401(k) & 403 (b) Advisory Services
Prudent 401(k) & 403(b) investments
See how a low-cost, passive investment line up can drive employee success
When it comes to your companies 401(k) or 403(b), SAM Stands Behind 3 Core Investment Philosophies
401(k) Investment Philosophy 1 – Avoid unnecessary fees
While the market is unpredictable, fees are guaranteed to lower returns. One of our primary goals is to lower 401(k) investment fees for your employees. Once we estimate the total fund cost, we then compare the total fund cost to other funds that provide similar asset class exposure and return potential.
The end goal — provide a selection that gives employees a low-cost 401(k) investment menu of diversified mutual funds.
401(k) Investment Philosophy 2 – Avoid unnecessary risk
Chasing past performance is likely to lower overall investment returns. Indeed, studies have shown that actively managed funds that outperformed in one 5-year period are actually significantly more likely to underperform in the next 5 year period. These actively managed funds can have wildly volatile returns, creating unnecessary fiduciary risk for employers and exposing employees to unnecessary risk.
Our 401(k) fund selection philosophy — avoid mutual funds that take excessive active bets in an attempt to outperform the market.
401(k) Investment Philosophy 3 – Thorough, ongoing fiduciary review
Limiting unnecessary fees and exposure to excessive active management at the outset is not enough. A prudent 401(k) plan requires on-going fiduciary reviews of the investments looking at both quantitative and qualitative measures.
Our investment monitoring process — carefully follow the investment policy statement, with well-documented quarterly performance reviews.
Ready to go with an advisor who selects a 401(k) fund lineup that is in your employees’ — and your company’s — best interest?
Contact us for a free consultation
PLAN DESIGNS
401(k) Plans (Traditional, Safe Harbor, Roth, and Simple)
Traditional 401(k) Plan – A 401(k) plan allows employees to contribute a portion of their income to an employer sponsored retirement plan on a pre-tax basis. The employer may choose to contribute matching amounts into the plan. The employer can also use the plan to provide profit sharing contributions to all eligible employees. Highly compensated employee deferral and match contributions are limited by discrimination testing.
Safe Harbor 401(k) Plan – This plan is similar to the traditional 401(k) plan with the exception that highly compensated employee contributions are not limited by the discrimination testing. The employer must either make a 3% safe harbor non-elective contribution or a safe harbor match contribution of at least 100% of compensation on the first 3% deferred by the employee plus 50% on the next 2% deferred. Both of these safe harbor contributions are 100% vested immediately.
Roth 401(k) Plan – With a Roth feature, the employee does not get a tax deduction at the time of the deferral contribution (it’s an after tax contribution), but all assets at retirement are tax free, including earnings. A plan with a Roth feature must also have the traditional pre-tax deferral option as well.
SIMPLE 401(k) Plan – These plans eliminate many of the testing requirements of a standard 401(k) plan in exchange for restrictions on contributions, and the timing of setup and communication of annual employer contribution requirements to employees.
Profit Sharing Plans (Traditional, New Comparability, Integrated, and Age Weighted)
Traditional Profit Sharing Plan – This plan type was designed for employees to share in the employer profits. Employer contributions are generally allocated to the participants in proportion to their compensation.
New Comparability PS Plan – Also referred to as a Cross Tested Plan. The goal of this type of plan is to maximize benefits for a group of employees (usually owners) while minimizing the contributions required for other groups (usually non-owners). Employees are divided into groups (or classes) with set contribution rates for each group.
Integrated Formula PS Plan – This type of plan correlates the employer contribution formula with Federal Social Security benefits. The Internal Revenue Code allows additional allocations to the compensation in excess of the Social Security Taxable Wage Base because these dollars do not accrue social security benefits.
Age Weighted PS Plan – The age-weighted profit sharing plan is a retirement plan design that allows employers to make contributions based on an employee’s age as well as salary. Under this arrangement, there is a chance for older employees to receive contributions that are much larger than those received by younger workers.
403(b) Plans
403(b) Plan – A 403(b) plan is a retirement savings plan sponsored by 501(c)(3) entities (non-profit organizations) for their employees. These plans have many similarities to 401(k) plans, but have different rules on contribution limits, discrimination requirements, and other administrative requirements.
Money Purchase Plans
Money Purchase Plan – For money purchase plan, the annual employer contribution is fixed by a formula stated in the plan document. The employer must contribute according to the plan’s established formula.
Davis-Bacon Plans
Davis-Bacon Plan – A plan for workers on federal and state construction contracts worth $2,000 or more and are paid the “prevailing wage”, which includes a specified hourly fringe benefit amount. This plan allows the employer savings in payroll taxes by contributing all, or part of the fringe benefit portion of the required hourly rate into a qualified retirement plan.
Multiple Employer Plans
Multiple Employer Plan – A Multiple Employer Plan is a plan sponsored by 2 or more employers where at least 2 of the sponsoring employers are not members of the same related group. It allows unrelated companies to participate in one plan and share the retirement cost of administering a 401(k) plan.
Defined Benefit Plan Actuarial Services and Administration
Our professional staff has the expertise and up-to-date technology to provide the necessary actuarial and administrative assistance to manage your defined benefit plan:
Do all testing to insure IRS non discriminate statutes are satisfied in optimal manner.
Calculate employee eligibility and plan entry.
Determine eligibility to receive benefit accrual.
Prepare Annual Actuarial Report and Valuation Certification.
Actuarial determination of required employer contributions.
Preparation of individual benefit statements and vesting.
Distribution processing: Calculation of distribution amount, preparation of required distribution notices, release forms and IRS Form 1099-R.
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