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Qualified Plans

PenServ Plan Consultants understand that no two clients have the same needs and expectations. When designing a qualified plan or taking over an existing program, our consulting team will create a fact pattern based on the employer’s hiring activities, turnover experience, and demographic characteristics. Company goals, resources, and employee classifications are only some of the factors to be considered in the process. The result is a well-planned program that creates more employer and employee satisfaction.

On-Going Administration

All retirement programs require periodic review to meet the changing characteristics of the employer and the design aspect of the Plan should not be limited to the establishment process. As part of the annual valuation, your PenServ Relationship Manager will conduct an analysis of the plan and, if necessary, make recommendations for updating or modifying the document. This process is completed each year and produces a written analysis of the plan, a review of any prospective law changes that would impact the existing provisions and a summary of any issues that should be reviewed by the Plan Sponsor.

Selecting investments for a Company’s 401(k) plan is a major aspect for the decision makers responsible for designing the Plan. The considerations regarding the investment model can be complex simply because of the many choices available in the marketplace today. Participant or trustee direction, segregation or pooling of assets, and the comparative cost of these options are generally choices evaluated by plan sponsors. This is where the advice of a competent investment professional is necessary. Investment firms provide assistance with plan activities such as:

  • Selection of a good investment mix for the participants
  • Education materials for plan participants
  • Enrollment meetings to explain the process of managing plan balances
  • Assistance with plan distributions
  • Rollovers from prior retirement plans
  • Retirement planning for the executive staff

Investment Alternatives

Mutual Funds
The flexible open-architecture platforms offered through PenServ provides a diverse selection of high-quality mutual funds that include:

  • A money market fund for conservative investors focused on preserving their existing investment
  • A bond fund or other low risk fund as an additional conservative option
  • A bond or equity fund that provides a medium-risk option
  • An equity fund that provides a higher risk, but a potentially higher rate of return

Self-directed Brokerage Accounts
Through the self-directed option, employees are able to access an expanded list of stocks and bonds that may not be offered as an option to all plan participants. Individuals electing to invest through a self-directed account are primarily participants with a financial advisor who incorporates the retirement plan balances into a overall investment program and prefer a broader selection of investment options.

Annuity Contracts
An insurance company can provide a variable annuity that includes several options such as a money market fund, a fixed-income option and a group of equity funds. Under these contracts, contributions are allocated among the different funds offered as part of the annuity.

Plan Compliance

IRS and DOL Regulations require that qualified plans meet certain requirements to maintain its qualified status. Although there are many rules the plan must meet to remain in compliance with the there are four basic requirements for the Plan to be qualified under IRC §401(a).

  • The plan must be established and maintained for the exclusive benefit of participants and their beneficiaries;
  • The employer must intend for the plan to be permanent;
  • The plan must be written;
  • The plan must be communicated to the employees.

While this may seem relatively simple, employers frequently fail to adhere to the details of these requirements and jeopardize the tax-exempt status of a plan.

In addition to these basic rules, a qualified plan must meet other regulations related to coverage, non-discrimination and benefit accruals. Understanding the application of these matters generally requires the assistance of a qualified professional who can guide an employer in the design and administration of the plan.

Fiduciary Responsibilities

ERISA defines a fiduciary as a person or entity that has any discretionary authority or responsibility to manage an employee plan or its assets or provides investment advice with respect to the assets of the Plan. The parties to a plan who are considered fiduciaries include: the plan administrator, the plan's investment advisor, a trustee, and anyone who assists plan participants in selecting investments for the Plan. ERISA imposes strict rules and responsibilities on fiduciaries of a plan and includes sanctions for failure to adhere to the standards established to protect plan participants.