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.
Friday, May 21, 2010
Thursday, May 6, 2010
Protect Retirement Plans By Contacting Your Member Of Congress Now!
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.
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
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
Tuesday, April 20, 2010
Plan for Unforseen Disasters!
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.
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.
Thursday, April 15, 2010
Friday, April 2, 2010
Do It Right The First Time
-By Tobi Cogswell
We recently took over two cases from another Third Party Administration firm. We got these cases because:
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
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!
- 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.
- 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.
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
Friday, March 19, 2010
5 Things you should know as a Sponsor of a Defined Benefit Plan
- 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.
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.
Friday, March 5, 2010
Change for Tax form reporting for 2009 Plan Years!
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!!
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!!
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