What Sponsors and Advisors Should Know About Retirement Plans

BusinessWeek

October 28.2009

According to a 2007 U.S. Labor Dept. survey, 68% of small business owners feel unprepared for retirement and just 42% maintain a retirement plan. Here are four frequently overlooked tips about retirement plans for plan sponsors and their advisors.

1. Understand the "controlled group" opportunity. If you or your spouse own and/or control several businesses, the IRS may require you to treat all of your businesses as one for certain retirement plan purposes. The controlled-group rules can affect retirement plan selection and operation and could mean higher deductible contributions.
2. Determine your contribution budget. … For example, if your goal is to contribute more than $49,000, you will need to consider a defined benefit plan; a lesser figure can be served by such options as a simplified employee pension (SEP), savings incentive match plan for employees (SIMPLE) IRA, or 401(k)/profit sharing plan.
3. Shop around. Fees for establishing and maintaining plans vary enormously. … [You]can …evaluate how much you are paying for such things as plan investments and record keeping. In fact, it is your fiduciary duty to do so.
4. Keep good records. … Having an investment policy statement and documenting your activities for reviewing and evaluating your plan investments are good ways to start.

John Carl

President

Retirement Learning Center

Brainerd, Minn.