Posts tagged with "retirement plan"

Year End For Plan Sponsors

Sheri A. Creger, CPFA  Ι  November 28, 2018

As the year draws to a close there are many things that a Plan Sponsor providing a 401k plan needs to ensure they are doing in order to adhere to regulatory legislative requirements.

One place to start is to confirm that all plan participant notices have been sent. Notices to all plan participants are required to be sent annually for transparency and disclosure purposes. Depending upon your plan you may have different types of notices but most of the 401(k) and 403(b) plan sponsors are responsible for the following notices; Summary Plan Description (SPD) and Summary of Material Modifications, Automatic Enrollment, Qualified Default Investment Arrangement Updates, Fee Disclosure, Safe Harbor, Summary Annual Report.

The Plan Sponsor must also ensure that they are maintaining updated mailing information, tracking delivery dates, and confirming receipts of participant notices.

Review your plan documents and make sure that they are kept current and adhere to current laws and regulations. You must also ensure that ALL of your amendments are properly signed and that any of your third-party administrators such as your TPA and/or record keeper have the updated documentation. Your TPA needs to know what has transpired during the year. Not only do they need the updated documents, but they also need the updated employee record information such as hire/terminations/rehire/birth date etc.

Prior to filing your Form 5500, make sure to carefully review your submission and form once completed prior to filing.

Plan Sponsors that are required to maintain an ERISA bond need to ensure that they are meeting the fiduciary requirements of the policy. Although not required, having fiduciary liability insurance for the fiduciaries is a good practice. If you don’t have it this would be a good time to look into it and if you do have fiduciary liability insurance this would be a good time to review your current policy.

Too many times we have seen Plan Sponsors neglect their annual review of their 401(k) plans and then run into future problems that could have been prevented. We can help you! We can serve as your “delegated” ERISA 3(16) Fiduciary Administrator and ensure the proper administration of your 401(k) plan. Click on “Meet Your New BFF®”above to find out how we can help you.

 

what’s a mep and why are you hearing so much about it?

Sheri A. Creger, CPFA  Ι  October 30, 2018

 

 

 

 

A MEP is a multiple employer plan. Simply put it is a type of retirement plan that pools contributions made by two or more unrelated employers. The benefit of this arrangement is that the employers can pool their resources to offer a retirement plan at a cost and level of risk that is not prohibitive. To benefit from the MEP structure, the plan must be treated as a single plan and thereby fit the ERISA definition of “employer”. If it does not fit the definition of ERISA it will be treated as a separate plan for each employer.

Because of the lack of retirement plan coverage for small businesses on August 31, 2018 President Trump issued an Executive Order 13847, that called for the Secretary of Labor to explore policies that would expand access to retirement plans for American workers. The Executive Order specifically called out the policies surrounding MEPs and if a business owner could sponsor or adopt a MEP.

Then on October 23, 2018 the Department of Labor published its proposed rule. The release proposes to change the definition of “employer” under ERISA §3(5) in a manner that would make MEPs more widely available. The definition would be changed so that groups or associations can offer a MEP without a common trade or line of business so long as employers have a place of business within the same state or metropolitan area. The proposal also states that professional employer organizations (PEO) as an entity that could sponsor a MEP. To do so, a MEP must provide substantial employment functions. PEOs can rely on 1 of 2 safer harbors to ensure the “substantial employment function” requirement is met. Working owners can qualify as both employer and employee for the purposes of participating in the MEP.

Under the proposed rule, a group or association can establish a MEP if:

  1. It has at least one substantial business purpose unrelated to providing employee benefits.
  2. It has a formal organizational structure.
  3. A commonality of interest exists between its employer members (now includes common geographic location).
  4. Each employer member of the group directly employs at least one employee covered under the plan.
  5. The plan is only available to employees and former employees of the employer members.
  6. Its functions and activities are controlled by its employer members, including the control of the plan.
  7. It is not a financial services firm (nor owned or controlled by one).

What the proposal does not include and can be further discussed is Open MEPs, does not relieve employers of ALL fiduciary responsibility and does not change the “One Bad Apple” rule.

How can business benefit from this proposed rule? The proposed rule could make it easier for employers to get together and provide employees access to a quality retirement plan.