Posted on Monday, 21st June 2010 by The Keane Organization

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Do you need to learn how to terminate a defined contribution plan?

If so, read on to learn the basics of defined contribution plans and the steps involved in terminating one.

If you still have questions at the end of this article, feel free to contact Keane Retirement Services by clicking here to fill out the online contact form.

OR –

If you would like to speak to an expert over the phone, call us at 800-848-8896.

What Exactly Is A Defined Contribution Plan?

Here’s a brief definition — if you already know this, feel free to skip to the next section on how to close a defined contribution plan.

A defined contribution plan is one in which the benefits of an employee during retirement ultimately depend on the amount of contributions to and asset appreciation within an individually-owned account. This is in contrast to defined benefit plans in which employees have no individual accounts, but rather are promised a benefit from the company during their retirement. The value of the benefit is typically based on the employee’s length of service and earnings history. Read More »

Posted in 401k Termination, Defined Contribution Plans, Retirement Plan Management | Comments (0)

Posted on Tuesday, 15th June 2010 by The Keane Organization

Actually, there is no such thing as a “401k termination letter”, though it is a commonly [mis]used phrase.

What people really mean when they say it is a 401k plan “determination” letter. You can see how one may confuse the two.

But, it just so happens that this IRS letter IS an important necessity when terminating 401k plans.

What You Need To Know About “401k Termination Letters”

A 401k determination letter is Form 5310 that is filed with the IRS.

An affirmative response from the IRS indicates that it has reviewed the plan document and found that all of its provisions comply with the requirements for a qualified 401k plan.

An employer who sponsors a 401k plan is strongly advised to get an IRS determination letter when the plan is first established, whenever it is amended and before the plan is terminated.

However it is not a requirement. In fact, we see many plans that terminate without first filing this form.

A favorable IRS 401k determination letter is important to the employer sponsoring the 401k plan when they want the peace of mind that they have followed all the rules.

Why Determination Letters Are Important

Qualified 401k plans give substantial tax benefits to both parties. Read More »

Posted in 401k Termination, IRS Forms, Plan Termination, Retirement Plan Management | Comments (0)

Posted on Monday, 26th October 2009 by The Keane Organization

To help plan sponsors address the challenges of missing participants, Keane Retirement Services (Keane) has entered into a strategic partnership with automatic rollover experts Millennium Trust Company (Millennium). The partnership leverages the strengths of each company to provide customers with an automated, one-stop solution for plan terminations and missing participant resolution. Read More »

Posted in Missing Participants, Plan Termination | Comments (0)

Posted on Friday, 7th August 2009 by The Keane Organization

Thomas J. Mackell Jr., Chairman of the Board of the Federal Reserve Bank of Richmond, gave a speech in New York at the end of January 2006 in which he announced that he anticipates that defined-benefit plans (i.e. pensions plans) will fade away over the next five years. Today, true to form on his prediction and with the popularity of 401(k) (defined contribution plans), defined-benefit plans are all but disappearing. In turn, this means more companies are opting to reduce costs by not funding pension plans. According to an article in Money Management Executive.com magazine, more than half of the Fortune 100 companies have shifted toward defined contribution only plans.

With people changing and losing jobs more than ever, it means that companies are faced with the challenge and fiduciary responsibility of maintaining 401(k) accounts and information about former employees. Read More »

Posted in Defined Contribution Plans, Missing Participants | Comments (0)

Posted on Monday, 18th May 2009 by The Keane Organization

The National Institute of Pension Administrators (NIPA) annual conference was held April 26th to 29th in Las Vegas. Based on our conversations with many of the third-party administrators (TPAs) and pension professionals in attendance, it was a beneficial, educational experience for everyone. The majority of these service providers indicated that they are “often the ones on the ‘front lines’ handling issues along with the plan sponsor”. This includes dealing with the growing concerns around missing or terminated participants. Whether you’re talking about a plan termination or managing the terminated participant population within an active plan, there is a fiduciary responsibility to locate and communicate in a timely fashion with plan participants. When the plan sponsor is confronted with these issues, they will often turn to their TPA for assistance.  As a result TPAs are very interested in best practices and solutions surrounding this pressing topic. Read More »

Posted in Missing Participants, Plan Sponsors, Third-Party Administrators | Comments (0)

Posted on Thursday, 14th May 2009 by The Keane Organization

The current economic climate has created many problems for employers. As organizations are forced to lay-off employees, very few of these employees are focused on what they may leave behind—their 401(k) plan for instance.

Studies have shown that the longer a terminated employee leaves their money in their former employer’s retirement plan, the more likely it is that they will become a missing participant.

But who is responsible for missing participants? There is someone in your organization that holds the fiduciary responsibility for the plan itself. However, many retirement plans don’t have any type of trigger that automatically reviews terminated participant information to determine if there have been important changes—for instance, if the address has changed or if the former employee is now deceased. Please don’t assume that your record keeper, third party administrator, investment advisor, accountant, or lawyer holds this responsibility. In rare circumstances you may find a provider who will offer this service, but in the end, the employer is typically responsible for making the best decisions for the plan.  Read More »

Posted in Retirement Services, Terminated Employees | Comments (0)

Posted on Friday, 3rd April 2009 by The Keane Organization

While the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) has changed force-out requirements, it doesn’t mean managing mandatory rollovers needs to be difficult. Keane Retirement Services has formed a partnership with Wealth Management Systems Inc. (WMSI) to provide a one-stop solution to mandatory rollovers. Keane can help implement an automated rollover solution providing access to a choice of IRA providers that will save money, alleviate administrative burdens and ensure full compliance with the Department of Labor regulations. This program can also be used by plan sponsors who need to terminate a retirement plan and establish rollover IRAs for missing participants.

Posted in Keane Organization News, Retirement Plan Management, Retirement Services | Comments (0)

Posted on Thursday, 7th August 2008 by The Keane Organization

The landmark decision of the Supreme Court in LaRue v. DeWolff, Boberg & Associates, Inc., No. 06-856 February 20, 2008 (“LaRue”) will be referenced in employee benefits law text books for years to come.

James LaRue filed a suit, alleging that by failing to execute his investment direction DeWolff and the Plan breached their fiduciary duties. As a consequence under ERISA section 502(a)(2), he sought to recover the amount he lost due to that failure. As a result of the Court ruling in his favor, any single participant in a defined contribution plan now has a cause of action under ERISA if fiduciary misconduct causes a loss to his or her account. This brings to light the need for greater care to be taken in the manner in which plan assets are invested and administered. Read More »

Posted in Legislative Updates, Missing Participants | Comments (0)

Posted on Monday, 7th April 2008 by The Keane Organization

The Qualified Plan Solutions (QPS) division recently announced a series of promotions as it expands its service offerings for retirement plan sponsors, record keepers, and third-party administrators (TPAs). QPS helps manage missing participant challenges which impact terminated, abandoned, or active defined contribution and defined benefit plans.

Mary Steigerwalt has been appointed President of QPS, Tara Altman was promoted to Client Services Manager and Jason Sauer advanced to VP of Sales.

“The challenge of missing participants is growing in light of constant changes in ERISA law, DOL guidelines, and IRS regulations,” says Steigerwalt. “Terminating a plan is an especially complicated task for plan sponsors and their service providers since it is usually tied to a disruptive event like a bankruptcy or merger which no one expects to happen.” Read More »

Posted in Keane Organization News, Retirement Services | Comments (0)