kpha meeting retirement plans 1/16/14 bruce a lafferre
TRANSCRIPT
KPHA MEETING
RETIREMENT PLANS
1/16/14
BRUCE A LAFFERRE
KPHA
• RETIREMENT PLANS COMPARISON
• 1/16/2014
• BRUCE A LAFFERRE, CHFC, MSFS, MBA
• PHARMACISTS MUTUAL COMPANY
SIMPLE IRA
• SALARY DEFERRAL PLAN—OFFERS EMPLOYEES CHANCE TO CONTRIBUTE $12K (+$2500 > AGE 50) IN 2014
• REQUIRES $ FOR $ MATCH BY KPHA UPTO 3% OF EMPLOYEE SALARY FOR 2014
• REQUIRES NO SET UP FEE• REQUIRES NO ANNUAL 5500 REPORT TO IRS• KPHA CHOOSES A FIDUCIARY TO MANAGE THE
CONTRIBUTIONS• PARTICIPANTS MAYBE OFFERED A VARIETY OF
INVESTMENT ALTERNATIVES
• DOES NOT PROVIDE LOAN PROVISIONS TO PLAN PARTICIPANTS
• ALL CONTRIBUTIONS ARE IMMEDIATELY VESTED• PARTICIPANTS MAY ACCESS ACCOUNT FUNDS UPON
RETIREMENT, TERMINATION OF EMPLOYMENT, OR DEATH
• ADDITIONAL CONTRIBUTIONS BY KPHA ARE NOT ALLOWED
• ADDITIONAL CONTRIBUTIONS BY EMPLOYEES BEYOND TAX LIMITS ARE NOT ALLOWED
401K PLAN
• PLAN REQUIRES AN ADOPTION AGREEMENT FILED WITH IRS
• PLAN REQUIRES AN ANNUAL 5500 REPORT FILED WITH IRS BY AN ERISA ADMINISTRATOR
• PLAN OFFERS MORE FLEXIBILITY• SALARY DEFERRAL PORTION THAT ALLOWS
EMPLOYEES TO CONTRIBUTE UP TO $17500 AND ($5500 > AGE 50) IN 2014
• MATCHING CONTRIBUTIONS BY KPHA ARE FLEXIBLE—SUCH AS $ FOR $ UP TO 3% OF SALARY AND $.50 FOR $ UP FROM 3% UP TO 5% OF SALARY
• KPHA CAN ELECT TO MAKE ADDITIONAL CONTRIBUTIONS TO PLAN = TO LESSER OF EMPLOYEE SALARY OF $50K FOR 2014
• VESTING SCHEDULE FOR KPHA CONTRIBUTIONS SET BY KPHA
• KPHA SELECTS A PLAN FIDUCIARY TO MANAGE THE PLAN ASSETS
• KPHA SELECTS THE INVESTMENT OPTIONS• PLAN LOANS MAYBE AVAILABLE
DEVELOPMENTS
• TAX DEFERRED OPPORTUNITIES CREATED BY ERISA LEGISLATION SEVERAL DECADES AGO FOR ORGANIZATIONS TO CREATE RETIREMENT PLANS
• PROVIDE OPPORTUNITY TO OFFER TAX DEFERRAL OPPORTUNITY FOR EMPLOYEE TO SAVE FOR RETIREMENT
• PROVIDE IMPORTANT MATCHING INCENTIVES FOR EMPLOYEES TO CONSIDER
• MAJORITY OF WORKERS TODAY ARE NOT SAVING AND MAYNOT BE PARTICIPATING IN ANYTYPE OF RETIREMENT PROGRAM
• DEFINED BENEFIT PENSION PLANS ARE BEING REPLACED BY SALARY DEFERRAL PLANS (401K AND SIMPLE IRA)
• PERFORMANCE RESPONSIBILITY IS BEING TRANSFERRED FROM EMPLOYER TO EMPLOYEE
• EMPLOYEE NOW DECIDES HOW MUCH AND WHEN TO INVEST IN THE PLAN
• MAY HAVE SOME CHOICES OF INVESTMENT OPTIONS• PLAN ASSETS ARE PROTECTED UNDER FEDERAL
LAWS
• RETIREMENT FUNDS MAY NOT COME INTO CONSIDERATION FOR APPLICATION FOR EDUCATIONAL LOANS FOR CHILDREN
• PLAN ASSETS MAYBE AVAILABLE WHEN EMPLOYEE TERMINATES TO TRANSER TO ANOTHER PLAN
• PLAN EARNINGS AND CONTRIBUTIONS ARE TAX DEFERRED
• TREMENDOUS GROWTH OPPORTUNITIES OVER THE LONG TERM (TIME VALUE OF MONEY AND COMPOUNDING INTEREST)
• TAX DEDUCTIONS FOR EMPLOYERS FOR PAYMENTS
FEDERAL GUIDELINES
• ADOPT A WRITTEN PLAN AGREEMENT• ARRANGE A TRUST FUND FOR PLAN ASSETS• DEVELOP A RECORD KEEPING SYSTEM• PROVIDE PLAN INFORMATION FOR EMPLOYEES• CONDUCT PLAN ENROLLMENT MEETINGS• MONITOR PLAN PERFORMANCE• MONITOR PLAN SERVICE PROVIDER• MAKE CONTRIBUTION DECISIONS FOR EMPLOYER• ESTABLISH PROGRAM FOR PARTICIPANT
COMPLAINTS
• DEVELOP THE ANNUAL PLAN SUMMARY DESCRIPTION FOR EACH PARTICIPANT
• COMPLETE REQUIRED REPORTS AND PAY NECESSARY FEES
• PLAN ADMINISTRATOR SURETY BOND MAYBE REQUIRED
• ADJUST PLAN AS NECESSARY
KPHA CONSIDERATIONS
• PHMIC HAS BEEN IN EXISTANCE SINCE 1909.• ONE OF 15 INSURANCE CARRIERS THAT HAVE
MAINTAINED AN “A” RATING FROM AM BEST COMPANY FOR THE PAST 75 YEARS
• OFFER KPHA A VARIETY OF OPTIONS FOR PLAN FUND INVESTMENTS
• SPECIAL ARRANGEMENT WITH PMG• ME