5. Failure To Satisfy Nondiscrimination Tests: Plan sponsors must annually test 401(k) plans to ensure the amount of contributions made by non-highly compensated employees (NHCE) are proportional to contributions made by owners and managers. The IRS recommends that plan sponsors who fail the tests, either for the Actual Deferred Percentage (ADP) or the Actual Contribution Percentage (ACP), consider automatic enrollment or securing some type of Safe Harbor for the plan. Sales Tip: Choose your retirement plan partner wisely. Ensure your partner provides all the tools and resources you need at your fingertips to help guide clients through the intricacies of plan administration. Make sure they provide the right amount of product training and support you need to help deliver and monitor the best retirement plan for each client. You can offer tremendous value to your 401(k) clients by using your expertise to help identify, fix and avoid the most common plan mistakes before they become big problems. This will help reduce their fiduciary exposure and limit their personal liability. Plan sponsors should always contact their benefits lawyer for counsel, but of all the external parties that work on a plan, you are most capable and best positioned to help monitor and fix these mistakes. By focusing on the top plan mistakes, you can provide real value by helping clients and showing prospects how they can save money, improve their plan and limit their fiduciary exposure by avoiding costly errors. 1. https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resourcecenter/fact-sheets/ebsa-monetary-results The information, analyses and opinions set out herein have been obtained from sources believed to be reliable and are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. Nothing herein constitutes or should be construed as a legal opinion or advice. You should consult your own attorney, accountant, financial or tax advisor, or other planner or consultant with regard to your own situation or that of any entity which you represent or advise. As national leader of Pentegra’s Financial Institutions Sales Channel, John Schafer is responsible for Pentegra’s business development efforts for community banks and credit unions nationwide. With more than 25 years of experience working with the financial community, John has developed a deep understanding of their needs. His unique perspective and expertise help financial institutions develop retirement plans and fiduciary outsourcing solutions designed to attract, reward and retain top talent. Prior to joining Pentegra, John was the leading sales representative for a private business. Before that, he worked in the banking industry for several years. John graduated from Purdue University in West Lafayette, Indiana, where he earned his B.A. in finance. He is also a certified financial planner (CFP) and holds FINRA Series 6 and 63 licenses. If you would like to continue the conversation with Pentegra, please contact John at john.schafer@pentegra.com or (317) 506-6875. DID YOU KNOW? Enjoy your association news anytime, anywhere. Scan the QR code to visit our online publication to stay up to date on the latest association news, share articles and read past issues. west-virginia-banker.thenewslinkgroup.org 27 WEST VIRGINIA BANKER
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