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RETIREMENT PLANS

Retirement plans are not "one-size fits all". There is no single method for selecting the right retirement plan. Each small business and every small business owner is unique and must consider their own goals and priorities.

Four key questions that help to identify the best retirement plan solution are;

  • Is the employer willing to accept a mandatory funding requirement of at least 3% of covered payroll?
  • How much does the employer want to contribute to the plan on a consistent basis?
  • Which employees are targeted to benefit the most from the plan?
  • What is the employer's tolerance of administration and set-up costs?

Rothrock Payroll Services works with several providers to provide a full array of retirement plan options. From plan selection to discrimination testing to completion of annual Form 5500 returns, Rothrock makes retirement plan administration easier.

One solution that Rothrock has developed is the Multiple Employer 401k Plan.

MULTIPLE EMPLOYER 401K/PROFIT SHARING PLAN

The professionals at Rothrock are often asked about retirement plan options. Employers want to ensure that their pension costs go to the employees and not to annual administrative costs. In addition to limiting annual administrative costs, employers always want to mitigate their fiduciary liability. To meet these and other recurring desires, Rothrock created the Multiple Employer 401K/Profit Sharing Plan. Here is a quick overview.

Unaffiliated employers join or "adopt" into the plan and this enables the employers to pool their resources so that:

  • Annual administrative costs are lower.
  • Investment options increase.
  • Reduce plan compliance.
  • Mitigate employer fiduciary liability.
  • Provide features small employers could not afford by themselves; such as online particpant tools.

The plan is completely customizable and while it isn't the best answer for every employer, it is a good option for many employers. Some features include:

  • The plan is overseen by an independent entity that bears the fiduciary responsibility for administering the plan.
  • The plan uses a Third-Party Adminstrator (TPA) to ensure compliance with the law, tracks participant eligibility, vesting, manages the website and call center, and issues statements.
  • The TPA also maintains the plan documents (these provide direction on how the plan operates) and updates plan documents for changes in pension laws.
  • Investment options that include;
    • Many of today's most popular funds and fund families.
    • Professionally managed asset allocation models.
    • Target date funds.
    • No-load funds.
    • ETFs.
  • Online participant tools.
  • Investment fact sheets and background data for each investment.
  • Daily Valuation website for participants.
  • Quarterly statement mailed to participants.
  • Ongoing employee education program.
  • Broad range of Investment Options that include;

RETIREMENT PLAN DOLLAR AND PERCENTAGE LIMITS

The government won't allow you to defer all of your taxes by contributing everything into a retirement plan.  There are several dollar and percentage limits and they are always changing. Rothrock helps you navigate this maze of limiting amounts and percentages.
       
    2016 2017
Annual compensation for plan purposes (for plan years beginning in calendar year) 401(a)( 17) Indexed in $5,000 increments $265,000 $270,000
Defined benefit plan, basic limit (for limitation years ending in calendar year) 415(b) Indexed in $5.000 increments $210,000 $215,000
Defined contribution plan, basic limit (for limitation years ending in calendar year) 415(c) Indexed in $1,000 increments $53,000 $54,000
401(k)/403(b) elective deferrals (for taxable years beginning in calendar year) 402(g) Indexed in $500 increments $18,000 $18,000
457 plan, elective deferrals (for taxable years beginning in calendar year) Indexed in $500 increments $18,000 $18,000
401(k)/403(b)/457, catch-up deferrals (for taxable years beginning in calendar year) (Age 50+) 414(v) Indexed in $500 increments $6,000 $6,000
SIMPLE plan, elective deferrals (for calendar years) 408(p) Indexed in $500 increments $12,500 $12,500
SIMPLE plan, catch-up deferrals (for taxable years beginning in calendar yr) (Age 50+) 408(p) Indexed in $500 increments $3,000 $3,000
Defined contribution plan §415 percentage of compensation contribution limit 415(c) 100% of compensation    
Profit sharing plan §404 percentage of compensation deduction limit 25% of compensation    
Elective deferrals Do not count against §404 deduction limits    
SEP contribution / deduction limit 408(k) 25% of compensation    
IRA contribution limit 408(a)   $5,500 $5,500
IRA catch-up contribution (Age 50+)   $1,000 $1,000
Highly Compensated Employee 414(q)   $120,000 $120,000
SEP Coverage 408(p)   $600 $600
FICA Covered Compensation   $118,500 $127,200
PBGC Maximum Monthly Insured Benefit (Age 65)   $5,011  
HSA Single/Family   $3350/$6750 $3400/$6750