Added Costs for Retirement Plans
In addition to the contributions you make to the plan, there may be other costs to consider. The type of plan you have affects the nature and amount of these added costs.
Whether you have a defined contribution or a defined benefit plan, you may be required to maintain a bond for yourself or someone else who acts as a fiduciary in your plan. You also must update your plan documents so that they reflect the latest law changes.
If you are approaching retirement age and want to obtain the maximum retirement benefits for your contributions (the biggest bang for your buck), you may want to adopt a defined benefit plan. Before doing so, it is important to recognize that these types of plans entail additional costs not associated with defined contribution plans.
Employers can, but are not required to, provide investment advice to participants and beneficiaries. In the past, doing this was a prohibited transaction that was penalized. Now it is a way to help staff increase their retirement savings.
To ensure that you will not run off with the funds in your company retirement plan, leaving participants high and dry, you are required to be bonded if you have any control over the plan or its assets. This includes, for example, authority to transfer funds or make disbursements from the plan. The bond must be at least 10% of the amount over which you have control (“currently handled assets”). The bond cannot be less than ...