Our goal is to partner with you, the financial advisor, to make sure that your client to getting the best retirement plan solution.
Types of plans we administer:
PROFIT SHARING PLAN
This type of plan is a defined contribution plan. The employer agrees to make a discretionary contribution, which usually comes out of profits and is allocated based upon the compensation of the participant. The participants’ retirement benefits are based on the amount (with investment earnings) in their individual accounts upon retirement.
This plan is arranged according to the Internal Revenue Code Section 401(k). Covered employees can elect to defer income by making a pretax contribution to a profit sharing plan. A variation of the 401(k) plan, called the Safe Harbor 401(k) plan, allows the plan to pass the 401(k) non-discrimination rules by making either a mandatory matching contribution or a mandatory employer contribution to all participants.
CROSS-TESTED/NEW COMPARABILITY PLAN
A cross-tested plan allows an employer to place each eligible participant into his or her own “tier” and the employer then determines on a year-by-year basis how much is contributed on behalf of each individual or group of individuals. Tiers can be based on a variety of factors, including ownership, compensation or longevity. Using this type of plan, a business can tailor its total compensation and benefit package to meet individual needs and provide a vastly more meaningful benefit to key individuals and other employees.
EMPLOYEE STOCK OWNERSHIP PLAN
This is often referred to as an ESOP. It can include profit sharing, stock bonuses or money purchase plans. These funds must be invested primarily in company stock. The difference between an ESOP and other plans is that an ESOP may borrow (or “leverage”) from the employer or use the employer's credit to purchase the company stock.
MONEY PURCHASE PENSION PLAN
This plan is also a defined contribution plan, but in this case the employer contribution is mandatory. The contribution is based on each participant’s compensation.
TARGET BENEFIT PLAN
This plan is a cross between two other plan types, a defined benefit plan and a money purchase plan. The annual contribution is determined by the amount needed each year to accumulate a fund sufficient to pay the targeted benefit amount upon retirement. Contributions are allocated to individual accounts for each participant.
This plan uses both age and compensation as the basis for allocating employer contributions among participants.
CASH BALANCE PLAN
A cash balance plan is a defined benefit plan that defines the benefit in terms that are more characteristic of a defined contribution plan. In other words, a cash balance plan defines the promised benefit in terms of a stated account balance rather than a monthly benefit to be received at retirement age. Generally, a cash balance plan defines the benefit payable to the participant as either a percentage of pay or a flat dollar amount or a combination of both. It is also possible to differentiate between different classes of employees in a cash balance plan with some classes able to have a higher contribution amount or percentage than other classes (if the required compliance tests are satisfied). Because of the way benefits are calculated, a “hypothetical account balance” is generated for each participant to see at the end of each year.
DEFINED BENEFIT PLAN
A defined benefit plan is also known as a pension plan. This type of plan requires the plan sponsor to put money aside for its participants and guarantees the participant a specific amount of money for life upon his or her retirement. The total amount of the pension depends on how long the participant works for the company and how much money the participant earned over his or her working lifetime. In this type of plan, the plan sponsor manages and invests the money for all participants collectively.
This plan is very similar to the 401(k) Plan, but is mainly used by non-profit organizations, such as schools or churches.