Your Retirement, Our Administration

Why Retain Derby & Company, Inc. as Your Third Party Administrator?

Derby & Company, Inc. provides each client with personalized service. Each client is assigned a specific professional as their consultant. We value our client relationships and are committed to delivering the highest quality of service. Our consultants develop a solid and dedicated relationship with you and provide a customized plan exclusively for your business or practice. We identify your objectives and design your plan to reflect those objectives so that ultimately all parts are working towards achieving your retirement goals.

We are a full service consulting firm specializing in the design, implementation, and administration of qualified retirement plans for small and medium sized businesses. As an independent firm, Derby & Company, Inc. can work with all of your advisors.

We provide all aspects of plan administration for qualified Defined Contribution and Defined Benefit Plans, including 401(k) plans, profit sharing plans, money purchase plans, age-weighted plans and cross-tested new comparability plans.

Our Services Include:

Annual review of plan design
Reconciliation of plan assets
Calculation of Employer contributions
Daily account valuations
Balance forward accounting
Preparation of valuations
Employee Benefit statements
Loan Administration
IRS Form 5500
Non-discrimination testing
ERISA, DOL and IRS compliance

Our Clients Include but are not Limited to:

Dental and Medical Practices
Contractors
Law Firms
Accounting Firms
Consulting Firms
Advertising, Sales and Marketing Firms
Manufacturers
Architectural Firms
Bakeries and Restaurants

Our staff of experienced professionals remains ready to review and evaluate your plan as changes in your company's demographics may suggest a change to your plan design. We also remain available to work closely with your accountant and attorney to provide you with the best possible options as laws and regulations governing retirement plans change constantly.

Our team has a total combined experience level of more than 100 years in the administration of qualified retirement plans. Consultants meet weekly to discuss IRS and DOL regulation changes in the retirement plan industry, and attend seminars and workshops to remain current with pension law.

When you select Derby & Company, Inc. as your third party administrator, a consultant will be assigned to you, who will be familiar with all aspects of your plan. Our consultants will work closely with you to administer and maintain your plan's compliance. They are available whenever you have a question. Communication will be sent to you throughout the year, keeping you abreast of any tax or regulatory changes.

Why use a Third Party Administrator?

A third party administrator is an independent, professional firm that has the expertise to perform the administration and compliance for all types of qualified retirement plans to maintain their qualified status.

Areas of compliance include plan documents, amendments, IRS filings, non-discrimination testing, as well as ERISA and DOL compliance.

Third party administrators can also assist you by providing consulting services which may help to remedy a plan that is out of compliance. A plan that becomes disqualified may result in plan assets losing tax deferred status and thereby cause a taxable event.

Using a third party administrator is cost-effective to you. Employers generally find in-house administration to be more costly due to outside legal and consulting fees required to keep your plan up to date and in compliance with changing pension laws.

Employers appreciate the independence of a third party administrator. They have seen that bundled plans can lack objectivity.

The IRS and DOL penalties for failure to maintain your plan's administration, compliance and tax filing can easily exceed the fees for retaining a third party administrator.

When must I file my Annual Return/Report Form 5500?

The filing deadline for Form 5500 is the last day of the seventh month following the plan year-end or the extended due date. An extended due date may be requested using Form 5558, which provides for a 2½ month extension of the original filing deadline of your Form 5500. Failure to file timely may result in substantial penalties from the IRS and DOL. We monitor our clients to help them achieve consistently complete and timely filings.

Does my Designation of Beneficiary Form require spousal consent?

If a participant is married and wishes to designate someone other than his or her spouse as the sole and primary beneficiary of the account in the plan, then spousal consent is required. An unmarried participant who later marries will automatically have his or her beneficiary designation modified to designate his/her current spouse as the sole primary beneficiary. If a participant fails to make any designation, then the terms of the plan control. Accordingly, this may result in a beneficiary other than one intended by the participant. We review your plan annually notifying you of missing forms, and include a blank form for any participants wishing to update or amend their beneficiary.

Does my plan need an ERISA bond?

In general, anyone that handles funds or other property of the plan must be bonded and anyone that is responsible for the people handling funds or property of the plan must be bonded. So, for example, the owner of the company that has the plan, the trustee of the plan, and the investment advisor of the plan must all be bonded and it is generally the responsibility of the owner to make sure everyone is bonded. There are a couple of exceptions to this rule which we monitor for our clients. The amount of the bond is based upon a number of factors, including the amount and type of assets in the plan and can range between 10% and 100% of the type of plan assets held. We can work with the bonding company to identify which assets qualify for the 10% bonding calculations and which do not qualify.

When must salary deferrals be deposited to the plan?

For plans with less than 100 participants, the DOL generally requires salary deferrals be deposited to the plan on the earliest date reasonably possible, but no later than the 7th business day after being withheld from the participant's wages. This "safe harbor" rule also applies to participant loan repayments withheld and remitted by the employer. All late contributions are disclosed annually on Form 5500 and may result in an audit by the DOL. Violations must be corrected as soon as possible and when they are, those late deposit corrections, including reimbursement of lost earnings, are considered to be prohibited transactions and are subject to a 15% excise tax as reported on IRS Form 5330. We provide our clients technological solutions and advice to help them stay timely and compliant.

When will I begin receiving my Required Minimum Distribution?

In general, anyone that owns 5% or more of a company must start taking certain minimum distributions by April 1st of the year following the year in which he or she attains age 70 ½. All other employees can wait until April 1st of the year following the year of their retirement.

Why is it important for Derby and Company, Inc. to know about ownership information of other entities (corporations, sole proprietorship's, partnerships) related to the entity that sponsors the qualified plan?

In some cases, the IRS will require that multiple related companies be grouped together and treated as one company for the purpose of meeting a number of coverage and non-discrimination tests. The idea is that this group of companies are effectively under common control and employees should be treated generally equally. The determination of which companies fall within the "controlled group" definition is complicated. We have a lot of experience in this area and will review your structure, help determine who is in and who is out of the group, and the best way to address any issues raised thereafter.

What is a QDRO?

In general, a Qualified Domestic Relations Order (QDRO) is a domestic relations order signed by a state court, which assigns to an alternate payee the right to receive a portion of a participant's benefit and which has been determined by the appropriate advisor to the plan that the order signed by the court meets the rules prescribed by law. There are consequences to making a payment to an alternate payee pursuant to a Domestic Relations Order that is not "qualified" by the appropriate advisor. This is considered to be in violation of the anti-assignment and alienation rules of the Internal Revenue Service code, and may cause the plan to become disqualified. It is important to note that just because the order is issued by the court does not necessarily mean the order qualifies under applicable pension law as a QDRO. Our general counsel will upon request review and qualify each order and make sure the plan stays in compliance.

What is the maximum loan amount I can borrow from my plan, and how are repayments made?

If your plan allows for participant loans, the maximum loan amount generally is the lesser of $50,000 or 50% of your vested account balance. Our office can advise you on the maximum loan amount available and provide you with the required promissory note and amortization schedule. Loan payments are made to the plan with after-tax money.

Should loan payments not be made in accordance with the amortization schedule, the loan can be considered in default status. Generally, the loan balance plus accrued interest through the date of default will become a taxable event subject to personal income tax and possibly IRS penalties.