Efficient Corrections and Audit Support
After discovering that their platform had failed to auto-enroll almost 150 participants over a period of 18 months, the plan’s sponsor contacted the platform for assistance. Their platform representative claimed it was the client’s responsibility to correct the error, knowing it would be a costly and time-consuming endeavor. Frustrated, the client contacted LAMCO seeking experienced counsel.
The LAMCO team, which includes a Qualified 401(k) Plan Administrator and an ERISA Attorney, quickly got to work smoothing the situation. We contacted the platform and were able to put a correction plan in place to ensure our client’s plan was back on track as soon as possible, with the least out-of-pocket costs.
LAMCO oversaw the enrollment process to completion. Though the total cost of the correction came in close to $131,000, LAMCO negotiated on the client’s behalf and we were ultimately successful in getting the platform to contribute just under 50% of the cost—the maximum they were allowed to pay.
The LAMCO retirement plan team documented the entire correction process for the plan’s auditors and the plan’s records. This documentation proved to be invaluable when, 12 months later, the plan was audited by the IRS. Our client turned to LAMCO for support again, and we were ready to help.
Our on-staff Enrolled Retirement Plan Agent designee coordinated the response to the IRS and was onsite to represent the client during the audit. The thorough documentation and rigorous organization of the records was noted and commended by the IRS agent, who was able to complete his onsite audit in only 4 hours.
Unique Focus on Participant Engagement
Upon being selected to run the retirement plan for a national restaurant chain, we immediately recognized the need for a unique approach to the plan’s management. Restaurants typically have low participation and deferral rates due to the large number of employees who receive tips as a portion of their compensation (“tipped employees”). Auto enrollment would also not be a viable option, due to a high degree of employee turnover and the tipped employees.
In order to drive participant engagement, education and enrollment, LAMCO designed a customized enrollment and information program that focused on working with participants to teach them about their plan options and their financial futures. We created customized printed materials that showed each participant their potential retirement shortfalls and what their futures could look like with the proper amount of planning.
By providing onsite education and guidance sessions to help restaurant employees feel comfortable and confident about their retirement plan, LAMCO was able to increase enrollment by almost 500 percent and boost the average deferral rate from 2.7 percent to 6.5 percent.
In-Depth Plan Evaluations and Cost Savings
A nationally recognized firm issued a Request for Proposals in search of a new retirement plan service provider. While LAMCO was referred to them after the RFP had been completed and they had made their selection, we asked for the opportunity to review the winning proposal to demonstrate our capabilities.
Our review noted that the winning provider made a recommendation to include a Safe Harbor contribution, however the provider failed to recognize that the company had recently purchased another firm. The newly acquired company had seven times the number of employees as the original firm, making them a controlled group. Adopting this change would have required the parent company to offer the same benefit to the subsidiary company, resulting in an additional $480,000 cost.
By conducting thorough research and in-depth evaluations, LAMCO was able to identify a major issue with the firm’s current retirement plan service provider. The contribution cost quoted by the provider was significantly lower than what the actual contribution cost would have been. Our diligent work to fully understand our clients’ needs and situations helped make a difference amounting to nearly half a million dollars for this LAMCO client.