Retirement plan responsibilities don't end with choosing a plan and its investment options. Monitoring your plan to make sure it is operating smoothly is also important. These guidelines can help.
Administrative assistance
Are you familiar with the various IRS tax rules and ERISA regulations that could impact your plan? Given the number and complexity of these rules, it's possible you aren't aware of the intricacies of each, so you might want to consider using an administrative provider.
An administrative provider typically offers the following services:
· Plan compliance
· Form 5500 preparation for plan trustees and/or sponsors
· Plan document services
· Form 1099 reporting for self-trusteed plans
· Funding requirements for defined benefit plans
· Plan accounting and record keeping
· Employee administration
Depending on the size of your business, you may feel that you can indeed handle these responsibilities yourself. Or you may feel more comfortable delegating them to your accountant. Since plans geared to "owner-only" businesses and those with only a few employees are often less complex, these solutions may prove to be just fine. However, if your business supports multiple employees and/or a 401(k) plan, which tends to have more complex investment and record-keeping needs, you may want to consider an administrative provider of "bundled" services. Such services can include not only typical administrative functions, but also communication and education programs, investment and retirement planning, Web- and phone-based participant account access, regulatory reporting, and trust services.
Trust and custody services
Under ERISA, all qualified retirement plans sponsored by a corporation (or in many cases, partnerships as well) must have a trustee for their plan. The only possible exceptions include plans where assets are held in insurance contracts or policies. Profit-sharing plans preserve the discretionary nature of employer contributions while offering features, such as loans, that may be attractive to both you and your employees.
By using a trust and custodial service provider as a non-discretionary trustee while the plan sponsor and participants make investment decisions, you can help alleviate your administrative responsibility. If you also need help keeping track of your plan assets, you may want to consider holding them in one centralized account used only for investing, while still keeping your current administrative arrangement.
Establishing your plan
The final step in establishing your plan is to sign its Adoption Agreement. Each particular plan has its own deadline dates, contribution limits and associated documents. You may want to consider using an IRS-approved prototype document. By doing so, you minimize the time and expense of drafting a plan. There are a variety of solutions to help you administer your plan effectively, and leave you free to manage other aspects of your business. Your Merrill Lynch Financial Advisor can work with you to coordinate the services you want.