Administration
RPS’ goal is to provide seamless administration of the retirement system. While the employer retains full control as benefit provider, RPS handles the day-to-day details. Employers can outsource some or all of the administrative functions necessary for the smooth operation of the retirement system.
Services include:
Profit Sharing
A Profit Sharing Plan is an arrangement that rewards employees by contributing set amounts to a retirement plan. Contributions are discretionary and do not have to be made every year. The employer maintains maximum flexibility in the amount and timing of the contributions. These contributions plus earnings grow tax-deferred until withdrawn.
Usually this plan type is incorporated into a 401(k) plan. We will work with you to determine the best allocation method for your situation and design the program that best meets your needs.
401k
A 401k plan is generally incorporated with a profit sharing plan. It allows each employee to defer a portion of their pay into the plan. Thus, the employee is helping to save towards their own retirement. To encourage employees to save, the plan can also allow for the employer to make matching contributions – thereby increasing the amount every employee receives each year.
There are many nuances to 401k plans that can be added to your program. These include Safe Harbor contributions and Roth deferrals. We will work with you to determine if this design best meets your needs.
Cross Tested
A cross tested plan is an allocation & testing method used for profit sharing allocations. It allows for more efficient allocation of the employer contribution towards owner/employees. It is not uncommon for the owner/employee to receive an allocation of up to four (4) times the amount allocated to the rest of the employees. This allocation method can be incorporated with a 401(k) plan to maximize the allocations each year.
We will work with you to determine the best allocation method for your company and will assist you each year to allocate the contribution to best meet your needs.
ESOP
An ESOP (Employee Stock Ownership Plan) can be used to help employers in their succession planning. This program allows the employer to make contributions in the form of company stock to the plan and allocate it to each employee and can be utilized by both C and S corporations. This is an excellent method to shelter profits and dividends from immediate taxation. These programs can also incorporate 401(k) plans and are commonly known as a KSOP (401(k) Stock Ownership Plan).
These programs require specialized knowledge of the rules & regulations that pertain specifically to these plans. Let our trained staff readily administer these programs and assist you throughout the year.
403(b) Plan
A 403(b) plan is a tax-deferred retirement plan for certain tax-exempt employers, such as non-profit organizations, some hospitals, and public schools and is similar to a 401(k) plan. Contributions can grow tax-deferred until withdrawal at which time the money is taxed as ordinary income. These plans may allow for some type of contribution from the employer, either in the form of a match of the percentage of the amount contributed by the employee or based on a percentage of compensation. It is possible for an employer to utilize both forms of contributions. 403(b) plans are subject to universal availability which briefly means that all employees must be permitted to make salary-deferral contributions.
From a plan administration standpoint, 403(b) plans do not have many of the same technical difficulties that 401(k)’s do, such as discrimination testing, especially if the plan is not an ERISA plan. Let us work with you to determine if this plan would best meet your needs.
457 Plans
A 457 plan is a tax-exempt deferred compensation program made available to employees of state and federal governments and agencies. It’s similar to a 401(k) plan, except there are no employer matching contributions and the IRS does not consider it a qualified retirement plan. Participants can defer some of their annual income (up to an annual limit), and contributions and earnings are tax-deferred until withdrawal. Distributions start at retirement age but participants can also take distributions if they change jobs or in certain emergencies. Participants can choose to take distributions as a lump sum, annual installments or as an annuity. Distributions are subject to ordinary income taxes and the amounts cannot be transferred into an IRA.
You as the employer can pick the vendors offering investments in the plan and change them if necessary. The employer can set all of the other rules. Federal laws make compliance for such plans much easier than for 401(k) plans since there are no “non-discrimination tests” to perform. Let us help you determine if this design best meets your needs.
Non-Qualified Plans
A Non-Qualified plan is a retirement plan that does not meet IRS (or ERISA) requirements for favorable tax treatment. Non-qualified retirement plans are funded by employers and are more flexible than, but do not have the tax benefits of, qualified retirement plans. They are primarily offered to executives and other highly compensated employees whose participation and benefits from qualified plans may be significantly restricted. The plans may differ significantly from company to company, and from individual to individual within the same company. Unlike with qualified plans, there are no legal contribution limits for Non-Qualified plans. Typically, they are funded in one of three different ways: “Pay-as-you-go,” mutual funds (and other publicly traded investments), and life insurance. The life insurance option is a popular and typically cost-effective funding mechanism. Benefits are paid at retirement age in the form of annuity which is taxed as ordinary income, or in lump sum payments which can be transferred into an IRA to defer taxes which is opposite of a qualified retirement plan.
Non-Qualified plans do not permit you to roll over plan assets into an IRA or another Non-Qualified plan when changing jobs. Let us help you determine whether or not this plan is the right program to fit your needs.
Davis-Bacon/Prevailing Wage Plans
The Davis-Bacon Act is federal legislation that was enacted during the depression era in 1931 to prevent unfair labor practices in nonunion situations. Amended in 1935, it established a system of setting wage rates in advance of the contract bidding and in 1964 it was amended to include fringe benefits as well. The purpose of the Act was to support labor unions by protecting workers from the economic disruption caused by out of town contractors coming into an area and securing federal construction contracts by underbidding local wage levels. In a Davis-Bacon retirement plan, workers are provided with deferred compensation and tax favored accumulation while avoiding the costly ramifications of the fringe benefit component being classified as wages. This cost avoidance feature is advantageous to both the contractor and the employee. The contractor will recognize payroll tax savings, and Davis-Bacon fringe wages can also be contributed to a qualified plan and used as the required contributions for a safe-harbor 401(k) or the gateway allocation in a cross-tested defined contribution plan.
With a properly crafted plan, the contractor can discharge his or her Davis-Bacon obligation and at the same time set the foundation for maximizing deferrals and other contributions on their own behalf. Let us help you determine which plan best meets your needs.