Category Archives: Retirement Plan

Our Clients Can Tell Our Story Better Than We Can!

The Platinum 401k is a first class organization consisting of a great team of subject experts willing to go the extra mile. We are extremely satisfied with their service.”  Smokey Bones Restaurants

“We have been with The Platinum 401k since 2011, and it has been a great experience!”  Dytran Instruments, Inc.

Retirement Plan Solutions
“When it comes to administering retirement plans these days, you want The Platinum 401k on your side to help you be fully compliant with all the new 401k plan regulations.” Lanier Upshaw, Inc.

“The Platinum 401k gives us the ability to focus on running our business rather than our retirement plan solutions.” Freestyle Pools & Spas, Inc.

The Next Steps? We’re going to Need Some Information about Your Current Plan:

We will need to gather information about your current retirement plan to help insure that the plan has been operated in accordance with IRS and ERISA regulations. This review takes just a few days once we have received your information. Once the plan has been approved for transfer into The Platinum 401k program, we will jointly establish a plan design review and pre-enrollment meeting scheduling with your internal human resources or employee benefits team members.

To join The Platinum 401k program as an adopting employer, contact your investment advisor or call us at 800.585.7540. You can also email us at Info@ThePlatinum401k.com.

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Platinum 401k Adds Hartford Lifetime Income Option to MEP

The Platinum 401k multiple employer plan program will now include a retirement income option from The Hartford.

MEP

The Platinum 401k multiple employer plan (MEP) allows plan sponsors to eliminate their annual plan audit, Form 5500 filings, trustee-level liability, and investment fund selection responsibility. It features investment products from Great-West Retirement Services, John Hancock, and The Hartford.

“We’ve seen a growing interest from employers who are seeking income protection for their employees in retirement”, said Terrance Power, President of American Pension Services. “The Hartford’s new Lifetime Income program addresses that demand in the marketplace.”

For details on the program, visit www.ThePlatinum401k.com.

Retirement plan

A Plan for Retirement

What is a qualified retirement plan?

A qualified retirement plan is a popular savings tool that millions of Americans use to help prepare for retirement.

An example of this is a 401(k) plan. Employees in this type of plan make pre-tax contributions to their retirement plan accounts through automatic deductions from their paychecks. Over time, savings may grow, helping you prepare for retirement. Your qualified retirement plan can provide you with a number of savings advantages, such as the potential for reduced taxes, the ability to take advantage of compound earnings and more.

Retirement plan

And why is it important?

This plan has been set up by your employer. By participating in your company’s retirement plan, you’ll be able to take greater control of your financial future. You’ll also be able to take advantage of some attractive benefits the plan offers.

The potential to pay less in taxes

The more you contribute to your plan, the larger your retirement savings (and tax savings) may be.

Each 401(k) dollar you contribute to your retirement plan is taken from your paycheck before taxes are applied. This may lower your taxable income. It might even put you in a lower tax bracket.

The earnings on contributions to your plan grow tax-deferred until withdrawn. And since you may be in a lower tax bracket in retirement, you might pay less tax when the money is withdrawn than if you were taxed today.

Retirement plan

What Makes Us So Unique? There Are a Lot of Reasons

The decision to outsource your retirement plan to experienced industry professionals should be pretty straightforward. Either you want to retain total flexibility and responsibility (and liability) for plan oversight, or you’ve decided you would rather hand off almost all of the fiduciary duties and liability to a third party. Once that decision has been made, the next decision – who best to take over these duties – is equally important. We think this is where we have a huge advantage over the rest of the industry.

Multiple_Employer_Plan

The Platinum 401K is unique in its ability to have brought the first multi-provider solution to the 401k Outsourcing marketplace. Our annual recurring plan revenue – which is fully disclosed in the personalized proposal we generate for your plan – is identical regardless of which provider is selected. We also rebate back all recurring “revenue sharing” as a credit against our annual asset based compensation fees. This strategy lowers your costs and increases your plan returns. Where it’s contractually possible, we will simply carve out” all revenue sharing fees completely. Your custom plan proposals will provide complete details and additional information that you should read carefully.

We were also the first program of our type in the country to utilize a CEFEX-Certified 3(38) Investment Manager on a multiple employer plan of this type. The Centre for Fiduciary Excellence (CEFEX) is an independent global assessment and certification organization. They work closely with investment fiduciaries and industry experts to provide comprehensive assessment programs to improve risk management for institutional and retail investors. CEFEX certification helps determine the trustworthiness of investment fiduciaries. This is an important point of differentiation that you and your employees need to fully appreciate. The annual CEFEX audit of fiduciary practices of the Investment Manager provides a high level of confidence and protection for the plan and the participants.

Center for Fiduciary Excellence

Finally, we are industry leaders in terms of both experience and expertise in these types of programs. When the U.S. Department of Labor’s ERISA Advisory Council sought input on Outsourcing Employee Benefit Plan Services in 2014, The Platinum 401k CEO Terrance Power was asked to provide expert testimony before the group in Washington, D.C.

The findings of the Council have already led to several bipartisan legislative proposals in Congress that are expected to greatly expand the availability and benefits of these types of programs across the country.

We look forward to continuing to work with our supporters and friends in Washington to help broaden retirement plan coverage for working Americans. Read More

Multiple Employer Plan

It’s Time for the DOL to Rescind their Advisory Opinion 2012-04A

On May 29, 2012, the U.S. Department of Labor issued Advisory Opinion 2012-04A.

This document explained the Department of Labor’s position, at that time, on the use of multiple employer plans as they relate to companies who did not have any specific commonality or nexus that would otherwise tie them together.

It did not change the Internal Revenue Code Section 413(c) one bit, nor did it appear to change the position of the Internal Revenue Service on these types of programs. It did require multiple employer plan adopters to file individual Form 5500’s, incur the cost for an individual annual plan audit as required under current regulations, and to possess an ERISA bond for their portion of the plan.

Perhaps a walk down memory lane might offer some perspective as to why the Advisory Opinion was issued in the manner in which it was.

Multiple Employer Plan

In April 2012, noted “fiduciary expert” and multiple employer plan proponent Matthew Hutcheson was indicted on charges of stealing millions of dollars from a multiple employer plan that he oversaw (Hutcheson was eventually found guilty and sentenced to 17 years in federal prison for his crimes in 2013). The DOL issued a press release on June 14, 2012 (two weeks after the Advisory Opinion 2012-04A was released) announcing that they had obtained an injunction against Hutcheson relating to ERISA violations surrounding that case. They were right to do so.

Why is this timeline important? Clearly, during the time that the DOL was considering attorney Robert Toth’s request for a favorable opinion from them, the entire Hutcheson mess came to light…..and had the kneejerk effect of creating an “all multiple employer plans are bad” reaction from the DOL.

While on the surface, this could appear to be a rational reaction to the theft of millions and millions of dollars from plan participants.

A deeper dive into the Department of Labor’s own records of enforcement from their website, however, show much greater problems with operational compliance and theft occurring from single employer defined contribution and defined benefit plans when compared to multiple employer plan by an enormous margin.

It’s not even close. It’s not the plan structure that led to the theft, it was the criminal who was running the plan. Read More...

Multiple Employer Plans – an Enticing Alternative for Plan Sponsors

AN INTRIGUING new use of a long-established concept is catching the attention of small to mid-size plan sponsors seeking a way to simplify 401(k) plan oversight: Multiple Employer Plans (MEPs). By merging their plan into a properly structured MEP, employers cease to be a plan sponsor and effectively transfer many of the responsibilities and liabilities associated with being a named fiduciary to the MEP.l6019022dstbai776952

The MEP concept is exploding in popularity. Established under ERISA 413(c), MEPs historically have been used by companies that share a common industry or payroll provider, primarily association plans and professional employer organizations (employee leasing). However, as interest in outsourced fiduciary solutions has grown in recent years, a new generation of “open” MEPs for unrelated companies has sprung up. While MEPs can deliver tremendous benefit to many plan sponsors, an MEP is a solution in search of a problem for others. This article is written to help plan sponsors determine if this approach is a good fit for their organization.

The MEP sets up a single plan that covers all adopting employers, with the plan document generally written to allow for variation in plan design among the participating companies. Fund selection and monitoring generally are handled by the MEP. Discrimination testing and plan design (with some limitations) generally remain with the adopting employer. The shift in responsibility results in several potential benefits:

Elimination of annual plan audit:

Plans that cover more than 100 employees typically are required to have an annual plan audit performed as part of their annual plan Form 5500 filing. Under the MEP arrangement, there is still a plan audit, but only one that is performed at the overall MEP level. The annual audit that is required by each employer (now known as an “adopter”) is eliminated, resulting in significant savings to the employer.

Mitigation of fiduciary risk:

Independent fiduciary W. Michael Montgomery described the impact on fiduciary liabilities in Multiple Employer Plans as a Fiduciary Risk Mitigation Tool:

“Employers adopting a sound Multiple Employer Plan…achieves a profound reduction in fiduciary risk exposure. The reason is a simple one: The adopting employer ceases to perform certain key roles that incur fiduciary status. When an employer merges its current single-employer plan into a properly structured MEP, it is no longer the sponsor of the plan. It also should cease to be a trustee, plan administrator, or any sort of named fiduciary. Those central roles move to the MEP, and the inherent fiduciary liability transfers with them.”

The relief offered by MEP participation is extensive but not total. Certain responsibilities generally remain with the adopting employer, and even this reduced role must be taken seriously. Those responsibilities include:

  • The need to make timely and accurate plan contributions.
  • Plan design decisions, such as the level of match.
  • The decision to adopt or de-adopt the MEP including necessary due diligence and monitoring of the MEP.
  • Distribution to participants of required notices and information, though this may at times be handled directly by the MEP plan sponsor.
  • Communication and enrollment assistance for participants.

Streamlining of plan operations:

In addition to the audit elimination, MEP adopting employers no longer file a Form 5500, maintain a fidelity bond, or shoulder the responsibility for 408(b) (2) compliance. These are handled by the plan sponsor that is associated with the MEP, not the adopting employer. For some employers, this benefit is inconsequential. For others, the desire to let outside experts run the plan can be more important than either the audit relief or fiduciary risk mitigation.

MEPs are not a good fit for every employer. Some plan sponsors already are mitigating their fiduciary exposure through a comprehensive, well-documented fiduciary process. Others don’t consider the cost or effort of an annual audit to be significant enough to justify making a change. Still others take satisfaction in staying engaged in plan oversight and fund monitoring. Simply put, if the advantages of an MEP appear to be solving a problem you don’t have, this approach is not for you.

An employer also should consider the potential limitations inherent in most MEPs. These may include the following:

  • The adopting employer does not select its own fund menu. For many, this is a relief. Others want to have more involvements in investment decisions and consider this a takeaway.
  • Loss of current provider. Though some MEPs offer a degree of flexibility, most are tied to a single record keeper or third-party administrator, so you will most likely have to leave behind your current providers to enjoy the benefits of adopting an MEP.
  • “Bad Apple” impact: one adopting employer with serious compliance violations could cause the entire MEP to be disqualified, though a more likely scenario is that corrective measures will be taken. In the 20-plus years that I’ve been associated with Multiple Employer Plan clients, I’ve yet to see this occur. It is important that employers confirm the availability of a “disgorgement provision” in any MEP that they may be considering. This important plan design feature allows the MEP to quickly eject and thereby isolate any noncompliant adopter from the plan.

If these features are appealing and the limitations are acceptable, you may want to look further into the Multiple Employer Plan approach to your company’s retirement plan solutions.

I’ve been told by plan sponsors that they decided to join an MEP because these programs are handled the same way as their other employee benefit programs, where the benefit providers handle all the details. For example, while an employer could, at least in theory, negotiate with doctors, hospitals, MRI service providers, pharmacies, etc., for their employees’ medical coverage, most find it easier to outsource these micro-managed decisions to a third party—in that case, a health insurance provider that offers a group health-care policy.

There is a trade-off in control, options, etc., but there also is comfort in knowing that there are professionals at the helm and that they have a vested interest in making sure that their employees are taken care of in accordance with the terms of the arrangement.

Plan sponsors and their advisers will, of course, need to determine on a case-by-case basis whether these programs are a “fit” for their plans and their plan participants.

What Kind of “fiduciary” Are They?

When you’re looking for relief from the personal liability and financial risks of being a 401(k) plan fiduciary, not all fiduciary protection is alike. You don’t stop being a plan fiduciary just because a vendor signs on as a plan fiduciary or gives you a certificate!Multiple Employer Plans

Fiduciary Warranty: Warranties offer to pay court costs or claims if the fund menu is deemed not to meet certain minimum standards. They usually cover only a fraction of actual fiduciary exposure and often clearly state that the 401(k) provider is not a plan fiduciary. They provide “coverage” for violations that are very rarely contested.

Co-Fiduciary Services (ERISA 3(21)(a)): This term includes a wide array of fiduciary services ranging from a vendor that accepts minimal responsibility for the appropriateness of its funds to advisors or independent services that assist you with investment oversight. Co-fiduciary support can be helpful, but the plan sponsor is still liable and needs to follow sound fiduciary due diligence processes. This type of arrangement is little more than another target for litigation. It provides very little protection to the plan sponsor.

ERISA 3(38) Investment Manager: Through a written contract, the plan sponsor formally delegates all responsibility for selection, monitoring and replacement of the 401(k) plan’s investment funds to an outside expert. This results in a significant transfer of investment fiduciary liabilities. The plan sponsor still retains all other plan fiduciary responsibilities, and also needs to monitor the qualifications and performance of the Investment Manager on an ongoing basis.

plan1Multiple Employer Plans (MEP): Multiple Employer Plans have been called “the platinum standard of fiduciary risk reduction” since the MEP itself actually contracts with the service providers, not the adopting employer. The employer is no longer the plan trustee and has no responsibility for direct investment oversight. Properly structured, an MEP can also remove a large percentage of fiduciary liability when an ERISA 3(16) Plan Administrator is involved in the process. MEPs can eliminate the responsibility for the employer to file annual Form 5500’s, oversee service providers, deal with document restatements, select and monitor investment funds, and much more! They are a terrific retirement plan solution for the smaller end of the 401k market.