Why have retirement benefits and 401(k) plans become such a valued commodity for employees?
According to the Census Bureau’s report, “An Aging World: 2015,” the global life expectancy at birth is expected to rise from 68.6 years in 2015 to 76.2 in 2050. In terms of retirement and aging, the 65-and-over worldwide populations will more than double to 1.6 billion by 2050.

The latest reports and data are all showing increasing life expectancy, increasing 65 and older population, increasing average number of years in retirement and increasing health care costs in retirement years. The future of the financial and economic market with these increasing costs related to longevity and retirement lies in financial planning, specifically retirement plans.

What are your retirement goals and business objectives?
The primary retirement goal is to maximize retirement savings. Business objectives are more complex in the sense that they encompass a dual purpose of maximizing benefits to the employer/owner(s) and providing a valuable benefit to the employees.

How do you leverage the expertise of retirement plan consultants to reach your goals and objectives?
Financial advisors and retirement plan consultants work together with business owners and plan sponsors to develop qualified retirement plans that address the specific objectives of the owners and key executives. The retirement plan consultant may conduct an annual projected contribution analysis for an existing plan to determine if the defined contribution plan design (401k and/or profit sharing type) allows for contributions that would benefit the owners/partners on a tax deductible favorable basis.

A defined benefit type of plan, including a cash balance design, may be appropriate if the company’s finances and owner’s/partner’s objectives allow, and make sense, for contributions greater than $60k for the owners or partners. The financial advisor can examine investment alternatives that would be perceived as an improvement by employees, including lower investment costs. These custom plan designs ensure that the business owner derives tax benefits, increases retirement savings and gains a valuable tool to attract and retain employees.

If it sounds too good to be true, it probably is…
There are a host of 401k providers targeting small business owners with low-cost or cheap 401k plans. Is that your criteria for securing your financial future? Will that low-cost plan address the objectives of the business owners or maximize retirement savings?

The courts have ruled that fiduciaries have latitude in assessing the value of investment options beyond price, and are even compelled to do so. Nowhere within ERISA does it say that fees must be the cheapest available. In fact there are no per se investment rules stated within ERISA for fiduciaries to follow. 

A qualified financial advisor or retirement plan consultant will take the time to explain the fiduciary responsibilities of plan sponsors, specifically within the guidelines of the Employee Retirement Income Security Act (ERISA) and the Pension Protection Act (PPA). Every plan sponsor should evaluate the plan value vs. cost in order to make informed decisions.

Plan Value

  1. Retirement Savings: Maximizes retirement savings for business owners and employees
  2. Tax Benefits: Maximizes tax benefits
  3. Compliance: Ensures compliance with all U.S. Department of Labor and Internal Revenue Service guidelines
  4. Transparency of cost: All fees are disclosed and reasonable
  5. No Conflict of Interest: Plan providers do not derive income from the plan’s investments
  6. Education: Plan provider offers guidance and education for plan participants

Plan Cost

  1. Plan Administration Fees: Third Party Administrator (TPA)
  2. Recordkeeping Fees
  3. Custodial Fee
  4. Financial Advisor Fee
  5. Investments: Pure cost of investment with no revenue sharing additional costs
  6. Fiduciary Services: 3(16), 3(21), or 3(38) fiduciary services
  7. Miscellaneous Fees: Plan documents, loans, distribution processing

About RPG Consultants
RPG Consultants is a leading recordkeeper and third party administrator (TPA) for 401(k) and other types of defined contribution plans, with deep actuarial expertise managing defined benefit and cash balance plans. Our goal is to understand your business and your strategic objectives to provide you with a complete, custom-tailored solution. For more information, please contact us at marketing@rpgconsultants.com or 212-947-4800 ext 227.