Fee Disclosure for the People

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:

1. Fee transparency allows them to see where their money is going
2. An ethical company which charges fairly for their services
3. We share revenue received from vendors with our clients sometimes covering all of our cost to the client
4. 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.

Contact us if you would like more information on fee disclosure.

IRS Questionnaire Update

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:

1. Potential compliance issues
2. Any operational Issues
3. 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

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

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!

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!

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

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

EFAST 2

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