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!

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. The plan was set up as a safe harbor plan, with auto-enrollment. For four years, the recordkeeper mixed up the safe harbor matching contributions with discretionary matching contributions – and each had separate vesting schedules. And the employer had a seasonal workforce, further complicated by the auto-enrollment feature. The plan was in need of an audit and could have been disqualified by the IRS.


ABG Solution

We got brought in by a new Advisor once the new CFO discovered the problems. The insurance company recordkeeper wanted $10,000 to fix the problems. We self-reported the problems under the IRS Self Corrections program. All the matching contributions got moved into the proper accounts and the plan was audited and reported as clean once we were caught up.


Best Practice Learned

Sponsors need their service providers to be accountable. In this case with three separate service providers and no fiduciary, no one was accountable. It’s best if the Advisor steps up and accepts a formal fiduciary role and takes ownership over potential issues ahead of time, and works up front with the recordkeeper to build a proper framework for plan success.

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Trash Hauler Replaces Some Wasteful Funds

One of the nation’s ten largest waste haulers had a $70 mm dollar 401k plan and a $45 mm Defined Benefit Plan. After an outside advisor warned the sponsor they might be paying too much in their overall fees, they decided to put the plan out for bid and ABG was asked to respond. The plan had an advisor and was using a top 10 institutional recordkeeper. We received the RFP as an independent recordkeeper.

All Plan Designs Are Not Perfect…

We ran into a 401k plan sponsor who had been routinely refunding over $30,000 in plan contributions made by their highly paid group. We met with the Advisor and sponsor to obtain their objectives in sponsoring the plan, and what they hoped the outcome could be.ABG SolutionBy focusing on the top 20% of highly paids as opposed to just the defined term “Highly Compensated Employees”, we were able to reconstruct the plans formulae and eliminate the refunds.