Learn What It Means to be a Retirement Plan Sponsor for Your Business
You have made a wonderful investment in your company and its employees. You have decided to start a company sponsored 401(k) plan for your employees to help them save for retirement. What does that mean for you? What are your responsibilities as the retirement plan sponsor?
Read on to learn more about what it means to be a retirement plan sponsor for your business.
Compliance Is Your Number One Concern
Retirement savings plans come with laws relating to the rights of the employees, the rights of the employer, and rules relating to investments and withdrawals. These laws change often, sometime more than once a year. As the retirement savings plan sponsor for your company, you are responsible for ensuring your company is always compliant with these laws.
You must put in writing the retirement plan documents to ensure they comply with all IRS laws. You also must ensure the plan is administered in accordance with the document provisions and within the boundaries of the laws.
To help with compliance concerns, you can purchase a pre-approved retirement savings plan. However, if you do so, you must have an adoption agreement. This agreement will become part of the plan. However, you should make sure you know what it says about when employees can participate in the retirement plan, types and amounts of contributions that can be mad to the retirement savings plan, how your contributions get divided among all retirement plan participants, when your plan participants become vested in the plan, and when and how retirement savings plan benefits get paid to employees.
Choose a Qualified Retirement Plan Administrator [TPA]
You cannot play ignorant when you are the sponsor of a retirement plan.
You must choose a TPA to administer the plan. You must know what services are covered (and what services are not covered) by your company’s retirement plan. You also need to appoint [if your company is big enough] an in-house administrator for the plan to tend to all administrative tasks.
Your TPA administrator can review the related documents to ensure it remains compliant with changing laws. Your administrator can also manage the day-to-day responsibilities, such as applying your retirement plans’ terms for participating and contributing to the plan as well as distribution of funds. They can provide notices to employees that participate in the plan regarding any changes or reviews involved with their retirement savings plan maintenance. Your TPA administrator can even file any forms and documents relating to your retirement savings plan with the appropriate agency (IRS, Department of Labor, etc.).
Working with a retirement plan administrator allows you to sponsor the plan while entrusting the day-to-day responsibilities to someone who is knowledgeable and understands the intricacies associated with installing and maintaining successful a retirement plan.
Communication Is Key
As the sponsor of a retirement plan, you must maintain communication with employees, your TPA, your investment provider and your payroll. Business changes. You receive new employees, employees retire, employees quit or get downsized, and all these issues can affect your retirement plan.
Conclusion
Retirement plan sponsors have a large responsibility when choosing to offer a 401k option to employees. However, a TPA plan administrator can take these responsibilities off your plate and oversee the retirement plan appropriately, maintaining compliance along the way. If you are looking for a retirement plan advisor who understands all of the intricacies of a 401k plan and can assist with the administrative tasks associated with your retirement plan , contact Scott Tanker at Retirement Plan Services Group at 609-922-0201 or www.retriementplanningservicesgroup.com today. And keep on saving!