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It's a 2 person company right now that I did and named an owner as the trustee and a participant. Does TD provide the form 5500? Who prepares it?
Are they both owners?
Why a 401k for a 2 person company?
They want to max it out and will likely add 2 more employees in the coming months. I was going with a simple IRA, but they wanted and can use the higher limit. I know, seems weird to do but it fits.
Both are owners.
Until they have employees they can do the solo k. Then they can have it for another year after they hire people before they need to make it a regular plan. It'll save them thousands with no tpa to start.
Td charges nothing for running the 401k. I'm doing the investment management under the fee based asset management, not sure where they be spending thousands. Again, they'll be adding 2 employees in a few months, maybe a 3rd by the 2nd quarter of 2019. Dont have or need a tpa from what I see.
Dont know if TD is bundled or un-bundled. If TD got the plan up and running, likely bundled (logically) because otherwise there would be no SPD, docs or specs setup on the plan...the plan couldn’t run.
TD does have their own prototype plan doc that can be used, or you can use an external one. We used theirs.
What do you mean TD doesn’t charge? They have to get paid somewhere. A bundled plan includes setup, administration, recordkeeping, compliance testing - all costs to TD.
Sure they charge the $7 per trade fee but there's no admin, record keeping, etc. The client's CPA does that, I do the admin and set up payroll, make investment choices and that's it. Just confirmed with them. Remember, this thing is tiny. Could be 4 people max, but 3 of them will max it out and I got it from a provider who didnt pay attention to them. Sat in cash for a year. TD just opens the account and we're responsible for the rest.
So TD ‘s capacity is basically custodian-only to a pooled investment account registered as a 401k? If that’s the case, TD wouldn’t do the nondiscrimination testing or 5500. Maybe the CPA will do it for free. I wouldn’t if I were them
I have done a 401k through TD as an RIA. They do charge and it is more expensive than a TPA. They set the whole thing up. Recently did a $2.5M, 15 employee plan and it had a minimum annual fee of $3750 or you can wrap it in to the participant cost - in my case 15 bps, but it is more with less under management. TD takes care of all the paperwork and on boarding, you get to pick the funds and create models and charge an advisory fee for rebalancing and managing the accounts. TD also charges a bunch of additional ancillary fees that are optional for miscellaneous tasks. There are no transaction costs in their 401k plans (i.e. $7/trade).
You can also use a TPA and hold the assets at TD. TD has a portal for TPAs. TPAs usually cost less, in my case, $1000 setup, $1400 - $30 per participant per year. It all depends if you want the brand name, fancy brochures and client experience.
Really? I actually called TD today and they verified no fees or assistance. I have various Simple IRA plans and they made it an point to say from a fee perspective it isn't no different. I've not signed anything saying i agree to any of these fees either. I wonder if it is because I only have 2 participants and under $500k in assets in this plan? I'm going to use the I fo that you're giving to call them tomorrow and see if I can figure out where this is different than what I've done.
There are no “setup fees”. But there is a fee to manage the plan.
I'll call and check today. I explicitly asked them to cover all fees associated with the plan and they never mentioned anything. I'll ask again and see what I get.
OP - In addition to fees, ask TD what their legal capacity will be. Custodian-only vs. directed trustee vs. recordkeeper-only makes a difference in their fees and responsibilities. You’ll want to nail all that down at the same time before signing.