For Charlotte business owners
Is Your Company 401(k) Still Working for You and Your Team?
If you own a company in the Charlotte area and sponsor a 401(k), the plan is two things at once. It is a benefit for your employees, and it may also be an important part of your own retirement savings.
Holland Capital Management helps business owners review their plan’s costs, investments and design, along with how the plan fits into their own retirement planning. We are based in Ballantyne, and we have no allegiance to any particular plan provider.
The review
What We Look At
A review starts with documents you already have: the providers’ fee disclosures, the plan document, the fund list and the most recent testing results. From those we answer a few plain questions:
- What does the plan cost in dollars, across recordkeeping, administration, advice and fund expenses?
- How was the investment menu chosen, and do the funds, share classes and costs suit the plan?
- Who is serving the plan as a fiduciary, and is that in writing?
- Does the design still fit the company, and your own retirement?
Your advisor
Who You Work With
Every client works directly with M. Chad Holland, CFA, CFP®, the firm’s managing director. Chad also holds an MBA from Wake Forest University. He handles all client work personally, so the person who reviews your plan is the person you talk to.
The providers
Who Looks After the Whole Plan?
A plan usually has several providers. The recordkeeper keeps the accounts. The administrator handles the plan document, testing and the annual filing. Fund companies run the investments, and the payroll company sends the contributions. Each provider has a defined role, and those roles do not always include a review of the whole plan: whether its costs, investments and design still fit the company and you.
Under ERISA, the federal law that governs most company retirement plans, choosing and monitoring a plan’s providers are fiduciary duties. At a smaller company, the owner may hold those duties, depending on how the plan is set up and who has authority to make decisions. Hiring outside providers does not remove them.
Costs
What the Plan Costs
Many plan costs come out of employee accounts, so they may never show up on a bill. We start with the service provider disclosures required under ERISA section 408(b)(2), along with the participant fee notices, the fund expense information and other plan records. Together these show the fees paid by the company and the fees taken from employee accounts.
We sort what we find into recordkeeping and administration, advice, and fund expenses. We also look for revenue sharing, where part of a fund’s expense is passed to a recordkeeper or adviser. We put the costs we can identify into dollar terms, explain any gaps in the information, and help you judge whether the fees are reasonable for the services the plan receives.
Our role
Our Role, and What We Do Not Do
We serve plan sponsors as an independent investment adviser and relationship manager. We evaluate plan costs, providers and design. We also help you decide whether an outside firm should serve as the plan’s 3(21) investment adviser or 3(38) investment manager, and we coordinate with the firm you choose. We do not serve as the plan’s 3(21) or 3(38) investment fiduciary.
A 3(21) adviser recommends investments, and the plan’s fiduciaries still make the decisions. A 3(38) manager makes investment decisions within the authority it is given. Either way, you remain responsible for choosing the firm with care and keeping an eye on it. Our page on 3(21) and 3(38) fiduciaries explains the difference.
The process
How a Retirement Plan Review Works
The review is a paid engagement, agreed in writing and paid up front, and it ends in written recommendations. The fee is set out in a written proposal before any work begins. The review may recommend keeping the current plan, making specific changes with your existing providers, or considering different providers or a different plan design. If the plan is in good shape, we will tell you so. If you decide to work with us on an ongoing basis afterward, that is a separate written agreement.
Plan design
Plan Design and Your Own Retirement
We review how the plan’s design supports your goals as a business owner. That includes employer contributions, matching formulas, safe harbor provisions, profit sharing, and Roth options. We help you understand the trade-offs and coordinate with your plan administrator and other specialists when changes make sense.
Each design change also affects employer costs and employee benefits. The right choice depends on the business, its cash flow and its people. So we look at the plan alongside the rest of what you own: the business itself, your other retirement accounts, your taxable savings, and what a future sale may produce.
Next steps
Where the Work Can Lead
A plan review may raise questions beyond the company’s 401(k). How much should you save before selling the business? When should you convert retirement savings to a Roth account? Those decisions call for personal planning beyond the plan review. Our 401(k) advisory pages cover each part of the plan in more depth, and our financial planning work covers the rest.
A Guide from Holland Capital Management
Is Your Company Retirement Plan Working for You, or Just Your Providers?
Five checks for owners who sponsor a 401(k).
Questions
Frequently Asked Questions
Does a small company need a 401(k) advisor?
Not always. The question is whether the people responsible for the plan regularly review its costs, investments, providers and compliance requirements. If no one does, a review can show whether the plan is reasonable as it stands or needs work.
What does a 401(k) plan review cost?
The fee is set out in a written proposal before any work begins, and it depends on the plan’s size and what it needs. A sponsor that already pays us asset-based fees for its plan is not charged a separate review fee.
How is Holland Capital paid?
We charge a fee for the Retirement Plan Review, agreed in writing and paid before the review begins. If you engage us for ongoing services, we charge an asset-based fee under a separate agreement. We do not accept referral payments from recordkeepers, administrators or the outside fiduciary firms we coordinate with. Holland Capital Management may receive insurance revenue when clients purchase insurance through the firm. Clients are not required to purchase insurance through HCM. Additional information about our compensation arrangements is available in our Form ADV.
Will you serve as our plan's 3(21) or 3(38) fiduciary?
No. We help you decide whether either arrangement fits, and we coordinate with the outside firm you choose. A 3(21) adviser recommends investments while the plan’s fiduciaries decide. A 3(38) manager makes investment decisions within its authority. Either way, you remain responsible for choosing and monitoring the firm.
Do we have to change recordkeepers?
No. Some plans can improve their fees or investment choices without changing recordkeepers. We evaluate those options before recommending a move.
What do you need from us to start?
Your providers’ fee disclosures, the plan document and adoption agreement, the current fund list, the most recent testing results and the latest Form 5500. If something is missing, we can help you request it.
Can the plan help me save more for my own retirement?
Sometimes. Safe harbor provisions and profit sharing can affect how much an owner may contribute to a 401(k). A Roth option changes how contributions are taxed, not how much you can contribute. A separate cash balance pension plan may let owners save more, with its own required funding, rules and costs. Each choice also affects employees, so we look at them with your administrator before anything changes.
Where do you work?
Holland Capital Management serves 401(k) plan sponsors in Charlotte and the surrounding area. Our office is in Ballantyne, and we also have an office in Winter Park, Florida. We meet in person by appointment, and much of the review work can be done by video and phone.
