Case Studies

Case Study for Retirement Plans


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Attention to Detail

The Issue

A 501(c)3 institution sponsored a 403(b) Plan. The Plan’s vendor provided the sponsor with two separate Plan documents, one for the tax deferred annuity contributions (employee salary deferral contributions) and another for the employer match contributions. The vendor did not provide any guidance with the Plan sponsor on how to complete the Plan documents, but instead required them to fill them out completely themselves, without any subsequent review. When the Plan sponsor completed the Plan document, they inadvertently selected two match formula allocations, which would require them to make contributions in excess of their intended amount.

The Solution

On all new cases, we provide a full plan review of a Plan sponsor’s current Plan document. From this review, we are able to provide an in-depth overview of the Plan’s benefit, rights, and features. Many Plan documents have not been reviewed in many years and thus do not meet the Plan sponsors current objectives or are written in a way that is converse to the true intention of the organization.

During our review, the match language issue was uncovered. Upon a true interpretation of the Plan document, the employer was required to fund a nondiscretionary match contribution that was in addition to their intended weekly match contribution. The way the Plan was written, the Plan would have been required to make a match that was double their intended amount.

With the final 403(b) regulations and pending audit, this would most certainly have been caught by a plan auditor, requiring the plan sponsor to go through a corrective program or be liable for the increased contributions.
Summit was able to assist the Plan sponsor in correctly executing the Plan document so it fit with their intended contribution commitments to their employees. The nondiscretionary match requirement required a last day of the plan year requirement so we were able to amend the Plan prior to employees becoming entitled to receiving this additional match contribution.

The Summary

Our attention to detail is just one of the many attributes the team at Summit Financial adheres to for all of our clients. Each manager is solely responsible for all aspects of your plans administration. This personal responsibility is what drives each of our plan managers to ensure your Plan remains designed appropriately and operating in the most efficient manner.

The preceding are hypothetical case studies and are for illustrative purposes only. Actual performance and results will vary. These studies do not represent actual clients but a hypothetical composite of various client experiences and issues. Any resemblance to actual people or situations is purely coincidental.