American Administration Services Company
A retirement plan maintained by an employer, provides retirement income to
participants or a deferral of income by employees into the plan. A
"qualified" plan means that the retirement plan is receives special
tax treatment for meeting requirements of the Internal Revenue Code.
Tax credits may help offset the cost of
establishing a plan.
Download our Retirement Plan Services
AASC designs, communicates and administers all qualified plans.
- Profit Sharing Plans -
offer flexibility in timing and amount of company
contributions not to exceed 15% of eligible compensation. Employer
contributions may be allocated among participant accounts based on a variety
of formulas dictated by the objectives set forth by the plan sponsor,
including Traditional, Age-Weighted, Social Security Integration, or New
An Age-Weighted Profit Sharing Plan allocates contributions based on
both age and salary, rather than just on salary and may benefit older
employees with fewer years to accumulate a retirement account.
Cross-Tested Plan Contribution Issues.
- 401(k) Plans - A design feature of a profit sharing plan allowing employees to contribute.
The company can elect to make an additional matching contribution to the
- Money Purchase Plans - Provide less flexibility but larger deductible employer contributions.
Contributions are stated a percentage of eligible employees salary, fixed
and specified in the plan document. The maximum deductible employer
contribution is 25% of covered compensation. contributions can be allocated
based on a variety of formulas dictated by the objectives of the plan
sponsor. Options include Traditional, Age-Weighted, Social Security
Integration, or New Comparability.
- Defined Benefit Plans - Allow a company to contribute as much money as is necessary to fund the
retirement benefit for the employee, per the plan document. Contributions
are determined actuarially each year, are flexible and funding may be may
skipped when necessary. See:
pension reporting rules information
Bonus Plan: Like a profit-sharing plan, except that instead
of contributions being made in cash, they are made in company stock.
Stock Ownership Plan (ESOP): A plan similar to a
stock-bonus plan, but with some notable differences. This plan is
invested in cash or employer stock. An ESOP may borrow from the
employer or use the employer's credit to acquire employer securities.
A 457 plan is a non-qualified deferred compensation plan for
states, counties, cities, agencies, and their political subdivisions or
agencies and 501(3)(c) Organizations. A 457 is designed to provide a tax
favored vehicle for participants to save for retirement and is not a
qualified retirement under Federal Law; it is merely a contractual
agreement between an organization and an employee wherein the organization
makes an unsecured promise to defer the compensation of the
employee to some future date for services currently performed by the employee
and employees do not have any direct claim on the plan assets.
we do not provide design or consulting for
457 or 403(b) plans )
Plan: A retirement plan for tax-exempt businesses (schools). It
works much the same way as a 401(k), allowing employer contributions and
employee salary deferrals. Investments are made in annuity contracts
issues by an insurance company, in custodial accounts for mutual funds, or,
in the case of church plans, retirement income accounts.
We perform many tasks to make
sure your plan maintains its IRS qualified status:
- The Actual Deferral Percentage
test under IRC Section 401(k)
- The Actual Contribution
Percentage test under IRC Section 401(m)
- Determination of maximum
contributions under IRC Section 402(g), 404 and 415
- The determination of minimum
contributions under IRC Section 416
- The coverage tests under IRC
- Plus more
Three major service models for DC plans
provider performs recordkeeping and plan administration (5500 form prep,
discrimination testing, plan documents etc.). This model is preferred by
mutual fund companies that also provide fund management. Plans with $1
million or more can choose from more than the provider's proprietary funds,
though the percentage of outside funds affects the administrative costs and
larger plans have more flexibility. Use caution as these may
appear to offer free recordkeeping & administration but there
is more to it, e.g. most assume the Expense Ratio of a mutual
fund measures total expenses as a percentage of net assets but there are
additional, less visible costs e.g. portfolio trading
costs are not paid by the fund manager; assets of the portfolio are
valued net of these costs. Many fiduciaries are completely unaware of
these costs because they are only reported to the SEC in two
- In the SAI
or Statement of Additional Information
but you must request it or access it via the SEC’s Edgar database. The SAI
is filed electronically, not attached to the fund registration statement
(semiannually). NOTE: fund families do not file for each individual
fund; multiple funds are grouped together into an entity called a
“registrant” and SAIs often exceed 100 pages! Extracting individual fund
information is very difficult!
NSAR but fund families
file NSARs for groups of funds & report total brokerage commissions on an
aggregate basis for all of the funds in the filing, not
for individual funds!
provider/fund manager performs the recordkeeping while a local TPA does the
plan administration, a model preferred by insurance companies serving the
small plan markets. Fund choices are limited to those offered by the
provider, which can range from 25 to 500 options, though most are not
proprietary funds of the provider.
provider (usually a TPA) provides the recordkeeping and plan administration
services and offers an open menu or platform of funds with few, if any
offer the ease of only having to deal with one vendor for all services.
are more flexible because plan administration is performed by a local TPA.
Open platforms offer more fund &
plan flexibility plus enhanced
Please call regarding our innovative
Open Platform system
Two primary Investment Model categories
Otherwise known as mutual funds, they should be listed in local newspapers.
There are load and no-load mutual funds, with load funds
carrying extra fees.
Load funds may provide the sponsor with
an experienced consultant via built-in fees while no-load funds, sometimes
called institutional shares (iShares) may offer lower expense ratios.
Unregistered Products including:
Group annuity contracts
offered by insurance companies are mutual funds with a life insurance
contract wrapped around them, which allows the insurance provider to adjust
the asset-based fees on a plan level. Small plans often
use group annuity contracts because the provider builds in (wraps) extra
expenses to cover administration.
Cloned Funds are similar
to group annuity contracts but there is no life insurance contract. The
provider can adjust fees but not on a plan level. Cloned funds are generally
used by insurance providers in the mid-sized plan market.
Consider the type of consultant you
wish to engage: a financial advisor, third-party administrator (TPA) or
benefits consultant and whether to work with a direct or advisor-sold service
provider. Direct providers offer no-load funds that do not have extra expenses
within the funds to pay a financial advisor. Advisor-sold plans offer load
funds to pay the advisor. No-load funds are 25 to 100 basis points less than
load funds (100 basis points equals 1%). Consultant fees for help evaluating
and selecting vendors can run $15,000 to six figures to help with direct
providers. Advisor-sold consultants normally receive a commission from the
IRS Form 8880, Credit for Qualified Retirement
Savings Contributions printable fill-in .pdf
Nonqualified plans can
discriminate in favor of highly compensated and
Retirement Plan Proposals
retirement plan compliance issues
Retirement Plan Services
||Are all of your
and in full compliance? Do you issue timely
||We take governmental regulations and
compliance seriously & we deliver "outsourcing solutions" customized to
your specific objectives. Are your plans subject to ERISA?