I’d like to thank you for indulging me as I take one last dramatic turn in my blog series featuring the “Seven Administrative Sins.” In each blog, I’ve uncovered the errors 403(b) plan sponsors make (many times unknowingly) that can doom their plans – either from a compliance perspective or through administrative adversity.
To get up to speed, you can read the first blog of this series, where I talked about how problems arise when many plans have provisions to force out small amounts, as well as the limitations regarding retirement plan loan limitations. In the second blog, I introduced two more “sins” – hardship distributions and Qualified Domestic Relations Orders (QDROs).
At the Principal Financial Group®, we typically see these type of problems crop up when a 403(b) plan sponsor who is shopping for a new service provider comes to us in search of a professional to guide them. Which brings me to the last chapter – the final three (and possibly the most pervasive) sins a plan sponsor can make. Read more
Most DB plan sponsors that freeze their plan want to terminate it completely someday.
Terminating the plan allows plan sponsors to:
- Pay plan participants the benefit they have earned.
- Eliminate the liability that they have had to manage as part of the plan.
There are a lot of moving pieces leading up to a DB plan termination including:
- Administrative tasks (such as participant notices, election forms, government filings, etc.),
- Plan document amendments,
- Annuity purchase decisions,
- Protecting the plan’s funding status (which is so critical to maintain during this process).
This is my second of three blogs in a series I call the “Seven Administrative Sins,” which I know sounds a little ominous. Yet I’ve found it’s an effective way to point out the mistakes 403(b) plan sponsors make that can put a non-profit plan out of compliance – or turn it into an administrative monster.
In the first blog of this series, I talked about the problems regarding how many plans have provisions to force out small amounts, as well as the limitations regarding retirement plan loan limitations and the challenge of tracking them. In this blog, I will introduce two more “sins” that can plague 403(b) plan sponsors – and suggest a way to help them. Read more