Does Your Plan Still Fit?
By this time of the year, most businesses have made their contributions to their employees’ retirement plans and have completed compliance testing to ensure their retirement plans remain in good standing with the Internal Revenue Service.
As your organization reviews the results for the past year we would recommend that you pose the following question: Does our retirement plan still fit the needs of our company?
The answer to this question may not be easy to determine. However, we believe having a properly designed retirement plan is critical to the long term financial prosperity of your company and employees.
Warning Signs
What are the warning signs that your retirement plan is not the right fit for your company?
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Low employee participation rates -
Discrimination tests are failing, resulting in taxable refunds to highly-compensated employees
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Highly-compensated employees are not able to reach maximum funding limits due to cost constraints for rank-and-file employees
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Employees are reluctant to retire from the company due to insufficient funds accumulated in their retirement plans
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New employee recruiting efforts are hampered by the company’s retirement plan benefits
How Do We Fix Our Plan?
If you recognize any of these warning signs in your plan, now is the time to begin a careful study to determine how the plan may be redesigned to better fit the needs of your company employees. Your retirement plan can be amended at any time. There are several potential “fixes” for the problems noted above including:
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Automatic enrollment in the salary deferral plan
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Automatic increases to the salary deferral contribution rates
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Modification of the contribution match to increase incentive for salary deferral contribution
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Redesign of the employer contribution formula to provide for allocation of employer contribution based on rate groups
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Revamping the plan’s investment menu
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Improvements in participant education
How Can RSA Help?
RSA is a full-service retirement plan consulting business. Our team of consultants has more than 20 years of experience in assisting large and small employers with the redesign their retirement plans to better fit their needs.
We will start with a detailed review of the history of the plan, then interview key members of your management team and analyze current employee census information. Using the data gathered from this in-depth analysis, we will prepare specific recommendations for the redesign of the plan to better fit the current situation of the company.
Once we have completed the redesign of the plan, we will help you ensure that the plan remains on the right track by carefully monitoring the results of the overall participation rates, key employee benefit levels and compliance testing each year. As your company changes, we will make sure the retirement plan continues to be the right fit!
Retirement Solution Advisors, LLC - 410 W Grand Ave. - Chicago, IL 60610
Phone: (312) 923 8700 ext. 232 - Fax: (312) 923 8701
E-mail: steve.johnson@rsadvisorsllc.com
Copyright 2007-2008, RSA LLC
