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Recommended Resources

 
 

www.401k-recordkeeping.com for information about accounting and recordkeeping for small 401k plans-Topics include: - 401k recordkeeping and record keepers, - Low cost small
business 401k plan recordkeeping and accounting services, - 401k auditors and third party processing

www.401kfreedom.com for information about adopting a 401k prototype plan document-Topics include: - Master Or Prototype Plans, - Sponsors of Prototype Plans, - Tax
Treatment of Distributions, - Tax on Early Distributions

www.lowfeeinvestmentmanagement.com for information about costs of 401k plan administration-Topics include: - Your 401 Plan May Cost You Too Much?, - 401k Tips,
- Addressing the Cost Issues, - Determining What You Pay, - Questions for Your 401k Record-keeper

www.401k-safeharbor.com for information about 401k erisa fiduciary and trustee rules-Topics include: - 401k ERISA rules, - 404c compliance, - 401k fiduciary, - Employee
Retirement Income Security Act, - ERISA fidelity bonds and 404c compliance, - IRS regulations for 401k, - Internal Revenue Code Section 125, - ERISA requires that
fiduciaries of retirement plans manage their for the benefit of participants

www.401k-revenue-sharing.com for information about small 401k plan audit waiver regulations-Topics include: - I currently use EFAST-approved software to prepare my
Form 5500 and then print and mail the annual return/report to EFAST. What will I need to do differently for my plan year 2009 annual return/report?, - I am filing a Form
5500-SF for a plan covered by Title I of ERISA and the plan invested in a direct filing entity. I don't see a way to complete a Schedule D for a Form 5500-SF. Do I have to
attach a Schedule D?, - Will the EFAST2 system still receive my filing if I do not attach the IQPA report with my Form 5500 annual return/report when it is required?, - Do you
need a separate registration for the "Employer/Plan Sponsor" and for the "Plan Administrator" (two separate signature lines) if the employer/plan sponsor and the plan
administrator are the same person?, - I tried submitting a Form 5500 annual return/report and I received an Acknowledgement ID. Does this mean my annual return/report was
received?, - How do I submit an amended annual return/report (Form 5500 or Form 5500-SF) for plan years 2009 and later in EFAST2?, - What is the Small Pension Plan Audit
Waiver Regulation?, - What pension plans are eligible for an audit waiver under the Small Pension Plan Security Amendments?, - How do I calculate the percentage of "qualifying
plan assets" for my plan?, - Summary Annual Report Disclosures, - Is there model language for the enhanced Summary Annual Report (SAR) requirements?, - E FAST2
All-Electronic Filing System

www.401k-administrator.com for information about 401k administration made easy-Topics include: - We start the book by taking the reader through the most fundamental inquiry: is a 401(k) right for his or her company?, - Chapter 3 considers the options open to an employer in designing its company 401(k), - Chapter 4 deals with the dark cloud that scares off so many would-be plan sponsors, - Chapter 5 is the first in the trilogy of chapters explaining the plan administrator's duties and responsibilities, - Chapter 8 is question and answer chapter, - Chapter 11 deals with the unbundled 401(k), - Outline for reference book proposal, - 401k ADMINISTRATION MADE EASY, - Number of 401k Investments Used By the Average 401k Participant

www.401k-support.com or access to technical support options for web-based 401k plans.

 

Commentary

The price of some stocks, especially recent "hot" IPOs and high tech stocks, can soar and drop suddenly. In these fast markets when many investors want to trade at the same time and prices change quickly, delays can develop across the board. Executions and confirmations slow down, while reports of prices lag behind actual prices. In these markets, investors can suffer unexpected losses very quickly.

Investors trading over the Internet or online, who are used to instant access to their accounts and near instantaneous executions of their trades, especially need to understand how they can protect themselves in fast-moving markets.

401(k) Facts:

According to Southern California-based (401k) Enginuity (www.401kenginuity.com), twenty-year veteran in developing and running 401(k) administration and 401(k) software and recordkeeping systems, the Internet will be the primary delivery system for 401(k)s by 2007. Many web-based 401(k) plans will run on administration and recordkeeping platforms that plan providers will outsource to 401k specialists and 401k Application Service Providers (ASP).

The advantages of web-based online 401(k) plans are obvious to today's workers, and include use conveniences, real-time monitoring and reporting, and instant re-allocation of their retirement assets. The internet has also dramatically reduce the cost of 401(k) plan administration, saving plan sponsor 50% or more in ongoing fees and costs when compared to the older traditional labor-intensive plans. Outsourcing of 401(k) functions by plan providers will extend the trend towards lower cost, high-quality 401(k) products.

401(k) plan providers of all types, financial institutions including banks, insurance companies, brokerages, mutual fund companies, credit unions, and third-party administrators, are now actively outsourcing 401(k) administration and recordkeeping tasks to 401(k) ASPs --- vendors such as 401k Enginuity, whose sole function is to maintain, updated and supervise software-based 401(k) administration and recordkeeping systems on behalf of plan providers. 401(k) ASP vendors are responsible for all routine day-to-day 401(k) recordkeeping and administration functions, thus allowing the plan providers to reduce internal staff, eliminate the expense and complications of licensing, housing and running hardware and 401(k) administration software in-house. Plan providers can refocus and concentrate their efforts on to the needs of their plan sponsors and plan participants, and rely upon the outsourced ASP 401(k) vendor for the recordkeeping and technical "backbone" supporting providers' Internet-based plans. It is inevitable that some of this 401(k) outsourcing to ASPs will include secondary outsourcing of certain non-critical low-level routine day-to-day tasks to non-US locations, where labor costs are less yet the expertise is abundant.

You can limit your losses in fast-moving markets if you

  • know what you are buying and the risks of your investment; and


  • know how trading changes during fast markets and take additional steps to guard against the typical problems investors face in these markets.

Online trading is quick and easy, online investing takes time

With a click of mouse, you can buy and sell stocks from more than 100 online brokers offering executions as low as $5 per transaction. Although online trading saves investors time and money, it does not take the homework out of making investment decisions. You may be able to make a trade in a nanosecond, but making wise investment decisions takes time. Before you trade, know why you are buying or selling, and the risk of your investment.

Set your price limits on fast-moving stocks: market orders vs. limit orders

To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. When you place a market order, you can't control the price at which your order will be filled.

For example, if you want to buy the stock of a "hot" IPO that was initially offered at $9, but don't want to end up paying more than $20 for the stock, you can place a limit order to buy the stock at any price up to $20. By entering a limit order rather than a market order, you will not be caught buying the stock at $90 and then suffering immediate losses as the stock drops later in the day or the weeks ahead.

Remember that your limit order may never be executed because the market price may quickly surpass your limit before your order can be filled. But by using a limit order you also protect yourself from buying the stock at too high a price.

Know your options for placing a trade if you are unable to access your account online

Most online trading firms offer alternatives for placing trades. These alternatives may include touch-tone telephone trades, faxing your order, or doing it the low-tech way--talking to a broker over the phone. Make sure you know whether using these different options may increase your costs. And remember, if you experience delays getting online, you may experience similar delays when you turn to one of these alternatives.

If you place an order, don't assume it didn't go through

Some investors have mistakenly assumed that their orders have not been executed and place another order. They end up either owning twice as much stock as they could afford or wanted, or with sell orders, selling stock they do not own. Talk with your firm about how you should handle a situation where you are unsure if your original order was executed.

If you cancel an order, make sure the cancellation worked before placing another trade

When you cancel an online trade, it is important to make sure that your original transaction was not executed. Although you may receive an electronic receipt for the cancellation, don't assume that that means the trade was canceled. Orders can only be canceled if they have not been executed. Ask your firm about how you should check to see if a cancellation order actually worked.

If you trade on margin, your broker can sell your securities without giving you a margin call

Now is the time to reread your margin agreement and pay attention to the fine print. If your account has fallen below the firm's maintenance margin requirement, your broker has the legal right to sell your securities at any time without consulting you first.

Some investors have been rudely surprised that "margin calls" are a courtesy, not a requirement. Brokers are not required to make margin calls to their customers.

Even when your broker offers you time to put more cash or securities into your account to meet a margin call, the broker can act without waiting for you to meet the call. In a rapidly declining market your broker can sell your entire margin account at a substantial loss to you, because the securities in the account have declined in value.

No regulations require a trade to be executed within a certain time

There are no Securities and Exchange Commission regulations that require a trade to be executed within a set period of time. But if firms advertise their speed of execution, they must not exaggerate or fail to tell investors about the possibility of significant delays. Additional non-profit websites that include relevant unbiased information about 401k plans include: www.employer-retirement-savings-account.org

No regulations require a trade to be executed within a certain time

There are no Securities and Exchange Commission regulations that require a trade to be executed within a set period of time. But if firms advertise their speed of execution, they must not exaggerate or fail to tell investors about the possibility of significant delays. Additional non-profit websites that include relevant unbiased information about 401k plans include: www.employer-retirement-savings-account.org

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