GUIDE TO SERVICES AND COMPENSATION
Provided By Leading Retirement Solutions, LLC
For Defined Benefit & Cash Balance Plans Pursuant to ERISA 408(b)(2)
The following is a guide to important information that you should consider in connection with the services to be provided by Leading Retirement Solutions (“LRS”) to the “Plan” and the Plan’s fiduciaries. Your Company is the Sponsor of your Defined Benefit or Cash Balance Plan and shall hereinafter be referred to as “Company” or “Sponsor”. Specifically, this information is designed to help you fulfill your duty as a plan fiduciary in accordance with the new regulations issued by the U.S. Department of Labor (DOL) under Section 408(b)(2) of the Employee Retirement Income Security Act of 1974 (ERISA).
ERISA requires plan fiduciaries, when selecting and monitoring service providers and plan investments, to act prudently and solely in the interest of the plan's participants and beneficiaries. Responsible plan fiduciaries also must ensure that arrangements with their service providers are "necessary" and that "reasonable" compensation shall be paid for services. Fundamental to the ability of fiduciaries to discharge these obligations is obtaining information sufficient to enable a plan fiduciary to make informed decisions about the plan's services, the costs of such services, and the service providers.
Effective July 1, 2012, the Department of Labor (DOL) began requiring that service providers to a company sponsored retirement plan disclose certain additional information about the service provider’s services, compensation and other applicable information. LRS provides services to company sponsored retirement plans, including one or more Plan(s) sponsored by your company. LRS is a “covered service provider” as described by the DOL and thus is required to disclose this information to our valued clients.
In your role as a plan fiduciary, it is important you understand the fees being paid, directly and indirectly, by the plan and its participants. You should understand how fees are being paid, who is being paid and the services for which payment is being made. The cumulative effect of fees and expenses can substantially reduce the growth of a participant’s retirement savings. Visit the DOL’s website for an example showing the long-term effect of fees and expenses. However, fees and expenses are only one of many factors to consider when selecting investment options and your responsibility is not to ensure the fees are the lowest, but rather that they are reasonable for the services provided. Additionally, it is important you identify any conflicts of interest that may affect a service provider’s performance of services so that you can continue to make the decisions about your service providers that are in the best interest of the plan and its participants.
The DOL implemented these regulatory mandates, in part, because changes over the years in the way services are provided to a company sponsored retirement plan have made service more efficient but have also increased complexity within the industry. The DOL intends for the following information to be of assistance to you in understanding and assessing the services being provided by LRS and the costs incurred by the plan and its participants as a result of such services.
If you have additional questions about the information contained in this Fee Disclosure Notice, please contact Leading Retirement Solutions at firstname.lastname@example.org, by calling (206) 430-5084 or email email@example.com. We are always here to help!
SUMMARY OF ESTIMATED COMPENSATION FOR SERVICES PROVIDED TO THE PLAN
The services and costs detailed below are reasonable estimates by LRS based on information available to us about your Plan. Such information has been received by LRS from the plan and/or its fiduciaries or agents. The costs detailed below are reasonable estimates of what LRS and its affiliates and/or subcontractors will receive for rendering services to the plan and/or its participants. The plan may need additional services from time to time, the costs of which are detailed within the supplements you will receive with this notice.
The Department of Labor requires a service provider to provide you with a reasonable and good faith estimate of the cost of the Recordkeeping Services the Plan would pay if such costs are offset based on other compensation received by LRS. LRS does not reasonably expect to provide services which would result in subsidizing the costs of the Recordkeeping Services to the Plan; therefore, this requirement is not applicable.
Glossary of Terms-Quick Reference
- Apply the eligibility requirements of the Plan to the employee census information to determine which employees were eligible to participate in the Plan;
- Calculate the benefit and contribution amounts and requirements;
- Perform required non-discrimination testing;
- Calculate the minimum funding contribution required by §430 of the Internal Revenue Code and the maximum deductible contribution allowed under §404 of the Internal Revenue Code
- Prepare Actuarial Certification of the Adjusted Funding Target Attainment Percentage
- Prepare and sign the Schedule SB to Form 5500;
- Prepare the Form PBGC Comprehensive Premium Filing (“CPF”), if applicable;
- Prepare benefit statements for each participant; and
- Prepare the Annual Funding Notice, if applicable.
Annual support and compliance of participant activities. Annual Participant Statements. Phone and email support for participants, assistance with distribution requests.
Asset Support & Recordkeeping
- Secure, online account management for participants
- Employee & Participant Support
- Investment allocation, reallocation and transfer requests
- Access to traditional and non-traditional investments
- Daily and balance forward valuation of participant investments
- Quarterly participant benefits statements
- Investment performance, account balance and rate of return reports
- Payroll contribution integration for employee and employer contributions
- Recordkeeping of contributions (by source, per employee), allocation of contributions, earnings and dividends
- Vesting calculations
At the Plan’s direction, LRS may agree to pay advisor compensation to your Plan’s designated
Investment Advisor or his/her firm for services provided to the Plan by such Advisor. The amount of the advisor compensation may change from time to time. Additional information regarding advisor compensation may be requested from your Plan’s Investment Advisor. The Plan’s Investment Advisor should provide a separate notice to the Plan regarding additional compensation, if any, the advisor receives and a description of services the advisor provides to the plan. The advisor is neither an Affiliate nor a subcontractor of LRS.
Custody Account / Paying Agent Account
Plan assets are held at a custodian; ACH services and certain tax reporting services are also provided. LRS pays the costs detailed herein on behalf of the plan, to the custodian.
Custodial Account (for use with mutual funds as an additional investment option)
- 4.5-6.5 basis points per annum (example: $5,000 x .00065 = $3.25)
- Transaction Costs: $.07-$.10 per transaction
- Custodial Account Termination Fee: $200
Trading, Clearing & Settlement
Investment of the plan's financial assets occurs via the custodian. LRS pays the costs detailed herein on behalf of the plan, to the custodian.
A comprehensive glossary of terms relevant to the investment options available in the plan can be found at https://www.leadingretirement.com/portal/ or via this glossary of terms.
Estimated Plan Costs
Ongoing Administration, Compliance & Government Reporting
Employer – Recurring
Employer – Recurring
+This fee is applicable to each employee who was a participant, or required to be included in plan testing and/or reporting, at any time during the plan year.
Recordkeeping & Custody of Plan Assets (if applicable)
Self Directed Brokerage Account (SBDA)
Employer – Recurring
Recordkeeping Only Minimum Service Fee
Employer – Recurring
COMPENSATION THAT MAY BE PAID BY LRS TO OTHER PARTIES
LRS utilizes the services of third-party providers, primarily for custody, trading and settlement services, generally at a fixed price. LRS pays fees to certain Affiliates and Subcontractors out of the fees LRS collects from the Plan Sponsor and/or the Plan. A description of services provided by each payee is included in this notice.
FORFEITURES AND REBATES
The custodian must collect and account for rebates (also referred to as 12b-1, sub-ta or servicing fees) from funds, in order to provide the appropriate rebates to your Plan. The total amount to be collected as compensation by the custodian can vary significantly and can be affected by the number of participants in a fund, the amount of monies in a fund, length of time monies are in a fund, etc.
The costs identified herein may be deducted from plan assets, billed to the plan/paid by the employer (plan sponsor) or paid by a 3rd party as indicated. Any amounts left owed will be billed directly to the plan and/or its participants as directed by the plan administrator and as allowed by law. By way of example, certain participant transactions such as a loan or withdrawal can be billed directly to the participant. The costs associated with terminating a Plan, however, must be borne by the employer. Actual costs may differ as plan asset levels, annual deposit amounts and number of participants change. Costs are subject to change as provided in the Retirement Plan Services Agreement. LRS will provide, to the Plan Sponsor, advance notification of changes.
COMPENSATION LRS MAY RECEIVE FROM OTHER PARTIES
LRS may accept payment from fund and/or investment providers often referred to as rebates, 12b-1, Sub-TA, or finder’s fees (hereinafter referred to as “rebates”). All such rebates will be used to pay down plan expenses. Any residual rebates will be returned back to the plan. Although LRS may accept 12b-1 or Sub-TA fees, the acceptance is done on behalf of the plan and all monies accepted will be returned to the plan and applied as directed by the Plan Sponsor, which may include returning any unearned fees to the Plan participants.
OPTIONAL AND TRANSACTION BASED SERVICES AND FEES
Additional services may be required of your Plan over time. These services may need to be secured with other service providers. We want to make sure that you are aware of these potential requirements as they are ones that are more commonly overlooked:
- Consulting, benefit projections, additional calculations and project work $75 - $250 per hour.
- Cross Test/New Comparability/Tiered Calculations (for 401k/Profit Share) - $400 (min.)/per plan/per year.
- Revised Calculations - $350 minimum ($250 per hour).
- PBGC premium payment account setup and annual filing - $250 per year.
- Participant Termination or Retirement Calculations and other Calculations - $250 per participant.
- Participant Distribution Processing, liquidation, money transmittal and Form 1099 - $275 per participant.
- QDRO review and support – $300 min. per request
- Additional Participant Notices e.g. Plan underfunded status - $350 (min. per notice)
- Retirement Plan Document Amendments (Required & Discretionary) - $350 (min. per amendment), includes resolution approving the amendment, amendment to the Adoption Agreement and participant notice.
- Trust Accounting -$175/hour
- Audit Support Services (IRS or DOL Audit) – Request quote
- ASC 715 (if applicable) - $1,500 per request
- IRS Form 1099/1096 Transmittals/IRS Form 945 - $175 per form
Pricing for additional services can be obtained by requesting a revised quote from our team.
ERISA BONDING & PBGC INSURANCE
ERISA Bond: This is an Internal Revenue Service (IRS) requirement that may apply to your Retirement Plan. An ERISA Bond a.k.a. Fidelity Bond (not required for owner only plans), can be obtained from an insurance provider. If you already have an ERISA Bond for another retirement plan (e.g. 401(k) Plan) you can usually add this plan as an additional insured to the same policy. Our team regularly assists clients with securing ERISA Bond’s, reach out to an LRS team member for assistance. We work with a number of providers who offer these insurance policies. In general, a bond must be obtained in an amount equal to 10% of the plan’s assets. A 3 year bond can be obtained for generally $150-$300. Additional information can be found at www.leadingretirement.com/secure/Resources/Fidelity-Bond-First-Year.pdf
PBGC Insurance: This is an Internal Revenue Service (IRS) requirement that may apply to your Retirement Plan. The Pension Benefit Guaranty Corporation (PBGC) insures plan participants against a plan that cannot pay promised benefits. Additional information can be found at https://www.pbgc.gov/prac/prem/premium-rates http://www.pbgc.gov/prac/prem/premium-rates.html PBGC insurance is not applicable to owner only (and spouses) plans and plans sponsored by professional services employers (i.e. attorneys, doctors, CPA, etc.) that have not employed more than 25 employees.
PBGC Insurance = $96 per participant, beginning in 2023 ($88 for plan years beginning in 2022), per year, plus variable rate premium (if applicable). Additional information about this regulatory requirement can be found at https://www.pbgc.gov/prac/prem/premium-rates
PBGC filings beyond e-1040 may incur additional costs. Government form/filing services are $125 (min.) - $350 per form or schedule.
DESCRIPTION OF SERVICES PROVIDED TO THE PLAN
Herein you will find a description of the services performed for the Plan by LRS, its Affiliates and its Subcontractors, as well as a description of the compensation paid to each party in exchange for those services. If the Plan (rather than LRS) has contracted directly with other service providers for additional services, you should request a description of those services and a summary of the fees related thereto directly from those providers.
- Employer Services
- Client service team and Toll-free assistance
- Recordkeeping and valuation of plan assets
- Plan sponsor website
- Legislative updates
- Plan Services
- Prototype plan document
- Plan installation and conversion
- Required & discretionary plan amendments
- Plan compliance and research assistance
- Eligibility and Vesting determination
- Contribution calculation and processing, distribution & loan processing
- Participant Notices, including Summary Plan Description, and other Annual Notice(s)
- Government Filings
- o Form 5500
- o Plan compliance testing, financial reporting & valuation
COSTS AND SERVICES RELATED TO THE PLAN’S INVESTMENT OPTIONS
We encourage you to log into your Plan Sponsor online account at https://www.leadingretirement.com/portal/ for additional information regarding your costs and services.
Leading Retirement Solutions is an independent service provider. We do not offer proprietary investments, nor do we require that you select certain investments. LRS has obtained the information related to the plan’s investment options from third-party sources. LRS believes this third-party information to be reliable, but LRS cannot guarantee the accuracy or completeness of such information. Additional investment information may be obtained directly from such investment(s). The investment options may change from time to time.
Leading Retirement Solutions does not serve as an ERISA Fiduciary or Registered Investment Advisor to the plan or its participants. At the Plan’s direction, LRS may pay investment advisor/manager compensation to an advisor/manager and/or to his/her firm, for services provided to the Plan by such an advisor. The Plan’s advisor should make a separate disclosure regarding additional compensation, if any the advisor receives along with a description of services the advisor provides, to the Plan. The advisor is neither an Affiliate nor a Subcontractor of LRS.
Other Assets offered outside of LRS’ platform, Non-Traditional/Non-Standard Assets: If the Plan holds investments not registered with the Securities and Exchange Commission (SEC); or the Plan has contracted with other service providers for additional services, including investment options outside of the LRS recordkeeping platform, including but not limited to self-directed brokerage account(s) (SDBAs) whether offered through LRS’ platform or other service provider(s), you should request a summary of the fees related to the services directly from those providers. In the event LRS has agreed to maintain and update records related to certain other assets offered outside of LRS’ platform and provide this information to Plan Sponsors and applicable plan participants via online account management, LRS has no obligation whatsoever, to provide any information to the plan sponsor, plan participants or otherwise, pursuant to ERISA § 408(b)(2) and 404(a)(5). It is the responsibility of the Employer, in its capacity as the Plan Sponsor to fulfill any and all disclosure requirements as detailed in ERISA § 408(b)(2) and ERISA § 404(a)(5) as the requirements relate to any and all fees and expenses of the investment options detailed above. LRS is a non-affiliated party and as such is under no obligation to act as a servicing agent for these investments. It is the obligation of the plan sponsor, or another party designated by the plan sponsor, to act as servicing agent, whose responsibilities include completing tax filings, management, trading, and annual valuations. LRS bears no responsibility to forward any notices, proxy voting materials or other legal documents that would relate to these investment(s).
TERMINATION OF SERVICES
Should the Plan terminate the Services Agreement with LRS, the following costs may be assessed to the Plan. The costs detailed below are on a per plan basis meaning that the costs identified would apply to each retirement plan.
- $400 Third Party Administration Services Termination
- $600 Recordkeeping Services Termination
- $800 Early Services Termination – applies to service termination requests within 2 years of securing services
- Termination of Services cost: The termination of services cost is a flat based fee that may be imposed should the Plan terminate the Services Agreement. This cost is invoiced to the Plan Sponsor during the termination process and covers the cost of the data feed (a.k.a. deconversion files), a one-time federal wire fee, and document requests by the client and/or new service provider(s). In the event the Plan Sponsor does not pay the cost(s) due, LRS reserves the right to collect such costs from plan assets and participant accounts.
- We do not assess liquidation fees, market value adjustment fees or penalties as often assessed by insurance companies.
- Accepting Service provider costs: The accepting service provider(s) may assess costs related to accepting the Plan. LRS is not responsible for these costs.
- Investment provider costs: The outgoing and/or accepting investment providers, such as the mutual fund family or insurance contract provider may assess liquidation, transaction, surrender or other fees related to liquidation and/or transfer of the investments pursuant to the termination of services. LRS is not responsible for these costs.
- LRS shall not be responsible for any additional costs assessed by other parties as a result of termination of services, with LRS, by the Plan.
TERMINATION OF THE RETIREMENT PLAN
A quote may be requested for services necessary and related to termination and dissolution of a retirement plan (vs. terminating services).
ADDITIONAL QUESTIONS & CONTACT
If you have additional questions about the information contained in this Fee Disclosure Notice, please contact Leading Retirement Solutions at firstname.lastname@example.org,orby calling (206) 430-5084