When it comes to 401(k) plans, plan sponsors have a fiduciary responsibility to distribute a variety of documents and disclosure notices. Imposing this responsibility on plan sponsors helps ensure that participants have the necessary information about the plan provisions and investment options in order to make informed and timely decisions for their personal financial wellness.
The concept of an “open architecture” recordkeeping platform has been trending in the financial industry lately and it’s not hard to see why. For many years, 401(k) providers offered bundled platforms with fixed investment options (consisting of proprietary investments) and provider fees paid through investments (via revenue sharing). Open architecture platforms offer features that increase investment flexibility and reduce conflict of interest.
RPG Consultants was among the first firms in the United States to successfully complete the independent certification process for recordkeepers, and has now earned the certification for the 8th consecutive year. Our CEFEX-ASPPA certification signifies our commitment to adhere to a standard of excellence and a dedication to recordkeeping and administration best practices.
Though some employers may not think so, the truth is that in today's world 401(k) plans are subject to fraudulent activity and that the often-overlooked retirement plan can be the perfect place for it to occur. For example, in late 2017, several news outlets reported a scheme targeting individual 401(k) accounts.
With the future of Social Security in question, it is becoming ever increasingly important for workers to self-prepare for post-retirement living. Studies show that approximately one out of every three eligible workers choose NOT to participate in their employer-sponsored 401(k) plan.
There is a common misconception that safe harbor plans are exempt from testing requirements. This overly general and inaccurate statement calls for a proper explanation. A safe harbor plan requires tests other than non-discrimination, entails proper administration to satisfy the plan design and can benefit from testing for plan optimization.
In 2018, the 401(k) plan celebrated its 40th birthday! Though extremely popular today, 401(k) plans came about almost by accident. IRC Section 401(k) was passed into law as part of the Revenue Act of 1978 and was included to limit executive compensation. However, in 1980, Ted Benna of the Johnson Companies used the provision to create and get IRS approval of the first 401(k) plan for his company. For this he is often referred to as the father of the 401(k).
401(k) plans offer many advantages to participants; the ability for accounts to grow on a tax-deferred basis, the chance of receiving employer contributions in the form of a match or non-elective contribution, the ability to contribute even after attaining age 70 ½, and protections from bankruptcy. These benefits are consistent whether a participant chooses traditional or Roth contributions, or even both! So, what makes Roth and traditional routes different and what are the advantages and disadvantages of each?
Since most retirement plans operate on a calendar year basis, testing season is now! If a testing failure occurs, correcting the failure by March 15th can save the plan sponsor excise taxes and additional filings. Getting year-end data in early, including complete census information, is paramount. Though RPG Consultants does all the heavy lifting to ensure your plan passes the appropriate testing, all plan sponsors should understand the basics of testing so that they can confirm all tests and any appropriate corrections are completed each year. The following are some helpful definitions to get you through the basics of compliance testing.
Natural disasters can cause upheaval in many aspects of victims’ lives and this destruction often extends to financial matters. What should otherwise be routine compliance for plan deadlines can prove difficult in these extreme events and the government tends to grant temporary relief in such cases.