Design Installation & Administration of Qualified Retirement Plans
Generally, if there have been no amendments to the plan you must provide a copy to all participants every 10 years. If amendments have been made, even if a Summary of Material Modifications was distributed, you must provide an updated copy after 5 years.
PSWNY prides itself on offering personal service. When you call our local or toll free number you are calling directly to our office not a call center we are local and independent. You will deal directly with the primary retirement plan design consultant and/or plan administrators that are assigned to your company. These representatives know you and know your business' pension plan, and will be able to answer your questions.
Why should I use an un-bundled approach and hire a Retirement Planner & Administrator to provide our plan's compliance administration & record-keeping?
These complicated and finite plan support services really should be "out-sourced" to professionals. At Pension Services of Western New York, (TPA) our sole business is providing compliance administration and daily valuation recordkeeping to retirement plans as an independent firm. Due to the nature of the potential risk of errors, staffing expenses and unnecessary exposure to plan sponsor and plan trustee liabilities, it is typically not advisable for a retirement plan sponsor to perform its plan's compliance administration or recordkeeping functions "in-house". By hiring a professional administrator like PSWNY to perform these important services for your plan, you will protect your plan and its participants from costly mistakes, regulatory penalties, liability exposure and all nature of aggravations that will act as distractions and interfere with the operation of your business or non-profit organization.
A retirement plan is "qualified" if it meets the rules and regulations of the Internal Revenue Service. Contributions to such a plan are generally tax-deductible for the employer and earnings on such contributions are tax-deferred while they remain in the plan. The participant in a "qualified" plan is not taxed on the contributions or the earnings until they are withdrawn from the plan.
The 403(b) is a tax deferred retirement plan available to employees of educational institutions and certain non-profit organizations. Participants contribute to either annuity contracts with insurance companies, or invest in mutual funds. Contributions and investment earnings grow tax deferred until withdrawal (assumed to be retirement), at which time they are taxed as ordinary income.
Named after IRS code 457, a 457(b) plan is a non-qualified deferred compensation plan for states, counties, cities, agencies, and their political subdivisions or agencies. Deferred compensation is a contractual agreement between an organization and an employee wherein the organization makes an unsecured promise to defer the compensation of the employee to some future date for services currently performed by the employee. Annual contributions are made through salary deduction up to $13,000 or 33 1/3% of salary, whichever is less. Distributions are made upon retirement, termination of employment, extreme financial hardship or at death to the name beneficiaries.
One nice benefit of the 457 plan is that in the last three years before the plan's normal retirement age, a participant can "catch up" on contributions missed in earlier years, as long as the total for each of the three years does not exceed $16,000.
Upon retirement, participating employees have various options for withdrawing funds. They can take out a lump sum, purchase an annuity or simply start drawing out money on a periodic basis from their current account. Unlike most other retirement plans, withdrawals may be taken from a deferred compensation account upon separation from service without incurring the 10% penalty for early distributions, even prior to age 59.
If your business is consistently profitable and you are an employer who wants to reward key employees with a generous retirement benefit; or if you are self employed individuals who would like to tax-shelter as much income as possible, then you should seriously consider sponsoring a Money Purchase Pension Plan.
Unlike a Profit Sharing Plan where employer contributions are optional, under a Money Purchase Pension Plan, employer contributions are mandatory and the employer contributes a fixed amount or a fixed percentage of compensation on an annual basis. Changing the contribution requires a plan amendment that the IRS will only allow if the change is infrequent. The "up side" is that such plans, funded solely by the employer, permit higher total contributions to as much as 25% of compensation.
Similar to profit sharing plans, money purchase pension plans may allow the exclusion of some employees by using eligibility criteria and give the employer a greater degree of control in determining when employees are vested.
Securities offered through Advisory services provided through
Pension Services of Western New York, Inc.
950-A Union Road, Suite 31
West Seneca, NY 14224
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Copyright © 2007 Pension Services of Western New York. All rights reserved. Last modified: 07/30/2007 14:09:13.