aba color palette - american bar association green rgb=0,169,79 dark gray rgb=65,89,104 light gray...

www.abaretirement.com

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126 www.abaretirement.com

Is Your Retirement Plan Right For Your Solo or Small Practice?

Presented by: [insert name] [insert title] Registered Representative of Voya Financial Partners, LLC (Member SIPC)

[insert date]

2016

CN-0215-12222-0317

2

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126

ABA Retirement Funds Program Presentation

Important Information

Please read the Program Annual Disclosure Document (April 2015), as

supplemented (September 2015), carefully before investing. This Disclosure

Document contains important information about the Program and investment

options. For email inquiries, contact us at: [email protected].

Registered representative of and Securities offered through Voya

Financial Partners, LLC (Member SIPC).

Voya Financial Partners is a member of the Voya family of companies (“Voya”).

Voya, the ABA Retirement Funds, Mercer Trust Company, and T.D. Ameritrade,

Inc. are separate, unaffiliated entities, and not responsible for one another’s

products and services.

mailto:[email protected]



3

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Introductions & Agenda

1. Welcome

2. Attitudinal Overview of Law Professionals and

Retirement Planning

3. Retirement Plan Types Overview

4. Understanding Retirement Plan Costs

5. Selecting a Plan

6. Overview of the ABA Retirement Funds Program

7. Questions and Answers


Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple


Attitudinal Overview of Law Professionals

and Retirement Planning

5

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Who is the small firm owner?

63% to 69% of lawyers work for small

firms with fewer than 10 employees1

Job

Creator

Supports

Local

Economies

Provides

Foundation

for National

Economy

6

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


How do small firm owners feel about retirement plans2?

401(k) plans are

valuable

benefits

irrespective of

firm size

Offering a

401(k) helps

attract and

retain good

employees

Employees

value 401(k)s

even without an

employer match

401(k) plans

offer more

advantages than

other retirement

accounts

Small firms don’t

have access to

affordable

401(k) plans

Employers of all sizes understand

the value of employer-sponsored

retirement plans

Those who do not sponsor a

plan misunderstand the

advantages they offer

They can!

We’ll show

you how

Employer-Sponsored Retirement Plans “ESRP”

No Employer-Sponsored Retirement Plans “ESRP”

Percent of survey respondents who agreed with each statement

7

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


And yet, many don’t sponsor or participate in a workplace retirement plan3

77

65

69

50

23

35

31

50

2-4 Employees

5-9 Employees

10-19 Employees

20+ Employees

As employers get larger, the propensity to offer a retirement

plan increases

Nearly 8-in-10 small employers with 2-4

employees do not offer a retirement plan

Do you offer any type of retirement plan for your employees, or do you not offer such a plan?

8

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


While many intend to participate, few actually do3

27

33

39

60% of employers either currently offer or are interested in offering a workplace retirement

plan

How are you saving for retirement?

Do you offer any type of retirement plan for your employees, or do

you not offer such a plan?

9

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


What might be the reason(s) for these conflicting outcomes4?

“I’ll do it later” succumbs to inertia

“My business is my pension”

The business never achieves its financial goals to allow its owners to fund a plan

10

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


We decided to ask for ourselves…

Don’t have enough employees

Can’t afford a matching contribution

Too expensive to set up

Haven’t had time to focus on it

Can’t afford the time to administer the plan

Too complicated to set up

We don’t want to take the role of fiduciary

We don’t know where to start

Hasn’t been recommended to us

Don’t want to save money in a qualified plan

Bad experience in the past

Don’t know the advantages of saving in a qualified plan

Top reasons why your firm does not offer an employer-sponsored retirement plan?

11

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


We also asked what was most important

No out-of-pocket expenses

Ease of setting up or converting

Deferred tax status

Reputable brand name

Wide array of fund options

Low cost funds

Endorsement from industry organizations

Brokerage option

Fiduciary solutions

Most important benefits when selecting a retirement plan?

12

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


What do we know so far?

…or it might be the perceived administrative burden…

…but they are not doing enough to save for their retirement needs.

Small law firm owners care about retirement benefits…

Seems cost may be one of the key issues with sponsoring a retirement plan…

13

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Might it be the cost issue?

Remember the tax deferral benefits of

qualified contributions

Certain retirement products are

affordable and made for small firms

Look for opportunities to leverage

institutionally-priced funds

14

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Are retirement plans truly that burdensome?

Service quality is one of the most important aspects of a sound retirement plan provider

Third-party administrators (“TPA”) can help with the administration of your plan

Some retirement products require less

administration


Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple


Retirement Plan Types Overview

16

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


What are your options?

SEP-IRA SIMPLE IRA 401(k)

Who is it for?

Self-employed individuals or small business owners, including those with employees

Who is it for?

Companies with 100 employees or fewer, that do not have any other retirement plan

Who is it for?

Companies of all sizes

What are the key advantages?

• Easy to setup and maintain

• Typically no or low initial setup or annual maintenance fee


• Salary reduction plan with less administration

• No discrimination testing

• Employees share responsibility for their retirement


• Generous contribution limits

• Most flexibility in plan construction

Who contributes?

Employers only

Who contributes?

Employer is required and

employee is optional

Who contributes?

Employer and employee

Consult IRS website for more details on product limits, eligibility, and other provisions

17

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126




How is the administration?

• No Form 5500 filing

• Very limited employee

notifications


• No Form 5500 filing

• Limited initial and annual

employee notifications


• Form 5500 filing required for

plan with $250K or more

• Required employee

notifications (initial and annual)

What are the Contribution Limits?

Employer contribution limited annually to the lesser of

1. 25% of compensation, or

2. Section 415 limit (lesser of 25% of compensation or $53K for 2016)

Employer must contribute the same percentage of compensation for all employees – including themselves


Employer can either: make dollar-for-dollar matching contributions (not to exceed 3% of the employee's compensation on behalf of eligible employees who make elective-deferral contributions), or a 2% non-elective contribution to all eligible employees, regardless of whether they make deferral contributions

Employee contributes up to 100% of compensation through salary deferral, not to exceed $12,500 (2016)

Catch-up contributions of up to $3,000 (2016) available for those age 50 or older


Employee (owner or spouse) can make salary deferral contributions of up to 100% of compensation, not to exceed $18,000 (2016)

Catch-up contributions of up to $6,000 (2016) available for those age 50 or older

Total of all employee and employer contributions (including forfeiture) cannot exceed the lessor of 100% of compensation or $53K or $59,000 if age 50 or older (2016)


18

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126





How much can it cost?

Typically no or low initial setup

or annual maintenance fee


Typically low plan and/or

participant cost


Typically slightly more expensive than a SEP-IRA or SIMPLE IRA, but can vary from provider to provider

What access1 do I have to my savings?

Withdraw at any time, but a

10% penalty may apply if you

are under age 59½.


Withdraw at any time, but a

10% penalty may apply if you

are under age 59½. If the

withdrawal is taken within first

two years of participation in the

plan, that penalty increases to

25%.


Loans may be available. Hardship withdrawals may be available but a 10% penalty may apply if you are under age 59½.

Withdrawals can be taken upon a "trigger" event such as turning age 59½, disability, termination of employment, and/or plan termination.

1. If you withdraw the money before age 59½, you are generally subject to a 10% early withdrawal penalty, subject to certain exceptions. For SIMPLE IRAs, if the withdrawal is made

within the first two years of plan participation, the 10% penalty increases to 25%.


Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple


Understanding Retirement Plan Costs

20

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Price Affordability Fees can erode your savings

You should have a thorough understanding of your plan’s cost, which can

include costs to your firm as well as costs to your participating employees.

Consider how just a one percentage point difference in fees could affect your account balance over time

$250,000

$200,000

$150,000

$100,000

$50,000

$0 35 Years Invested

This example by Voya Financial is for illustrative purposes only. Investment results

will vary. Systematic investing does not ensure a profit or guarantee against loss.

0.50% fees 1.50% fees

$69,716 Difference

A $25,000 investment with

$100 monthly contributions

earning an average of 6%

annually and paying 0.5% will

grow to approximately

$286,288 over 35 years.

A $25,000 investment with

$100 monthly contributions

earning an average of 6%

annually and paying 1.5% will

grow to approximately

$216,572 over 35 years.

$286,288

$216,572

That 1% higher expense can equate to a 24% lower account balance.

21

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Planning for retirement is an important task – one that pays off best when started early

In the example below we show you the retirement plans of Sarah and Adam

who saved the same amount monthly but started at different times.

Sarah starts saving at 25, she invests $1,000 a month for 25 years. At 50 years of age Sarah stops contributing to

her savings and relies only on the power of compounding for the next 15 years. The result is a retirement nest egg

of nearly $1,700,000 at age 65.

Adam decides to put off starting his retirement savings until the age of 40. His total after 25 years of continuous

$1,000 a month contributions is nearly $698,000.

Sarah’s 15 year head

start produced

$974,000 more in

savings than Adam.

That’s the power of

starting early.

Note: This example uses a 6% annual return on investment, and because of the tax deferred nature of retirement accounts the power of compounding is impactful because there are no

taxes to be paid on interest and dividends that could otherwise deplete assets each year. For illustration purposes only. Not drawn to scale.

22

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Know the various types of fees

1. Recordkeeping and general

administration fees are typically billed

monthly directly to your firm or deducted

from participant assets through a basis

points fee (“bps”)

2. Investment advisory fees are often billed

quarterly and paid either by the firm or

deducted from participant assets

3. Trust fees are usually billed quarterly and

paid either by the firm or deducted from

participant assets

Here is a short list of possible ways your retirement plan may be paying fees today.

All of these can quickly add up to thousands of dollars which can erode the profits of your law firm,

and negatively impact an employee’s retirement savings

Many providers use a variety of ways to collect revenue from

retirement plans – some are more transparent than others

4. Fees that apply to certain transactions

such as loan set-up and maintenance,

rollovers, QDRO, enrollment meetings,

and enrollment packages are one-time

fees that may be paid for by participants

5. Other fees may be charged for year-end

and other miscellaneous processes such

as plan redesign, IRS plan determination

filings, fund adjustments, correspondence

with IRS and DOL, etc.

6. Investment fees, also known as the funds’

expense ratio, can range widely

depending on the funds, and share class

they belong to

23

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


A Closer Look at Expense Ratios

How do they work?

The expense ratio represents the percentage of the fund's assets that go purely toward the expenses of running

the fund. The expense ratio covers the investment manager fee, the administrative costs and other operating

expenses. The practical aspect of the expense ratio is that it wraps all these various costs and expenses into

one number that’s easy to calculate. Currently, the typical expense ratio for an actively managed mutual fund in

the industry is about 1.5%.1 Assume an asset balance of $100,000 and expense ratio of 1.5%. The annual

expenses borne by that account are equal to $1,500 ($100,000 x 0.015 = $1,500).

Breaking down the Program’s fees

The Program is committed to providing full

fee transparency. For illustrative purposes,

the table to the right breaks down Program

fees based on averages across all core

Funds available through the Program.2

Breaking down the Program’s fees

Investment Manager Fees

Acquired Fund Fees and Expenses

Program Expense Fees

Subtotal Fees

Trust, Management, and Administration Fee

and Other Fees

Total Average Fees

0.07%

0.14%

0.47%

0.68%

0.12%

0.80%

Trustee

Recordkeeping

Tax reporting

Compliance testing

Investment

management

Custom participant

communication and

education services

Participant

distribution (loans,

withdrawals)

Plan set-

up/conversion/install

ation

Fiduciary services

termination

1 Source: The Motley Fool

24

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Service Provider Disclosures 408(b)(2)

What are the new Disclosure Requirements?

• Intended to make it easier for plan

fiduciaries to assess the

reasonableness of the fees paid to

service providers in comparison with the

service provider’s delivery of services

and performance.

• Requires service providers to disclose

to plan sponsors information about:

1. the services to be performed; and

2. the fees and compensation to be

received for performing those

services.

Participant Disclosure 404a-5

• Participant Disclosure Requirements

• Plan Administrators are required to

furnish participants, eligible employees,

beneficiaries and alternate payees

certain plan related disclosures and to

provide a comparison of the plan’s

investment options and rates of return

and fees on a regular basis.


Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple


Selecting a Plan

26

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Selection of plan type & features – New Plan? P

lan

Typ

es

What type of

plan is right

for your firm?

Defined

Benefit

Cash

Balance

Plan

Money

Purchase

SEP IRA/

MyRA SIMPLE

Pla

n S

tra

teg

ies

What plan

strategy

meets your

objectives?

Safe Harbor

Maximize contributions

while reducing

limitations associated

with testing

Social Sec. Integration

Formula awards higher-

paid employees with a

larger percentage of

their compensation

Cross-tested

Different employee

groups defined and

separate contributions

to each group are made

Pla

n F

ea

ture

s

What plan

features will

make your

plan unique?

Eligibility & Vesting

Investment Options &

Trading Restrictions

Match &

Match Structure

Distribution & Rollover

Options

Automatic Features &

QDIA

Self-Directed

Brokerage Service

TIP Does your plan include an advice offering?

TIP If your strategy is to maximize tax deferred contributions, look into adding a Cash Balance plan to your 401(k)

This example was designed for educational purposes only and is not intended for specific legal, accounting, investment, income tax or other professional advice. Please note that other plan types, strategies, and features may exist.

Profit

Sharing /

401(k)

27

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Selection of providers

Maintains the participant records; trades the shares when contributions are deposited and when participants reallocate their portfolios; provides the web site and call center for the participants and plan sponsors; and generates and mails the participant statements.

Recordkeeper

Drafts the plan document; performs the compliance testing; and prepares the annual IRS Forms 5500. These tasks are sometimes part of a bundled service provided by a recordkeeper.

Third Party

Administrator

A Bank or Trust Company acts as Custodian; initially accepts the contributions, processes loan- and distribution checks; and prepares tax reporting. Trust Company

Provides advice and guidance on investment selection and allocation to the trustees; may also serve as directed or discretionary trustee; and on rare occasions can take on investment fiduciary role.

Investment

Advisor

Consultant can be used in the request for proposal (“RFP”) process and retained to evaluate the plan’s merits from time to time. Consultants

Provides advice and guidance on investment options to employees participating in the plan; may take on professional asset management role for a fee; may take on fiduciary responsibility for participant in-plan investments.

Advisory Firm

Can advise on plan types, plan features, and plan documents. May also help resolve plan qualification issues or disputes.

ERISA Attorney

While payroll companies offer services unrelated to retirement plans, the link between payroll and participant contributions to qualified plans does require consideration when picking a payroll vendor.

Payroll Company

This example was designed for educational purposes only and is not intended for specific legal, accounting, investment, income tax or other professional advice. Please note that other types of providers may exist.

28

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Administration and Maintenance Service levels

Typically, your participants have several options to make investment

election changes and transfers

TIP Does your provider offer service level guarantees?

Things to keep in mind:

1 Make sure your participants are familiar with any trading or transfer restrictions

within your plan’s fund lineup

2 If your plan includes a self-directed brokerage window, investment election

changes and restrictions may be different from those of funds in the plan

3 Beware of cut off times for processing of investment election changes as this is

often a source of complaint by participants

4 Find out if your current provider offers automatic investment reallocation to keep

participant accounts on track

29

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Administration and Maintenance Accessing Funds

There are a few different ways participants typically access funds

from their plan accounts

1 2 3 4 5

Distribution resulting from termination occurs when a participant quits, retires,

or is fired.

When a participant dies, you are responsible for checking the

participant’s records to determine the named beneficiary and the

type of death benefit, if any, the beneficiary should receive.

Typically for the employee who has met the age- or service-based criteria for

withdrawal and is still employed.

Only specific financial conditions qualify for hardship withdrawals.

Assuming loans are

allowed under your plan,

a participant may request

a loan from the vested

portion of his or her

account.

TIP

When a participant leaves your firm, an account distribution is not

required. In fact, a participant with a vested account balance of more

than $5,000 can maintain the account with your firm’s plan (subject to

required minimum distributions at age 701/2).

30

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Administration and Maintenance Compliance and Communications

As Plan Administrator, you will need to determine the requirements that apply to your

plan based on the number of participants in your plan and your plan type

Participant communication

requirements

1

The Department of Labor

(“DOL”) mandates that

certain communications to

plan participants be

conducted, and may

include:

1. Enrollment kit for

eligible employees

2. Summary plan

description

3. Summary of material

modifications

4. Summary annual report

5. Participant disclosure

Plan testing requirements

2

Testing is done each year to

monitor whether the plan is

in compliance with certain

IRS and DOL requirements,

and includes:

1. Annual additions

2. Top-heavy

3. ADP and ACP

nondiscrimination

testing

4. 410(b) Coverage

testing

Reporting requirements

Form 5500 is the annual

return for your retirement

plan that must be filed. It is

required to ensure

employee benefit plans are

operated and managed

correctly.

3

31

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Administration and Maintenance Plan Termination

Although employers establish retirement plans with every intention of having a long-term

retirement vehicle, there are occasions when the decision is made to terminate it

When Must You Terminate the Plan?

Some, but not all, examples of occasions when the plan must be terminated

are as follows:

• Firm has dissolved and is no longer doing business,

• Sole proprietor has passed away and a successor employer will not be

continuing the plan, or

• Sole proprietor has retired and a successor employer will not be

continuing the plan.

TIP

A partial termination of the plan may be triggered if a significant portion of the firm's

employees have severed employment due to firm-initiated employee dismissal such as a

layoff. The IRS presumes that a partial termination has occurred if the plan's turnover rate

is at least 20% of the active employees. When a partial termination of the plan occurs,

affected participants (e.g., those who are no longer participants due to the event) must

become 100% vested. There is no requirement that the plan must be terminated or that

other participants be vested or receive distributions.


Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple


Overview of the ABA Retirement Funds

Program

33

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126

ABA Retirement Funds Program GP Solo & Small Firm Educational Presentation

Recognizing a need in the legal community

In 1963, the American Bar Association created a not-for-profit corporation to offer

a unique retirement plan Program – the ABA Retirement Funds Program

9 out of 10 lawyers work for firms with fewer than

ten attorneys1

Only 17.3% of Companies with fewer than ten employees sponsor a retirement plan2

The annual median

income for lawyers is

$112,7603, which

compares favorably to

the nationwide median

household income of

$51,9144

Lawyers - much like

everyone else – can

exhibit behavioral

tendencies that

negatively impact

retirement savings

(e.g., loss aversion,

familiarity bias)

1. The Lawyer Statistical Report, American Bar Foundation, 2012 edition

2. Employee Benefit Research Institute estimates from the 2011 March Current Population

Survey

Access

Ability Willingness

3. Bureau of Labor Statistics, 2010

4. U.S. Census Bureau, American Community Survey, 5-Year Estimates

34

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


ABA Retirement Funds Program Structure

Oversight Responsibility

Board of Directors comprised of no fewer than

10 attorneys

Board of Directors supported by:

• Full-time Staff; Executive Director,

Director, Program Operations

• Outside experts including independent

counsel & consultants

ABA Retirement Funds

All data as of December 31, 2014 or otherwise noted.

1. Assets under advisement includes aggregated data for Mercer Trust Company and its affiliated companies globally (“Mercer”). Data is derived from a variety of sources, including, but not limited to, third-party

custodians or investment managers, regulatory filings, and client self-reported data. Mercer has not independently verified the data. Where available, data is provided as of December 31, 2014 (“Reporting Date”).

If data was not available as of the Reporting Date, information from a date closest in time to the Reporting Date, which may be of a more recent date than the Reporting Date, was included. Data includes assets

of clients that have engaged Mercer to provide project-based services within the 12-month period ending on the Reporting Date, and assets of clients that subscribe to Mercer’s Manager Research database.

2. As published by Pensions and Investments Special Report of top DC Recordkeepers as of March 9, 2015 (based on September 2014 data).

3. TD Ameritrade was evaluated against 17 others in the 2015 Barron's Online Broker Review, March 7, 2015 and was awarded the highest star ratings (4.5) shared with 2 others. Star ratings are out of a

possible 5. Read the Article at http://webprints.djreprints.com/50013.html

ABA Retirement Funds

Program sponsor; not-for-profit corporation

Nearly 3,800 law firm retirement plans

Over $5.5 billion in assets

More than 50 years of service to the legal

community

Investment Fiduciary, Trustee, and Custodian

Mercer Trust Company and its

affiliates globally, have 40+ years of

investment experience, advising on

over $9 trillion1

Has provided consulting services to

8 of the 10 largest US pension funds1

A leading provider of financial

products and services in the U.S.

One of the largest Defined

Contribution Recordkeepers with

over 48,000 plans2

Recordkeeping, Client Service and Sales

Self-Directed Brokerage Service

Offers over 13,000 domestic and

international mutual funds

Ranked #1 for Long-Term Investing

and #1 for Novices in Barron’s 2015

Online Broker Review3

http://webprints.djreprints.com/50013.html

35

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


With nearly 3,800 law firm retirement plans across the U.S., the Program may already know someone in your neighborhood

Sample distribution of Program Members in the United States


Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple


Thank You ABA Retirement Funds Program

P.O. Box 5142

Boston, MA 02206-5142

800.826.8901

[email protected]


© 2015 ABA Retirement Funds Program

2015

37

Green

RGB=0,169,79

Dark Gray

RGB=65,89,104

Light Gray

RGB=173,185,192

Blue

RGB=0,85,149

Burgundy

RGB=143,44,85

Dark Green

RGB=0,103,78

Yellow

RGB=197,150,11

Red

RGB=186,41,35

Orange

RGB=245,132,38

Teal

RGB=0,146,173

Brown

RGB=166,132,98

ABA Color Palette

Lime Green

RGB=103,145,70

Purple

RGB=98,74,126


Endnotes

1. The Lawyer Statistical Report, American Bar Foundation, 1985, 1994, 2004, 2012 editions.

2. “Micro Market Marketing Study” by the ABA Retirement Funds Program, First Quarter 2012.

3. “Poll Report: Small Business Owners’ Views on Retirement Security” Main Street Alliance and American Sustainable

Business Council, June 2013.

4. “Small Business Owners Are Unprepared for Retirement”, The American College, Bryn Mawr, February 28, 2012.

5. “Nearly half of small-business owners may never retire”, by Dennis Jacobe, Chief Economist, October 1, 2010.

6. The Health and Retirement Study (HRS),

aba color palette - american bar association green rgb=0,169,79 dark gray rgb=65,89,104 light gray...

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