If your financial advisor tells you that it’s time for the regularly scheduled meeting, don’t blow them off.
If your third party administrator (TPA) needs you to complete their census request, do it.
When your ERISA 3(16) administrator is in charge of signing off on distributions, let them.
If your ERISA attorney tells you that you have to make an application to a voluntary compliance program, do it.
The point is pretty simple: if you hire some good plan providers, let them do their job.
Thanks to renewed interest in. multiple employer plans (MEPs), I will always get the phone call from someone interested in setting up a multiple employer plan. That person might be an advisor, third party administrator (TPA), or even a plan sponsor.
On paper, we all would like to start our own MEP. The problem is most MEPs fail because they never get the size they need in order to justify it, in terms of costs. Nothing worse than a MEP that has little in assets, but an audit to pay for. While everyone thinks their MEP is the end all to be all and everyone would adopt it, the sales process is slow. After working on so many MEPs, only a few are successful and the ones that were successful took many years to achieve a level of success. It doesn’t mean that people won’t try a MEP.
My latest newsletter for retirement plan providers can be found here.
My latest article for JDSupra.com can be found here.
When having unique events to promote your business, I think you need to make it memorable because I’ve been to too many forgettable industry events. Creating lasting memories helps your business because people end up remembering you.
That’s what I had in mind when creating That 401(k) Conference. Instead of the same olf educational event for advisors, I decided a memorable location and memorable experience (stadium tour and athlete appearance) would go a long way in helping my business out as a leading ERISA attorney. That memory that I gave these advisors has expanded my networking capability and footprint.
When developing events for plan sponsors and sources of referrals, think of an event that will create memories.
The Retirement Advantage, Inc. (TRA), a national third-party administrator (TPA)announced the acquisition of two retirement plan consulting and administration firms: Benefit Strategies, Inc. of Roanoke, Virginia (BSI) and Scholz & Friends Enlightened Retirement Group, Inc. (S&F) of San Antonio, Texas.
With Ascensus buying so many TPAs and PCS buying Aspire, any large TPA is going to try to become bigger tom compete. We will see further and further consolidation in this business because of the heavy competition that has increased in the retirement plan business, thanks to technology, but most importantly, thanks to fee disclosure.
I’m wary of self-directed brokerage account because I still concerned about the fiduciary issues, as well as the fact that I still don’t think participants do better with them in terms of financial growth.
There was a recent survey done by Schwab where it implied that advisors should consider offering it to their clients in their plan. Schwab’s “SDBA Indicators Report” found that while only 20% of participants in a brokerage window worked with an adviser as of the second quarter, their average balance of $448,515 was nearly twice as much as the $234,673 held by non-advised participants.
I’m sorry, but that doesn’t make me jump out and suggest that plans offer the brokerage window. The survey doesn’t suggest that participants do better with a brokerage window, it only says that participants with advisors working with them on these windows have larger account balances, that’s it.
There is nothing wrong with offering loans with your 401(k) plan. What will be wrong is if the program isn’t administered properly and you don’t have the backup to prove you administered it correctly.
One of the biggest targets of a 401(k) plan audit by the Internal Revenue Service (IRS) is the loan program. The IRS agent is going to want to see the loan documents, the loan repayments, and a Form 1099 if there has been a default. Anything missing on your end with loans is going to be a problem with the agent. Not only do you need the requested paperwork, but you also may discover that it wasn’t previously administered, such as a loan default occurring because payments weren’t made to a participant’s loan.
Regardless of what could go wrong, be on the alert that something bad has happened and make sure it’s corrected before the IRS agent on an audit finds first.
As a plan sponsor being investigated by an Internal Revenue Service (IRS) agent, there is one thing you might not be aware of. The IRS agent is there to ensure there has been voluntary compliance by you to the provisions of the Internal Revenue Code.
That means the IRS agent has a half-empty view, they are “pessimists” at heart. If you don’t have the requested loan documents or the last restatement, they take the position that it was never done. If you don’t have a restated plan document since 2002, they are not going to take your word for it. They can’t.
That’s why it’s necessary for you to keep good records because there is nothing worse than getting penalized for something you did.
Social media is a great benefit for your 401(k) business, but sometimes it can be a disaster if you let it.
I’ve seen too many business professionals and companies that get in trouble on Facebook for posting things that are just unprofessional. I might post some things on Facebook that I probably shouldn’t, but nothing that might give plan sponsors and fellow providers working with me. How you deal with people on Facebook dealing with politics or just customer complaints will tell a lot about you. You can’t afford to let your temper get the better of you.
Reputations can take a lifetime to build and gone in an instant over some misguided social media post.
