional ERISA fidelity bond for $750,000 from another certified surety company.

Alternatively, the plan fiduciary could cover the qualifying assets and specifically designated non-qualifying assets under one ERISA fidelity bond and obtain an additional ERISA bond for the remaining non-qualifying assets from another certified surety company.

Save some money, do some shopping and get the results you want! If you need the Department of Treasury listing, please contact your Consulting Administrator at ACI and they will be glad to provide you with the listing.

References: 29 C.F.R. § 2580.412-21, 29 C.F.R. § 2580.412-20

ACI RENEWS ASPPA RECORDKEEPER CERTIFICATION- STILL IN A CLASS OF OUR OWN

2010-07-09T14:08:00.000-07:00

By Yariel Chiong

The Department of Labor (DOL) defines who is considered a Fiduciary to the plan and their responsibilities to plan participants and beneficiaries. As a responsible fiduciary, one of the most important responsibilities is to select a service provider for the plan, gathering information about their business practices and quality of service.

ASPPA and CEFEX have partnered to offer third party auditing of service providers which helps plan sponsors assess the competency of their Third Party Administrators.

ACI has recently undergone the renewal of our ASPPA Recordkeeper Certification. We still maintain as being the only ASPPA Certified Recordkeeper in California. This is a testament to our dedication to our clients and advisors in offering them a firm which is:

1. financially sound
2. following fee disclosure guidelines under the DOL’s proposed 408(b)(2) regulation
3. trustworthy and ethical in its business practices
4. reducing risk for the plan sponsor and their employees
5. using secure IT systems
6. defining quality control and management systems with clear processes and procedures

The certification closely resembles the ISO 9000 certification given to manufacturing firms and is performed by an outside auditing firm. ACI has gone through extensive reviews with 17 critical practices and over 100 separate criteria all to ultimately give our clients peace-of-mind.

Contact an ACI Consultant or Administrator to learn more about why you should be working with an ASPPA Certified Third Party Administrator such as ACI. The proof is in our quality staff and their work.

Some Funding Relief for Defined Benefit Plan Sponsors

2010-07-01T09:14:00.000-07:00

By Yariel Chiong & Alison Murray

On Friday June 25, 2010, President Obama signed the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (H.R. 3692). This Act gives plan sponsors of defined benefit plans new options for required annual contributions, giving some much needed relief to cash strapped employers hit by the economic downturn.

Under the Pension Protection Act of 2006 (PPA) the difference between the value of benefits earned by participants and the assets in the plan is called the shortfall amortization base. Contributions must be made to the plan to make up this shortfall over a 7 year period.

Single-employer plans are given 2 new amortization options under H.R. 3692 for the shortfall amortization base amount recognized under the ERISA and IRS Code. The “2 Year Plus 7 Year” option gives plans sponsors 2 years of interest-only payments plus an additional 7 years for the remaining balance. The “15 Year” option gives employers 15 years vs. 7 years for payment of the shortfall amortization amount.

This relief is available for any plan year for which the minimum funding deadline has not yet been met (8 ½ months following the end of the plan year). So this relief would apply for plan years ending on or after October 31, 2009 and is available through plan years ending in 2011. If employers choose to apply for 2 plan years they must elect the same type of extension for both years.

Multiemployer plans are given minimum funding requirements determined on a ledger. Under the Act the amortization level may be increased from 15 years to 30 years.

The Act has also extended the Worker, Retiree and Employer Recovery Act of 2008 allowing the funded status determined for 2008 to apply for 2009 and 2010 keeping plans from being frozen if they fall under 60% funded during those years.

Although the new Act does not release employers from their contribution requirements to the plan, it does allow them to free up more cash which may be used for other business expenses.

Contact your ACI Consultant or Administrator for more information and how these changes could be of benefit to your current plan by lowering your minimum required contribution.

Fee Disclosure for the People

2010-06-25T08:58:00.000-07:00

By Yariel Chiong

While “fee disclosure” is currently not mandated by government, Chairman of the Committee on Education and Labor, Senator George Miller has been one strong advocate fighting to bring fee disclosure back into the H.R. 4213 bill. The disclosure which was based on the “401(k) Fair Disclosure and Pension Security Act” authored by Senator Miller was included in the May 28, 2010 version approved by the House of Representatives. But as of June 8, 2010, the bill has been stripped of the fee disclosure in the Senate’s version. The 401(k) fee disclosure would have informed plan participants of fees being charged to them by service providers. This fee disclosure will most likely not make it back into the bill.

The reason for the Senate’s exclusion of the provision is because they feel they will derail the Department of Labor’s (DOL) own fee disclosure efforts proposed by regulation 408(b)(2) which will mandate service providers to disclose compensation to plan sponsors once passed.

ACI discloses its fees to plan sponsors. As part of our pro-active company culture we updated our engagement letters over 2 years ago to adhere to the DOL’s proposed regulation on fee disclosure.

Some of the things clients can expect from ACI:

Fee transparency allows them to see where their money is going
An ethical company which charges fairly for their services
We share revenue received from vendors with our clients sometimes covering all of our cost to the client
An experienced staff with an average of over 15 years of experience

ACI is on the client’s side. We pride ourselves on being on the forefront of fee disclosure from service providers and will continue to provide you with information on the proposed H.R. 4213 bill and 408(b)(2) regulation.

IRS Questionnaire Update

2010-06-17T10:41:00.000-07:00

By Yariel Chiong

We recently contacted our clients and advisors to let them know that the IRS is conducting a random Compliance Check of 1,200 401(k) Plans. Plan Sponsors who received the questionnaire have 90 days (without) extension to complete and return it. Not completing the questionnaire automatically will result in an IRS audit.

Plan Sponsors should make sure to provide complete and factual answers to the detailed questions regarding their 401(k) plans. Not understanding, or partially answering questions may result in costly enforcement by the IRS. Immediately contact your ACI administrator who can help you answer these questions on a time and charges basis.

The purpose of the IRS questionnaire is to determine the following:

Potential compliance issues
Any operational Issues
Additional education and outreach guidance that may be helpful for the IRS to provide plan sponsors to improve compliance

NOTE: Some multiple question answers provided are unacceptable under the law and will lead to an IRS audit. There are also similar questions repeated throughout the questionnaire, and plan sponsors should be aware of the relationship between the questions. Be careful not to inadvertently answer a question which is legally unacceptable unless it is factually the correct answer.

If you have received a questionnaire contact your plan administrator with the compliance questions. We will answer these questions for you.

Changes to EFAST2 e-signature

2010-05-21T11:19:00.000-07:00

By Yariel Chiong

The DOL has announced a new option that allows form preparers, such as ACI, to electronically sign 5500 forms on behalf of the Plan Administrator (client). This new option will be offered to our clients which do not have access to the internet or do not wish to receive signing credentials (User ID and PIN).

EFAST2 which applies to plan years beginning in 2009 states that Forms 5500 and 5500SF must be filed electronically with the Department of Labor (DOL). The Plan Administrator is required to receive signing credentials in order to electronically sign the Form 5500/5500SF posted by ACI to the FT Williams website. The client transmits the signed return to the DOL and also retains a physically signed copy of the return for their records. Instructions on how to electronically file your return were posted on our ACI blog in April and can be viewed at any time.
The EFAST2 I-File system has been updated to include a signing credential for service providers. In order to have ACI electronically sign on behalf of clients the following is needed:

1. Written authorization from the client will be required to allow us to electronically sign on their behalf using our credentials. This is different than the credentials the client receives from the DOL.

2. A paper copy of the Form 5500 must be manually signed by the employer and a pdf copy of the signed copy will be attached to the electronic filing done by ACI. Please note: the image of the first 2 pages of the manual employer signed Form 5500 will be visible on the DOL’s electronic public disclosure website. Having the manual client signature public visible raises the possibility of identity theft.

3. ACI will inform the employer of any inquiries from EFAST2, DOL, IRS or PBGC concerning the filing.

We recommend that plan sponsors still obtain their own signing credentials from the DOL and file their own Form 5500.

We will have more information regarding the new change soon for those clients wishing to have ACI sign the return on their behalf.

IRS Questionnaire

2010-05-21T11:16:00.000-07:00

By Tobi Cogswell

The IRS announced last week that it will be sending compliance questionnaires to a number of 401(k) plans. These questionnaires are expected to go out at the end of May. They are 46 pages long. If you get one, you have 90 days (without extension) to complete and return it. Do not ignore it. It was confirmed last week at the NIPA Seminar that if you do not return the questionnaire you will be audited. Contact your plan administrator for help with the compliance questions. We will be happy to help you on a time and charges basis.

Protect Retirement Plans By Contacting Your Member Of Congress Now!

2010-05-06T13:58:00.000-07:00

Congress is considering a proposal that will threaten the use of cross-testing used for defined contribution plans as well as combination defined contribution and defined benefit plan design. Specifically the ability to have different allocation formulas for different groups and the interest rates used in the calculation are in BIG JEOPARDY!

This affects the vast majority of small plans and many large plans. We need your help to send a strong message to Congress to stop this misguided proposal. Given this tough economy, now is not the time for Congress to make it more difficult to provide retirement benefits to employees.

We have made it easy for you. Please go to the link below and in a matter of seconds you can get the word out to your member of Congress that they should NOT pass any proposal negatively affecting retirement plans. Please feel free to get your employees involved since their benefits may be threatened as well.

Thanks for your support!

Pat Byrnes, COPA MSPA, EA, MAAA
President

In the “take action” block of the link please select Small Business Owner or Practitioner as appropriate.

For Small Employers please modify the 1st paragraph and Practitioners the 4th paragraph.

http://www.mmsend57.com/ls.cfm?r=239497387&sid=9445266&m=1003356&u=ASPPA&s=http://www.asppa.org/sp/CapWiz-Pages/Contact-Congress.aspx

Plan for Unforseen Disasters!

2010-04-20T09:14:00.000-07:00

by Tobi Cogswell

Take this opportunity now to beef up your retirement plan and avoid unforseen disasters.

Take advantage of cost savings both as an empoyer and as a plan participant.

1) Employer contributions to a qualified plan are tax deductible;

2) Employee deferrals into a 401(k) plan are pre-tax

Don't just plan for a dignified retirement, plan for the ability to roll with the punches no matter what nature or life throws at you. Help your employees plan for this as well.

As you read this I am stranded in Ireland by a volcanic disturbance no one could have predicted. I have thousands of dollars in unplanned expenses for hotels and meals, phone calls, emergency prescription refills and the uncertainty of when I'll be able to come home.

Think of your retirement plan as trip insurance. You don't want to have to be counting your pennies and sleeping in the airport. You don't want to worry. We are living longer now than ever before; make sure you have enough so you can have a great life after retirement, not just an adequate one.

ACI's consultants will help make that happen. We will partner with you and your financial advisor to ensure your plan is designed to help weather the volcanic storm.

Call us today at (310) 212-2600 for an analysis of your plan design. Buy some peace of mind and potentially cost savings at the same time. Ask for Jay Luber - I'm writing this from Ireland.

EFAST 2

2010-04-15T11:14:00.001-07:00

Please view the presentation for more information on how to electronically file your 5500.

EFAST 2

View more presentations from Actuarial Consultants, Inc..

Do It Right The First Time

2010-04-02T14:02:00.000-07:00

-By Tobi Cogswell

We recently took over two cases from another Third Party Administration firm. We got these cases because:

The other firm wasn’t pro-active. Everything was done last minute or after the fact.
The other firm did no consulting. No choices were ever discussed with the plan sponsor.
The other firm did not look at the plan design and make changes at the same time the amendment and restatement for EGTRRA was done, thereby saving the plan sponsor some money on document costs,
The other firm did not return phone calls!

We also took over a 401(k) plan from a different Third Party Administration firm and we got this case because:

The other firm never discovered that a stand-alone 401(k) no longer met the needs of this growing law firm.
The other firm never discussed the advantages of having a safe harbor 401(k) and how that would eliminate ADP test failures AND satisfy top heavy.
The other firm never discussed the benefits of having a cash balance plan.
The other firm never disclosed they were receiving revenue sharing from the recordkeeper.

At ACI:

We don’t have to be taught about client service.
We understand problem solving.
We disclose all revenue sharing.
We want to design plans that will grow with your business.

Tell your friends about us.

Jay Luber – (310) 212-2607 for prospect and new client issues,

Tobi Cogswell – (310) 212-2623 for prospect and new client issues, and 5500 reviews,
Jeff Esmond – (808) 389-5979 for all business in Hawaii

5 Things you should know as a Sponsor of a Defined Benefit Plan

2010-03-19T10:05:00.000-07:00

- by Pat Byrnes

Sometimes in life you learn the right things to do by observing when something went terribly wrong. On the front page of the Los Angeles Times business section on March 16, 2010 an article entitled “For CalSTRS, a bet that failed“ by Marc Lifsher is a stunning example of what not do to do with a defined benefit plan. That’s the government sector which is very different from the private sector.

Defined benefit plans are marvelous tools to solve…well, retirement planning problems. They can be very flexible and very rewarding too if you pay attention to a few things.

Here are my thoughts on private sector defined benefit plans:

1. Confront the brutal facts. When your business or profession is going through turbulent times, pay attention to your plan. Ignoring never helps. Surprises are worse if you wait.

2. Deal with a pro-active actuarial firm like ACI. The pro-active piece is very important. We contacted all our defined benefit clients at this time last year and discussed with them the thought of freezing their DB plans before anyone incurred 1,000 hours in the 2009 plan year. This needed to be communicated and executed by about mid May 2009, depending on the number of participants. Most decided to do so. They will be able to fund out their asset losses before they unfreeze those plans.

3. Plan Design matters. Your goals for the plan and the flexibility needed may be significantly different than your current document specifications. The Pension Protection of 2006 changed a lot…and it’s not all bad. Deductions have increased significantly. Baby Boomer entrepreneurs and professional entities have embraced cash balance plans in conjunction with defined contribution plans.

4. Coordinate the plan design and funding rules with the investment of the assets. Pay attention to how the investment of the assets compares to the plans underlying assumptions. Make a conscious choice on the investment decisions. If the underlying plan interest rates are in the 5%-6% level and you shoot for a 9%-10% growth rate, know that you are taking a risk.

5. Be willing to think differently about your plan and the funding of your own retirement.
We are very skilled with these plans. We would be happy to do a quick review for you if you provide us with a signed copy of your plan document and latest actuarial report. Please call me at (310) 212-2612 or email me at: pat.byrnes@acibenefits.com.

Change for Tax form reporting for 2009 Plan Years!

2010-03-05T14:30:00.000-08:00

By Alison Murray

Medical Groups and Law Firms often have a retirement plan configuration where individual PC doctors or attorneys are in their own Defined Contribution plans, with the staff in a separate plan. The entire arrangement is considered a Controlled Group. All plans are combined for various compliance tests. Until 2009, the individual PC’s, as plans of a controlled group, could not file a short IRS Form 5500-EZ. The individual PC’s were also required to have a bond.

The definition of a “one-participant plan” has changed for purposes of filing 5500’s for 2009 plan years. Even if you are part of a controlled group, if your personal PC-owned plan contains only you, or you and your spouse, you can file a Form 5500-EZ. In addition you are no longer required to have a bond covering the assets of the trust.

If your plan assets are $250,000 or less you don’t have to file anything! The only requirement is that if you terminate your plan you must file a form in the final year.

What does this mean for you?

5500-EZ’s must still be filed in paper form. They can not be filed electronically. It’s one less thing for you to have to learn this year and you can concentrate on doing what you do best.

The cost of 5500-EZ preparation is less than the cost to prepare a regular Form 5500 so you’ll save some money!

5500-EZ’s are not uploaded to public information. You have more privacy.

Larger plans consisting of partners or partners and spouses only will also enjoy this newly-minted definition of “One Participant Plan”. Take advantage of it.

Remember, you heard it here first!!

ACI Expands to Hawaii

2010-02-22T09:28:00.000-08:00

By Yariel Chiong

We are pleased to announce that we have opened our doors in Hawaii and are now doing business there.

Our Hawaii office is led by Jeff Esmond, Consulting Administrator. Jeff began his career in the retirement industry in Honolulu in 1991 and most recently worked for Aon Consulting in Honolulu doing consulting and plan administration for small and large defined benefit and defined contribution plans.

Jeff holds the Qualified Pension Administrator (QPA) and Qualified 401(k) Administrator (QKA) designations from the American Society of Pension Professionals and Actuaries (ASPPA) and is currently working on ASPPA’s Certified Pension Consultant (CPC) designation. Additionally, he also recently was the first Hawaii resident to have received the new federal designation of Enrolled Retirement Plan Agent (ERPA) which means he has been admitted to practice before the Internal Revenue Service.

We are all very excited at ACI as we begin this new venture.

ALOHA

How to Identify Quality Recordkeeping

2010-02-03T09:16:00.000-08:00

By Gerri Wheeler

Today I received such a great question from a participant in the “Plan Administration Seminar” that ACI sponsors that I had to share. The participant asked, “What can a Plan Sponsor look for to assure that their Recordkeeper is providing quality recordkeeping?” In response, there are several touch points that we can recommend:

· Monitoring the “Ins” – As a Plan Sponsor, you have the ability to track and monitor the contribution actually made to your plan. When you make a deposit of deferrals, matching, loan repayments, rollovers or employer contributions, double check that the totals imported match the totals received. If you can match your totals, you can be assured that the import has worked correctly.

· Monitoring the “Outs” – When a distribution occurs, review the amount actually distributed to the participant to the elections the participant made on their distribution election forms. Check for correct address. Were taxes withheld as directed?

· Paper Investment Elections (vs. Website) – Check to make sure that the Recordkeeper has correctly recorded the participant’s instruction on the investment election.

· Cash Account – does the activity in the cash account make sense? For instance, you can see your deposits that match payroll and the withdrawals that match the distribution instructions. Are forfeitures moved into this account when an ex-employee receives a distribution? Are there fees paid from this account, if so, to whom?

· Education – does your recordkeeper keep you informed of legislation that affects the operation of your plan? Do they provide reports that help you monitor the activities of the participants? Are they suggesting that an enrollment meeting occur?

If you have any other questions please don’t hesitate to contact an ACI consultant or your plan administrator. We have the knowledge. Let us share it with you.

News Flash: IRS Forms Must be Electronically Filed!

2010-01-19T11:38:00.000-08:00

For plan years beginning in 2009, the form 5500’s must be filed electronically with the DOL

Paper forms will no longer be accepted by the DOL unless you are eligible to file a 5500EZ (only for those plans that are maintained by sole proprietors or partnerships, that are not part of an affiliated service group or controlled group and that do not have rank and file employees are eligible ).

This rule applies even if you don't own a computer! The IRS has recommended that if you do not have access to a computer, you use your local library, internet café or come into our offices.

The Plan Sponsor will be required to obtain a user name and PIN from the DOL (credentials) in order to submit the form 5500 electronically to the DOL.

There is a brewing controversy over the DOL’s refusal to allow the Plan Sponsor to share their credentials with third party administrators for purposes of filing the 5500.

Please see the content of an email below from ASPPA (American Society of Pension Professionals & Actuaries) that includes a Petition to Phyllis Borzi, Assistant Secretary/EBSA US Department of Labor. You may want to sign and electronically file this Petition.

Regardless of the outcome on the sharing of the credentials, ACI will be setting up a webinar on our website that you can review at your convenience on how to file electronically and how to set up your DOL signing information. We anticipate this webinar will be available in the next few weeks.

We recognize that you will be going through a learning curve on this new requirement. We are committed to helping you through this change. Your ACI administrator will be co-coordinating with you in setting up the plan administrator, plan sponsor and CPA if applicable for the electronic filing.

The following is an email from the American Society of Pension Professionals & Actuaries (ASPPA) regarding the EFAST2 filing.

Sign the EFAST2 Petition!

ASPPA is soliciting your support in asking the Department of Labor to modify its position with regard to the sharing of EFAST2 credentials. Many practitioners have expressed concern that DOL’s current position will hamper their efforts to assist clients with timely filing of Form 5500. IRS and PBGC have developed systems that recognize the key role played by service providers in achieving compliance. ASPPA proposes that DOL implement similar rules so that filing signers could, at their option, choose to share their credentials with their service providers to facilitate electronic filing.

Read the entire letter here.

If your firm wishes to endorse our efforts, please click here and you can provide the necessary information to have your firm’s name added to the list of signatories on the above letter. Be sure you are authorized to sign on your firm’s behalf and only one member of your firm completes the form.

You do not have to be a member of ASPPA to support this effort. ASPPA believes there is strength in numbers and hopes you will take this opportunity to let DOL know your firm is committed to compliance.

Thank you for your support.

4245 North Fairfax Drive Suite 750 Arlington, VA 22203 703.516.9300 www.asppa.org

Business New Year's Wishes from ACI

2009-12-30T08:21:00.000-08:00

by Tobi Cogswell

We at ACI come to work every day wanting to make a difference. I am proud to work with everyone and I hope that next year you have the opportunity to get to know them even more than you do now. Below are some New Year’s Wishes for you:

*May your T’s always be crossed and your I’s always be dotted!
*To a successful 2010 filled with profitability and market growth.
-Yariel Chiong,
Marketing Manager

*Best wishes for a prosperous 2010!
-Stacy Bass,
Accounting Manager

*For 2010 I would like to encourage plan sponsors to increase participant awareness about participant loans and encourage participants only to take a loan from the plan as a last resort as the participant will never recoup the lost earnings on the funds that were distributed.
-Alison Murray,
Lead Administrator, Manager

*May all of your gains show up in your portfolio and all of your losses show up on your bathroom scale!
-Pam Binder-Escobosa,
Director, Client Services

*May you always have a post-it within arms reach!
*May you prosper and know all good things including the responsibilities of being a fiduciary!
*May you be able to defer more than you ever have!
*May you have joy in the first year of contributing your catch-up contribution!
*May your employees understand the benefit that you are providing them and be grateful!
*May you have the income to put in a cash balance plan so you can aggressively save for retirement!
*May you become paperless and green!
*May your census information be perfect without any changes!
*May you look 20 years younger even if you are at normal retirement age as prescribed by the Pension Protection Act of 2006!
-Gerri Wheeler,
Consulting Administrator

*My 2010 wish for our clients and their advisors is to think beyond survival and build strategies to thrive in this chaotic economy; and in that fresh thinking develop the strategy for the retirement plan and incentive plan you have or need to have to make your company stronger for the sake of you and your employees. Oh, and have fun in the process!
-Pat Byrnes,
President

Compensation - do it right or it will cost you

2009-12-16T15:35:00.000-08:00

- By Tobi Cogswell

Compensation is one of the biggest corrective issues we come across on takeover plans. It is so important that the compensation used for testing and allocations is the compensation as defined in the plan document. You may not think this is a big deal, W-2 is W-2, right?

We have seen companies where that is correct, there is nothing extra than wages paid. We have seen companies with 50 elements of compensation, everything from bonuses and commission, to special spot bonuses, to childcare to moving expense. There can be multiple stock options as part of compensation, some may have to be included in compensation used for testing and some may not.

Some plans exclude compensation earned before an employee becomes a participant. Some plans have two entry dates per year and some have four or more entry dates per year.

It is immensely important that you understand compensation as it pertains to your plan. The consequences for using incorrect compensation can be mighty.

$$$$ - to the TPA to go back a particular number of years to check everyone,
$$$$ - to the ERISA attorney to consult and to file a correction with the IRS
$$$$ - to the participants to make up any contributions/deferrals/match missed
$$$$ - to the participants for earnings on those missed contributions
$$$$ - to the IRS potentially if the error was discovered under audit

It is so easy to avoid and so not worth the expense. Take a moment to review your plan document, and before you complete your census package for the year, make sure you are reporting the correct compensation. You will be glad you did.

Cross Testing - will it Survive?

2009-12-03T09:05:00.000-08:00

- By Pat Byrnes

I believe so. However, on November 19th House bill HR 4126 was introduced. If passed into law it would:

- repeal cross-testing
- allow only vested benefits of non highly compensated employees (NHCEs) to be used for discrimination testing, and
- modify the Coverage Rules under IRC 410(b) requiring that a NHCE be considered a fractional employee if he/she works less than 2080 hours in a year.

In essence, this would set retirement plan design back 20 years. At a time when we need to incentivize employers to put in plans this proposed legislation would cause thousands upon thousands of employers to terminate their plans thus leaving millions without employer funded retirement plans.
As you know, cross-testing, also known as tiered allocation, is a way in which profit sharing allocations can be skewed toward particular groups of plan participants by demonstrating that when today’s allocations are brought up to retirement age with interest, they are not discriminatory. For example, and in a very broad explanation, a 20-year-old participant receiving an allocation of $500 today will have more money at age 65 than a 60-year-old participant receiving an allocation of $5,000 today.

Cross testing is also used in combination defined benefit/defined contribution plans including cash balance plans.

In 2001 the U.S. Treasury finalized the cross testing regulations and required a “gateway” contribution ranging up to 7.5% that would be contributed to NHCEs to assure that they were getting meaningful benefits.

The American Society of Pension Professionals and Actuaries (ASPPA) is launching a targeted grass roots campaign to defeat this proposal.

The Bill has 16 co-sponsors. All are members of House Ways & Means, four of which are in California. I have written each of them a letter expressing my opposition. I would suggest you do the same.
Here is there contact information:

Rep. Stark
https://forms.house.gov/stark/webforms/contact.htm
202-225-5065

Rep. Sanchez
http://lindasanchez.house.gov/index.cfm?section=contact
202-225-6676

Rep. Becerra
http://becerra.house.gov/HoR/CA31/Hidden+Content/Email+Signup+Form.htm
202-225-6235

Rep. Thompson
http://mikethompson.house.gov/contact/email.shtml
202-225-3311

Timing of Deferral and Loan Payments

2009-11-24T15:21:00.000-08:00

-By Tobi Cogswell

As we are nearing the end of the year some people are going to go on vacation. Maybe more so even than during the summer. Or maybe yours is a business that closes between Christmas and New Years.

Be sure that you have a written procedure for how deferrals and loan payments are transmitted in case the person with primary responsibility for payroll is one of those going on vacation.

The IRS and DOL have strict guidelines with regard to when payments are “late”. They do not agree. Amounts withheld from an employee’s paycheck must be deposited into the trust as soon as they can be segregated from the employer’s general assets. A deposit is generally late if the deposit occurs later than the normal average elapsed days from the end of the payroll period to the date of deposit. The Department of Labor issued proposed regulations intended to provide small plan sponsors with a clear safe harbor but this applies only to plans with fewer than 100 participants at the beginning of a plan year.

Under the proposed safe harbor regulations, employee contributions will be treated as complying with the regulations if the contributions are deposited no later than the 7th business day following the day on which the amounts would have been payable to the participant in cash.

• Make more than one person responsible for making sure the deposit is made in a timely manner.

• Develop systems and procedures and a timeline for their completion each pay period.

• Document the reason for any deviation.

• Have a wonderful holiday.

A Disney Moment—Without Goofy Talking Retirement Plans at the 2009 ASPPA Annual Conference

2009-11-16T10:12:00.001-08:00

--By Pat Byrnes

It’s about a Disney “Moment”. You know what I mean. The deer fall in love, the sun breaks through, the birds tweet and the forest creatures gather in awe. It is hard to believe that this could be happening in late 2009 with a challenged private pension system.

Time and Place
On November 2, 2009 one such moment appeared at the ASPPA Annual Conference in National Harbor, Maryland with 1,500 in attendance.

Characters
On the panel together were

Phyllis Borzi, Assistant Secretary of Labor for Employee Benefit Security Administration (EBSA) and
Mark Iwry, Senior Advisor to the Secretary of Treasury & Deputy Assistant Secretary (Tax Policy) at the U.S. of Treasury Department.

They were both formerly in government posts, left for private practice and then came back to government in their respective & powerful new positions--and they are on the same page in their collaboration!

Morsels

Both acknowledge that the employer based retirement system is under stress.
Both are working together to help create new incentives that encourage business owners to establish and enhance retirement plans that will be part of a system that will ultimately allow people to actually retire.
Both believe strongly in plan sponsor education and enforcement.
Both believe in a system that puts personal responsibility on each citizen for their own retirement and on their advisors.
Both are in a position to make a difference—and together—well that’s the “Disney Moment”

Take-Aways for Plan Sponsors & their Advisors

Be part of a mindset that helps promote employer sponsored retirement plans that work
Use that mindset to implement appropriate plan designs
Run to, not from, compliance and enforcement—It is necessary for the system to survive

Please respond to this post to keep Disney alive.☺

December 1st 2009- Big Notice Date

2009-11-05T11:34:00.000-08:00

-By Tobi Cogswell

Tuesday December 1st is the date many participant notices need to be distributed for calendar year plans. You think “It’s only November 5th, I have plenty of time”. Not so. Think about it, you may be beginning your close out of 2009, doing your budget for 2010, reviewing your insurance increases, thinking about new plan participants as of 1/1/10, deciding on bonuses, who’s going to make partner, a zillion other things, including thinking about Thanksgiving. And your ACI plan administrator and our document specialists need to have time to do them. Notices include, but are not limited to: Safe Harbor commitment notices for 2009, Safe Harbor notices for 2010, Automatic Contribution Arrangement (ACA, QACA, EACA) notices for 2010 and Qualified Default Invesment Alternative (QDIA) notices for 2010. Contact us now if you have any questions and let’s get one thing off your plate.

HOW LONG DO YOU WANT TO WORK?

2009-10-30T16:06:00.000-07:00

If you are a baby boomer entrepreneur, you have no doubt lost money in your retirement plan, in your investments, and quite possibly in the value of your company. This may put you in the position of postponing retirement until your assets can recover.
In the past, many entrepreneurs have used retirement plans as tax devices based on the amount of profit in their business at the end of the year. Many are re-thinking that strategy and are now interested in using retirement plans as, well, a strategy for retiring.
Let’s take Mary, age 60. She owns a PR firm and has 7 employees. She earns $245,000 and employees average $50,000.
Mary has worked with her financial planner to determine now much money she needs to save over the next several years in order to begin thinking about retiring. One of the ways her accountant suggested was to consider putting in a Cash Balance Defined Benefit Plan. The contribution to this plan would be a budget item for her PR firm. The lion share of the monies would go for Mary’s benefit, although there would be a substantial increase in contributions for her staff, i.e., between the Profit Sharing/401(k) Plan and the Cash Balance Plan, Mary would receive $210,000 (87%) and the cost to cover the staff would be approximately $30,000 (13%). Mary was thrilled with how much of her savings could be accomplished with tax deductible contributions and she liked the idea of helping her employees save for their retirements.
Mary’s accountant and financial planner referred us in to develop this program and to help her monitor this on a yearly basis as a team effort among Mary, the accountant, financial planner and ACI. We welcome your thoughts or questions on how this may apply to your client.