Recommendations for 457(b) Vendor?

[Guest erisafried]

I am working with a nonprofit entity that is setting up a top-hat 457(b) plan for (at the moment) one executive employee. Since they don't have any experience in administering a 457 plan (even a pretty simple one), I would feel better if they started off with some sort of a "turn-key" approach that doesn't have a lot of moving parts.

Does anyone have any recommendations? Any vendors to stay away from?

Thanks!

[mbozek]

Why do you need a vendor with all of the attendant costs for a plan with one or two employees? There arent any moving parts in a 457(b) plan other than the amount of the deferral and distribution under the MRD rules. Distributions are taxed as wages on a w-2. There is no annual reporting,vesting or participation requirements, fiduciary rules, spds or testing of contributions. I have prepared plan documents for NP which permit self directed accounts where employee selects a financial institution to invest the contribution. Employer establishes the account as the owner and employee has a limited power of attorney to invest the funds but cannot withdraw funds. Employee gets account statement from financial institution. Employer's only out of pocket cost is for preparation of plan document. Employer gets benefit of letting exec choose where to invest the contributions and saves cost of plan administraton.

[Guest erisafried]

We do have an option that is essentially as you describe, and that may well end up being the way we go. I couldn't think of much "administration" that would need to be done for a single participant plan, but I still worry about the entity's ability to properly administer the thing. My thought was that it might be better to have an arrangement with training wheels for a while until they get the hang of it, even if that ends up being more expensive. I am also trying to factor in my own costs because even a bare-bones investment arrangement will get to be expensive if they are calling me to discuss every other day.

[mbozek]

I dont know what there is to administer. Even simple arrangments will cost several hundered dollars a year or more or a % of the assets. Once your client hes engaged a vendor it will be difficult to extricate itself from the vendor's investments. If the employees self direct investments there will be no need to call you or charge them for the call as a means of discouraging them.