It's Bond...Fidelity Bond

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?

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

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

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

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

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

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.