Oops they did it again

In a classic instance of the left hand not knowing what the right hand is doing, the IRS has sent out a number of DENIALS for the Application For Extension Of Time to File an Employee Plan Return in error.

On the latest Form 5558, the instructions specifically state that no signature is required on the Application for Extension of Time, however the IRS began rejecting those submitted without signature, until someone there realized their mistake.

After speaking with a representative at the IRS, our office was given the following instructions for responding to the DENIAL letter:

* Write a letter back to the IRS explaining the form was not signed due to the change in the instructions

* Include a copy of the original Application for Extension of Time

* Include a copy of the DENIAL Letter

If you (or your clients) receive a DENIAL letter from the IRS, please forward it to our office immediately so that we may respond in the above manner timely.

Just another day in the Retirement Plan world...

Learn More about ASPPA's QPFC Program

In a recent post I mentioned that ASPPA has rolled out a new designation for Investment Professionals of Qualified Retirement Plans, QPFC. I am pleased to announce that ASPPA will be hosting a FREE on-line seminar with more information about the designation, course materials and costs. Below is information about this from the ASPPA website:


WEBCAST –(FREE) ASPPA’s QPFC Program – The “Gold Standard” of the Industry
Presented by: Sarah Simoneaux, CPC, and Chris Stroud, MSPA

Join ASPPA for a free webcast designed especially for financial consultants and sales/marketing support staff who specialize in retirement plans. Learn more about ASPPA’s QPFC (Qualified Plan Financial Consultant) credentialing program, which has become the “gold standard” in the industry for financial advisors who wish to distinguish themselves in the retirement plan marketplace. The webcast will provide an overview of the QPFC program and why it is important to you, as well as details about course materials, costs, benefits, etc. One significant benefit is that the exams required to earn the QPFC credential provide significant continuing education credits for CFP, ChFC and CLU. There will be time allocated during the webcast for additional questions on the QPFC program of ASPPA.

Sarah Simoneaux, CPC, and Chris Stroud, MSPA, will be hosting the webcast. They are both recent past presidents of ASPPA and currently work as E&E Program Advocates. Sarah has worked in the employee benefits industry since 1981 and Chris has worked in the industry since 1978. Sarah is the author of Retirement Plan Consulting for Financial Professionals, the required textbook for ASPPA's first Plan Financial Consultant exam (PFC-1), and Chris is the Editor of The ASPPA Journal. Sarah and Chris offer consulting services through Simoneaux and Stroud Consulting Services to for-profit companies providing retirement services and to non-profit organizations. Their firm specializes in business planning, business consulting, professional development, industry research and customized skill building workshops.

To register via fax, download the registration form at: http://www.asppa.org/archive/gac/2008/webcasts/goldstandard/promofax-092408.pdf, complete it, and fax it to ASPPA at 703.516.9308.

EGTRRA Document Restatements

Well, we've FINALLY started the latest mandatory document restatement process. One of our document providers has, at last, released 401(k) and profit sharing plan documents on their system! So we're now beginning to go through all of our clients' documents to update them to the EGTRRA approved document. In the process we will be:

* Informing our clients of recommended plan design changes
* Letting our clients know of various options in the designs available
* "Cleaning up" some of those pesky take-over plans

What does this mean to you? Be sure that you (or your clients) are aware this restatement MUST be completed. If the plan is a Defined Contribution Plan, and is using a Volume Submitter or Prototype Document, the restatement must be completed by April 2010. THIS INCLUDES SOLO 401(k) PLANS!

If you, or your client, has a Solo 401(k) Plan, and you need a non-proprietary plan document which will not restrict the investment provider to be used under the plan, contact our office for pricing. We have a standard Solo(k) document available that is cost effective, and meets all EGTRRA requirements.

Western Benefits Conference

This year's Western Benefits Conference was held in Seattle, WA, and as always there were some interesting topics and speakers. One of the highlights for me personally was attending the ASPPA PAC reception, and meeting Sal Trapodi, among others.

ASPPA (a co-sponsor of the event) had a large presence. All of our employees are required to pass at least the first two ASPPA exams, and Administrators are encouraged to obtain various ASPPA designations. While discussing this with ASPPA's educational representative, I was informed about one of their latest initiatives: Certifications for Investment Professionals, being slated as the "CFP for retirement plans". More information will be posted on this shortly.

A hot topic over the course of the conference was the DOL's focus on 2 things: 1. PPA Implementation; and 2. Fee Transparency. For the DOL's summary on these topics go to www.dol.gov/ebsa, however future postings to this site will focus on these issues.

Other issues discussed (which, again, will be covered in future postings) include: updated 402(f) notices to terminated participants, the HEART Act, 401(k) Safe Harbor Deposit Timing, Cash Balance Plans, and various proposed bills.

Seattle is a beautiful, and CLEAN, city...if you ever get the chance, take a few days to walk around the city and check out Pike Street Market and, of course, the Space Needle. On another note, I rounded out the week by attending day 1 of the inaugural Mile High Music Festival in Denver, CO. Though there were many great acts there that night (Tom Petty & The Heartbreakers, Mike Gordon, Moe. and more), I have to say that once again Steve Winwood blew me away. He sounds as great today as he did 40 years ago!

Economy Going Down, Participant Loans Going Up

For those of us in the Retirement field, the latest survey released by the Transamerica Center for Retirement Studies came as no surprise. What the survey found was that 'the number of workers with loans outstanding on retirement accounts...rose to 18 percent in 2007 from 11 percent a year earlier.'

As retirement plan administrators, we can predict fairly accurately when the upswing in participant loan requests will occur: the start of the school year when tuition bills arrive and just before and just after the Christmas holiday shopping time. But with the recent trends in the market, the rising costs of living, and the current mortgage 'crisis', we have certainly witnessed a significant, and steady rise, in loan requests in the past months.

As a rule of thumb, we encourage plan sponsors to hold off adding loan provisions to a plan as long as possible, because we often see that once the floodgates have opened, participants see the loan option as a quick fix to their current situations. In reality participants are damaging their retirement savings, while (in many cases) just delaying the inevitable.

Many participants look at plan loans as a viable option because they pay THEMSELVES back the interest instead of a bank or lending institution. But what they fail to realize, especially in a downward trending market, is that when the assets are liquidated, and the loan check cut from their account, they have most likely just committed the cardinal sin of investing: they bought when the market was high, and sold when the market was low. Worse still, if the market turns around while the loan payments are still ongoing, they will then be buying back in at a higher value.

What is more troubling, in real world applications of loans, is that there are a number of participants that terminate employment with outstanding loan balances. If these loans are not paid in full immediately (or if an arrangement is not made for ongoing loan payments), the loan balance is deemed in default, and will be a taxable event to the participant. This can certainly further the financial strain on those already feeling the crunch.

Take time to educate participants about the pros and cons of taking a loan from a retirement plan, and when possible, have them look for other alternatives. They may not realize it now, but come retirement they'll be glad...

Kicking Off the 3rd Quarter

As we quickly head into the 3rd quarter of 2008, at last week's Advisor Breakfast, we took a look at some new ventures and marketing opportunities that are coming up.

First: On July 1, 2008 American Funds is rolling out their new PlanPremier TPA platform. This multi-fund product will allow clients to utilize the best of American Funds along with various outside mutual funds, along with the tailored plan design and high level of service clients have come to expect with a TPA. This is particularly exciting for Wells Thomas, LLC as we are one of a handful of TPAs in Connecticut that have been pre-approved to work with this platform. For more information, please call or office to schedule a meeting with us and an American Funds representative.

Second: We are now in the midst of the latest document restatement process for all of our Defined Contribution Plans using Prototype or Volume Submitter plan documents. All of these must be restated to the EGTRRA document no later than April 2010. This is a great opportunity to meet with your clients and ensure that the plan design is appropriate for the current company make-up, as well as meeting the goals of the company owner(s) or key employee(s). Now is the perfect time to solidify your relationship with your existing clients by providing proactive services...and could be a great time to market to potential clients by using this as a way to review their current plan satisfaction.

Third: We are pleased to announce that Wells Thomas, LLC and New England Payroll Services, LLC will be offering a seamless, online data transfer program for our mutual clients. Currently we are in the design stages of the system, but the end result will significantly lessen the data entry time spent by clients in ongoing contributions as well as year-end data collection. Once a client enters the appropriate payroll information into New England Payroll Services, LLC's website (or directly with a payroll representative), contribution data files will automatically be generated and Wells Thomas, LLC will coordinate the transfer of the data to the appropriate custodian of the client's retirement plan. Our goal is to provide not only an easy way to consolidate data entry, but to also help our clients ensure they are meeting the deposit timing standards as mandated by the DOL (see article below on proposed deposit timing). More information will follow as we move forward with this exciting new venture.

We'd like to thank all of those who attended this quarter's meeting, and look forward to seeing you next quarter. Invitations will be sent out in early September with details on when and where the next meeting will be held.

ADVISOR BREAKFAST

• Interested in learning more about the American Funds PlanPremier TPA program?
• Want to know the lastest about the mandatory document restatement process, and how your clients will be impacted in the next two years?
• Do you have any general questions on retirement plan issues you'd like to ask?
• Or how about having an informal round table discussion with other investment advisors in the area to find out how they are handling issues?

Come join us for an informal discussion on these issues at our quarterly get-together. This time we'll be hosting the meeting in-house and providing breakfast.

So join us on Wednesday, June 25, 2008 at 8 am at our office. RSVP through the 'Comment' section below.