We’re excited to have presented jointly with the Chamber, October 8, 2020, on the Chamber’s new Aggregation 401(k) member benefit “perk” being offered to members. Here’s the video and below is our blog post as well.
Less Time:
401(k) plans take time to administer. Check out the list of tasks that could come your way on the left side in the image below:
On the left are the many possible tasks that may come across your desk. The record-keeper and other service providers may give you some help with many of these - and do not accept any liability. The Chamber’s Aggregation plan comes with a helper called an administrative fiduciary. The helper takes care of all but three of the items on left - not just doing them, but taking on the liability for them! That includes submitting and signing the Form 5500 each year which is similar to a 401(k) tax return.
I list the “save time” benefit first, because as a business owner, you need to focus on immediate P&L issues, and you want your CFO and HR executives to focus on high return priorities. They still have some oversight responsibility but the time is reduced significantly.
Less Liability
The helper mentioned above not only saves time, they also lower liability. In addition to that helper, the plan comes with an investment fiduciary that takes full responsibility for selecting and monitoring the fund lineup. Believe it or not some companies have investment committees that get involved with selecting and monitoring funds in the 401(k) which is an unnecessary risk and poor use of their time.
Another word - compliance - with the aggregation plan, you delegate staying in compliance to a 401(k) administrative fiduciary specialist.
Less Cost
When you go to the 401(k) market with $2 Billion dollars, the financial services industry rolls out the red carpet and so they have for the Aggregation Program that the Chamber adopted and offers to its members. It’s important to note that the Plan adopted by the Chamber has been around for decades and has the size and experience to offer the benefits. Organizations that start up an Aggregation Program now or even in the last several years is way too small to generate the benefits. Even big plans save money and time. Plans that require an annual audit pay less for their audit.
Providers
The two most important providers that make this bundled aggregation work are TAG Resources and Transamerica. TAG Resources is the overall manager - they are the administrative fiduciary - take over almost every Plan Sponsor duty and the liability for those duties. No company wants their owner, Presindet, CFO or HR executive having to spend time on the 401k plan other than encouraging employees to use it as a great company benefit.
Transamerica is the “record-keeper” - that’s where employees log in to see their accounts and make changes. Record-keeping of Aggregation Plans is a little more complex because of having many plans under one umbrella. Transamerica has the most experience of any record-keeper which makes them the ideal choice. It’s a nicely design interface and cmes with a very well designed smartphone app.
TAG and Transamerica are the largest and most experienced in their respective fields.
CalSavers
In addition to simply offering an amazing member benefit for all members that have or will have a 401(k) plan - another reason the Chamber’s CEO offers the Aggregation Program is to give its smaller members a much better alternative to comply with CalSavers.
CalSavers requires all companies with 5 or more employees in CA to either offer a plan or use the state-run, state-designed plan called CalSavers. CalSavers is simply an individual Roth IRA plan - very limited - no pre-tax contributions/tax savings, no company match or profit-share.
The deadline for companies 5-49 employees is 6/30/22 and for 50-99 6/30/21. The first deadline for 100 or more employees just passed 9/30/20.
The images above came from a two page PDF flyer. At the link below you can open and download the two page Carlsbad Chamber of Commerce flyer on their Aggregation Program.