matth100

Thanks for the reply. Where I was going with this is that while there is control due to the common ownership, and while payroll is run by the same S Corp... My thought/hope was that it would mean that we did not have to cover the Nanny (unless that was desired).

"Get a ROBS" is the official IRS definition Sorry for the confusion... I think that Karoline may have identified the issue, but also, it might make it possible if so.... Existing k has a loan. If the plan is terminated then the loan will default. However, I'd like the client to be able to access k funds since he has no other available assets and needs some cash to keep afloat. I felt that a ROBS k would be a good option here, but we can't just close up the old plan and roll it, we would need to either find a way to amend the plan into a ROBS plan (my question) or if it would be possible to partially roll out from the old plan, leaving the loan intact, so it doesn't trigger default....? I'm looking for this to be done by someone, for both plan paperwork and TPA, if it is possible to be done.

Wondering if there might be a way to get a ROBS 401(k) from an existing Individual 401(k) that also has a loan attached. TP doesn't have the cashflow to pay off the loan now, so doesn't want to risk termination of that aspect. If anyone is familiar and drafts documents for this, please let me know thoughts and prices.

I was thinking about that, but figured that with a custodian change they might not be able to do so, I'll ask, thanks.

Wondering how we might address an over contribution to a SEP IRA if it has since closed and the funds transferred into a 401(k). 2016 tax year, looks like about $2K over the limit was added to the SEP, but a withdrawal doesn't seem possible since the account has since transferred into an Individual 401(k) Any ideas on how to resolve this?

I agree with you 100%. I only do them as a courtesy to other service providers I do business with. They do not actually generate revenue, and the client needs a lot more hand holding. Me too!

But to use your painting analogy, might not be able to afford (in a practical sense) a TPA to have access to a Solo K. My painting was not an analogy, it was a real situation for me. My virus protection comment was an analogy used to illustrate the point. The reason I even bothered to comment on this post is because over the past 10 years I've been aggressively correcting financial advisors who were quick to suggest that there was no need for a TPA simply because it was a one-person plan. This was a mindset that carried over from the old Keogh days. Back then, you mainly had a single source of funding in the plan. Nowadays, you have several sources of funds; each with their own rules. Books can be written on the potential failures. I think the most appropriate analogy would be purchasing a Mercedes Benz and not being able to afford the insurance premium. The easy argument is that if you cannot afford the insurance premium, then that would question whether or not you can really afford the Mercedes. I understand that each case is difference, but the idea of cutting corners and trying to make it seem 'practical' has been proven disastrous on many occasions. I've even explained to advisors why $12,500 in a SIMPLE IRA is better than $18,000 in a solo(k) plan. The main reason is that in a SIMPLE IRA, you don't need a TPA. In a solo(k) plan, the $300 fee that you quote is really for the additional $5,500 in contributions you are getting; and that amount is even reduced by the 3% employer contributions on top of the deferrals. Good Luck! Thanks for the advice.

I have a good grasp of compensation and will be setting up their payroll and deductions. Clients will be on W2 comp. Plan document is off the shelf 'Prototype' I wouldn't seek to build anything custom. I'm looking seriously at the QPA cert, I spoke with the ASPPA last week and they advised me to wait until Jan when the RPF 1 and 2 switch to a modular format. Thanks again for the help.

Matt, the point you are missing (or perhaps simply overlooking) is that a client who cant afford a few hundred a year on competent and qualified advice should probably look for savings vehicle more in line with what they can afford. And honestly, if you are putting away $18k+ a year, it is not that you cant afford it, you are simply too cheap for your own good. This isn't Michelangelo vs a handyman for a tree house, this is hiring a librarian to your electric work. Sure she may have read up on how to draw wires and how to ground, but there is a good chance she will burn your house down. On a side note, I'm not sure what ethical standards you are held to, but most professionals in this forum are held to circular 230 or higher, and providing services for something you are not qualified for would be a big no no. Something to consider. Well, I see it a little differently regarding cost. For example, the Mutual Fund industry could say the same: "If you can't afford 1.5% fee then you shouldn't be invested in the market" but in reality there is an ETF out there for 0.04% that does a better job for a lower price. Note that I'm not suggesting that I could do a better job at all than a TPA, just using a correlation between the concepts of pricing, and active vs passive management. Regarding the ethical standards, that is a good point. And circling back to my original line of questioning, in addition to what sort of recordkeeping requirements are needed for a SoloK, to address your question directly: What qualifications are required to send through a prototype SoloK and ensure that the client doesn't go over their limits/do anything out of bounds? Is a certification such as the QKA, QPA, CPC, ERSA, etc a qualification, and is it required by law to do what I'm talking about here?

Just to be very clear - I've never thought or said that the TPA isn't worth much, I think very highly of the profession and the qualifications. But to use your painting analogy, I wouldn't hire Michelangelo to paint my tree house. Would he (if he were still around) do a great job? Undoubtedly, but the value of the house just wouldn't justify the expense of hiring him. Saying I wouldn't want to hire him isn't a judgement on his skill, competence or years of training. I'm just trying to find a way to get people who might not be able to afford (in a practical sense) a TPA to have access to a Solo K.

I like basic questions - thanks for the answer So if all we are doing is delaying the RMD a couple of years and not offering any other value, the return doesn't seem to be overly great in relation to the added complication and potential risk. Is there any other value add that the vesting option, if possible, would offer?

Question related to the value such vesting would offer to the plan participant: if they did not incorporate this clause then they would have to start RMDs after 70 1/2 even if still working - would they be able to both contribute and RMD in conjunction in this scenario? If so, the lost opportunity from the delayed RMD likely isn't much in a single participant plan?

That's actually really neat... but just thinking, if the owner should die before they are vested, what would happen to the ER side?

Do they get fries with that? Thanks for adding value to the discussion. No offense was intended. I think that hidden within this statement is really the underlying aspect of this whole discussion. What is the perceived value of something? For some, my original post may have been of value because it added some levity to the conversation. For others, it may have added value to the discussion by highlighting the possible dichotomy of being able to provide services that include everything while seeking for insight on some fairly routine procedures for pension professionals. For still others, it added no value because it did not address a desired question or was perceived as a belittling comment. Similarly, some may see little value in paying fees for certain services because they prefer to the take the associated risks or assume little or no risk will exist. Others see a greater value in paying the fees to a seasoned professional due to the peace of mind they will have. To each his own. Sorry about that - I've done extensive research and nothing had led me to believe that TPAs had a sense of humor I personally don't see a dichotomy here. If the answer is routine and straightforward, why not share it rather than put up walls? I'm not sure I want to go through the entire QPA course just to discover that it was actually pretty straightforward all along!

I asked the provider of the docs and they said they took care of this, any updates are filed appropriately and both the participant and myself would be advised of any changes. Not exactly the case - I was asking (sorry for not being clear) if I run it on a custodial platform what additional measures should I take to ensure that it is all running properly. What I've noticed is that some providers (EG Vanguard) split the transactions into EE/ER at time of contribution whereas others (TD Ameritrade) do not. I just wanted to make sure that if we were with a custodian like TD (using their model prototype plan that they update) that contributions were tracked properly.

Do they get fries with that? Thanks for adding value to the discussion.

I think the key is ratio. $300 to a $10K contribution is 3% which is a tremendously high amount to pay as a fee for just one component of an overall solution. Even at $20K 1.5% is too much IMO. These folk are all going to be running S elections, so that is where the W2 comes in. I'm running a fee only advisor firm, there is a fee but it includes 'everything' and while I would share it here I wouldn't want to horrify you with how small it is

For some of these clients, $300 is probably too much.. I know it sounds crazy, but that's the fact of it. For others, $300 or more is fine. Again, depends on the client. Client type 1 with a prototype plan will run a single payroll for the entire year that I'll be setting up and run initially in Dec and then even out over 2017. I'll then send them the forms to fund the account at the custodian in terms of amount to transfer in. Client type 2 with a prototype will run recurring payroll which I will help them establish and set up ACH pulls from the custodian for regular, automated contributions. The plan is to have these clients using QB with direct bank account feeds so we can monitor and discuss business income/expenses and W-2 Income. I'd then monitor the custodial accounts to confirm that the amounts contributed tallied up to the amounts we established with the Payroll. One thing that might sound silly to you guys was an idea to do two ACH pulls per period on the custodian side, which would make it really apparent how much was coming in for EE and ER. Things like hardship/loans/after tax contributions etc I would put into the bucket of things where a custom plan document and TPA would be brought in. This is what I consider client type 3, and even with individual plans if it seems these provisions are requested or going to be needed I'd suggest that an off the shelf plan isn't a good fit, since so much more can be achieved via customization from people with the experience you folks have.

So this might also be insulting - I apologize in advance! I absolutely think you guys know what you are talking about - but (apologies if this sounds bad) I also feel that people here are making things sound worst case in order to upsell their services. Technically I said: To which you addressed as: Which does speak to my point that you can't actually track it accurately, so we're in agreement there as you propose Pro Rata allocations. At this point I'm not totally sure why it matters in regard to specific fact patterns I'm working with. As for the other points: I'd expect the client to blame me for this, regardless of whether there was a TPA involved or not - I think it's my job to explain the pro's and con's of the retirement options they have, and if they messed it up I wouldn't try to pin the blame on a third party for that lack of understanding. Back to the point, from what I can gather from looking into this, an Individual 401(k) plan with a model plan document from a custodian with no bells or whistles seems pretty straightforward to administer in terms of record keeping. I'd like to know if I'm missing anything on this, but if that is offensive, I apologize and I can just keep on looking. I do absolutely think that for clients (even Individual 401(k) clients) who have more elaborate needs from their plan, a custom designed plan document and ongoing recordkeeping from a professional TPA is essential and I'm all for it. In fact, I have a few clients that I'll be needing this service for and will gladly pay the market rate. Thanks everyone again for your insights here.

TPA software sounds interesting, but I'm still not sure it can truly track performance of EE vs ER, or actually if that is necessary. I'll keep digging.

OK so to track deposits, a payslip shows this, would having a copy of all payslips for the year suffice? In terms of 'earnings per contribution type' Isn't that impossible since the funds co-mingle when they hit the custodial account? How would you be able to determine what percentage of each was used to buy an underlying investment?

Thanks for the replies folks. To elaborate on my situation: I have a client who can custody assets within a model/prototype Individual 401(k) plan, the client only earns about $25K per year and we will be putting most of that into the plan. There isn't really enough left over cash from the relationship to justify a large fee in terms of recording that this was $18K in salary deferral (and maybe a few more $K in employer contributions). I can file the taxes for this, including the 5500 when needed as I'm an Enrolled Agent, but I don't know a huge amount about the practicalities of recording a plan like this one. If it were bigger, had multiple people involved, different levels of EE/ER contributions and all that I can see it being a viable candidate for using a full TPA solution, but I just look at these smaller plan situations as one that perhaps we can 'make work' if done correctly. I'm keen to learn, and am looking at a few qualifications to build up my knowledge, but want to know just for a case like this one how much work/time really exists on a practical, yearly basis?

Point them to the code and regulations and instructions to form 5500. Also let them know about the LRMs so they can make sure the plan document is current and in compliance. I had looked into this previously and was under the impression that form 5500 was not required until assets exceeded $250,000. Further to which, since they are Solo 401(k) plans they could file form 5500-EZ. My question is for the next decade or so where the plans will remain under the $250,000 threshold, what records should be kept on an annual basis?

Hi Folks, I've a couple of small business clients that need a TPA but not really a TPA fee. The Solo 401(k) balances are small, perhaps $10K-$20K or so. I was wondering if we could handle the record keeping for these smaller cases in house, and if so if there we some guidelines with regard to 'how' records should be kept? The only glaring thing I see is the split between EE/ER contributions when the custodian doesn't track that directly, are there other things that need to be recorded on smaller plans like this, and are there any rules on how things should be recorded? For example, would a copy of payslips showing the contributions suffice? Lastly, what qualification or course would prepare someone for scenarios like this if professional training is recommended? Thanks! Matt

Hi, I'm interested in offering several additional services to my financial planning practice, notably: Benefits Administration (for things like section 105, section 125 plans) Retirement/Pension Administration (including 401(k), cash balance, and other retirement solutions. I'd like to know what education or qualifications would be best advised to be able to competently manage such plans. I'm currently acquiring the Enrolled Agent designation, and feel that I need some more niche specific training/certs. Additionally, I'd really like the chance to see what software solutions are out there in a conference/expo format so that I could get a grasp for they are capable of. Are there any recommended conferences like this? Best Matt