Best Practices In Retirement Services

This blog is designed to showcase the expertise of Alliance Benefit Group (ABG) through its recordkeeping, consulting and compliance services. Delivered locally to retirement advisors and plan sponsors. All blogposts are derived from actual client situations. Enjoy!

Doctor Group Mergers

03/09/2017

Problem Encountered

We had a longstanding client relationship with a 12 partner Orthopedic group. As is happening in the health field, they wanted to merge practices with four other Ortho groups to form a super group with 50 partners. We had established a 401k plan and a cash balance pension plan for our group, and the partners were projected to end up with $2.5-3.0 million in each of these plans by retirement. Incredulously the other four groups all had just safe harbor 401k plans, and one had a cash balance plan with only one year of contributions. The other four plans had been serviced by two name brand mutual funds, an insurance company, and an independent recordkeeper.

So after analyzing all the proposed benefit structures, the super group chose ABG to service the new plan(s) going forward after the merger.

ABG Solution

We created new 401k plans and cash balance plans for the new group as of 1/1/17. We kept their current 401k/profit sharing plans open to give them some greater flexibility in 2017. But more importantly, there have been $7 million in new contributions to the 401k and cash balance plans as of 2/28/17! And we’ve designed the plans to allow for additional medical groups to join the corporation and participate.

Best Practices Learned

  1. Even though a so called ‘brand name institution’ may be servicing a plan, that does not mean the plan is designed properly.
  2. Don’t assume all medical groups have the properly designed plans for their makeup!
  3. Look to an ABG firm for cash balance pension plan consulting for any professional type group (doctors, lawyers, accountants, engineers etc).

More Like This

All Plans Need an Annual Checkup

An ABG recordkeeper discovered a 7 person law firm retirement plan that had a broker collecting 12b1 fees and churning high priced mutual funds at over 100% annual turnover. The plan’s investment performance had underperformed the S & P by over 500 basis points over the past six years. And the broker was not performing its tasks as a Fiduciary.

Watch Your Matching Contributions!

Problem encountered – we were brought into a plan situation by a new CFO who had discovered issues with their prior plan provider. There was an Advisor who was not a fiduciary, an insurance company recordkeeper, and a Third Party Administrator.

Refreshing a Stale 401k Plan

We received an RFP from a manufacturing plant owned by a foreign based company. Their HR team had totally turned over in the midst of our proposal opportunity. They were being serviced by a name brand mutual fund, but it had no advisor. They had mostly target date funds, low participation and low contribution rates.