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Re: Changing 401K Plans / FEES / Investment advice

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  • #16

    Is your plan a 401k/Profit Sharing Plan with a cash balance plan option?
    Our group is of a similar size and our current plan has a similar fee structure to yours (too high).

    Any other suggestions of other low fee plans to take to “management” as an alternative?

    I plan on consulting a specialist to help negotiate the structure of our retirement plan strategy when I buy in to my group later in the year but would love to hear any alternatives used by other cost conscious docs.
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    For small- to mid-sized 401k plans, I’d suggest looking into Employee Fiduciary. Its $1,500 for a base fee (that covers 30 employees) + $30/employee over 30, and they charge only 0.08% of assets. They say they do the “record-keeping only” for a Cash balance plan though, so I’m not sure if that fits with your group’s needs.
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    They are a record-keeper only with very rudimentary TPA services.  They are appropriate for a Safe Harbor 401k plan, but definitely not for a cross-tested custom-designed 401k plan.  I use other record-keepers which are even lower cost than EF for solo practice owners.  For group practices I use other record-keepers and I bring in high level TPAs because without a TPA you don't have a plan.  There is a lot of compliance work that has to be done especially with a group practice plan (and also with a solo owner plan, despite the fact that it is a 'small' plan, the rules are still the same, and smaller plans are the ones who don't have the benefit of back office support, so they absolutely need to have a standalone independent TPA working exclusively for them).  The choice of a record-keeper is secondary.  The primary choice is that of an ERISA 3(38) fiduciary and TPA.

    Just a reminder to docs reading this forum.  Retirement plans (401k, Cash Balance, etc), especially when you have employees and/or partners are not DIY.  Saving a few bucks by going to a barebones record-keeper isn't going help when the plan is out of compliance and is under audit.  Investment-related breaches are a lot more rare than administrative ones, and the best recipe to have a problem down the road is not to hire independent providers such as a TPA or an ERISA 3(38) fiduciary.  If going that way, always know the limitations, and that you as the plan sponsor would have to become a compliance expert, because record-keeper's job description does not include compliance (despite anything they say on the website).  They have lots of low level staff that will handle your plan, so you can be sure that mistakes will be made, but you as the plan sponsor will be responsible for them financially and legally because that's how things work.
    Kon Litovsky, Principal, Litovsky Asset Management | [email protected] | 401k and Cash Balance plans for solo and group practices, fixed/flat fee, no AUM fees