Is Your 457(b) or 401(a) Plan Fee Allocation Fair and Reasonable?

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By Jeff Chang

Investment fiduciaries and plan administrators of California public sector 457(b) and 401(a) plans are required by law to act as “prudent experts” for the sole and exclusive purpose of providing benefits and defraying “reasonable expenses” of administering the plan. We believe that these duties should cause plan fiduciaries to look beyond whether their plan investment fees and plan recordkeeping fees are reasonable in the aggregate – at the plan level. If you take a closer look at the various types of plan fees (and what they represent), you may decide that the current manner in which your plan “spreads” or allocates these fees no longer makes sense or no longer seems fair.

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Posted in 401(a), 457(b) Plans, Fiduciary Duties, Investments, Plan Administration, record-keeping | Tagged , , , | Comments Off on Is Your 457(b) or 401(a) Plan Fee Allocation Fair and Reasonable?

What Participant-Level Records Should Your Governmental 401(a) or 457(b) Plan Keep?

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By Jeff Chang

In earlier posts, we discussed the plan documents you should keep as well as some of the policies and procedures you will need to properly maintain and administer your governmental 401(a) or 457(b) plan. This post discusses the participant-level records that you may need to keep in order to determine the benefits due, or which may become due, to plan participants, their spouses, beneficiaries, and alternate payees. Although governmental plans generally are not subject to ERISA, the inclusion of ERISA-like fiduciary duties and responsibilities in authorities such as the California Constitution, definitely make the guidance and rules promulgated by the U.S. Department of Labor (DOL) relevant to California’s public sector plans.

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Posted in 401(a), 457(b) Plans, Plan Administration, record-keeping | Tagged , , , | Comments Off on What Participant-Level Records Should Your Governmental 401(a) or 457(b) Plan Keep?

Is Your Social Security Replacement Plan Up to Snuff?

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By Jeff Chang

As we previously explained, most public agencies are not automatically subject to Social Security. They have a choice between voluntarily participating in Social Security pursuant to a section 218 agreement, or they can exempt some or all of their payroll by providing what is known as a “Social Security Replacement Plan” (SSRP).

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Posted in 401(a), 457(b) Plans, Plan Administration, record-keeping, Social Security | Tagged , , , | Comments Off on Is Your Social Security Replacement Plan Up to Snuff?

The “Mechanics” of Combining Your Agency’s Multiple 457(b) Plans

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By Jeff Chang

Many public agencies have come to sponsor and maintain multiple 457(b) plans, which can unnecessarily increase the compliance burden as well the fees paid by participants. Although the human resource and finance managers who typically oversee these plans know that it makes sense to simplify and consolidate these plans, many don’t know how to start or accomplish this task. If you are in this situation here are a few suggestions for breaking down and addressing the tasks:

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Posted in 457(b) Plans, Investments, Plan Administration, record-keeping | Tagged , , , | Comments Off on The “Mechanics” of Combining Your Agency’s Multiple 457(b) Plans

California Public Agency 401(a) Sponsors Should Amend Their Plans for PEPRA and May Want to Submit for a New IRS Determination Letter

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By Jeff Chang

Ongoing changes in the way the IRS reviews and “approves” qualified retirement plan documents and the need for California public agencies to comply with the Public Employees’ Pension Reform Act (PEPRA) are forcing these agencies to reevaluate the “form” of 401(a) plan document they use. Although California’s landmark pension reform legislation was directed primarily at public sector defined benefit pension plans, such as CalPERS, CalSTRS, and the numerous county retirement systems, PEPRA also established a number of requirements for California public agency defined contribution plans, or 401(a) plans. In 2017, the IRS significantly changed the rules regarding the use of pre-approved plan documents (i.e., the form/template plan documents typically offered or sold by plan recordkeepers, financial institutions or benefits consultants that previously have gone through an IRS “pre-approval” process and have received an IRS opinion letter regarding satisfaction of various plan qualification rules). We will refer to these plans as “PPDs.”

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Posted in 401(a), PEPRA, Plan Qualification | Tagged , , , , , | Comments Off on California Public Agency 401(a) Sponsors Should Amend Their Plans for PEPRA and May Want to Submit for a New IRS Determination Letter