Timing of Deferral and Loan Payments

-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

--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

-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?

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.