Standard Benefit Administration, LLC

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Frequently Asked Questions:

1. What is an Open Architecture 401-k plan?

An Open Architecture 401-k Plan (or 403-b Plan) is a platform where the plan sponsor, with the assistance of the advisor and/or TPA, can choose the lowest cost and highest quality mutual funds and ETF's for their plan. In light of the new fee disclosure regulations we are endorsing and providing this type of platform. We structure the plan so there is no "revenue sharing" between the fund family and the recordkeeper, which typically results in the lowest cost share class for the given investment option. Please call us to discuss how this solution benchmarks with your current plan.

2. What are "reasonable plan fees" for participant accounts? The Department of Labor Guidelines that plan fees should be "reasonable" and not "excessive". They do not specifically define "reasonable" or "excessive". In our experience and with our platform, a reasonable average expense ratio for participants should be 1% or less. This ratio should take into account a minimum of 10 asset classes to give participants plenty of options. Fees for plan administration, which are sometimes paid out of pocket by the plan sponsor, should be included in this average expense. Many plans under $5,000,000 have expense ratios between 2-3%. For example, on a $2,000,000 plan costing 2.5%, if we can move the total average expense ratio to 1% with all other aspects being equal, the plan participants would save $30,000 per year in fees. This is not an uncommon scenario in our experiences.

3. Do I have to have an attorney to write the legal plan document, and any subsequent modifications, for my plan?

No, many third party administrators, including Standard Benefit Administration, LLC have pre-approved letters from the IRS for our prototype and volume submitter plan document software. At Standard Benefit Administration, our goal is to provide your company with all the resources needed to keep your retirement plan in compliance.

4. I have failed to file a form 5500 for my plan. I have heard the penalties are severe, what options does my company have to get back in compliance?
Companies that fail to file Form 5500 in a timely manner can face severe civil monetary penalties. In an effort to bring delinquent filers into compliance, the Department of Labor introduced the Delinquent Filer Voluntary Compliance Program (DFVCP). The DFVCP is available to companies who sponsor a retirement plan under Title 1 of the Employee Retirement Security Act of 1974 (ERISA). While civil penalties for failure to file a Form 5500 can be as high as $30,000, the DFVCP allows an employer to generally get up to date for between $750-$1,500.

5. I would like to start a retirement plan, but don’t want to include all employees, is this possible?

While there is discrimination testing that’s required to be passed, it is possible to structure your plan to exclude certain classes of employees. It is also normal to have provisions regarding age, years of service, and a minimum total of hours for purposes of eligibility. This would all be outlined in your Plan Document and the Summary Plan Description given to participants.