Money Purchase
Baden Retirement Plan Services is an indendent third party administrator (TPA) of money purchase plans. A money purchase plan is an IRA-based account in which an employer (plan sponsor) sets up and contributes to retirement savings accounts for the company's employees. Eligible employees (plan participants) may also contribute to the plan. In a money purchase plan, the employer (plan sponsor) contributes a fixed amount of cash rather than shares of stock or a percentage of profits. Our services for money purchase plans include, among others:
- Money Purchase Plan Documents
- Money Purchase Plan Administration
- Money Purchase Plan Compliance Testing
- Money Purchase Plan Consultation
- Money Purchase Plan Daily Valuation and Recordkeeping
- Money Purchase Plan Form 5500
- Money Purchase Plan Design
Similar to a 401(k) plan, a money purchase plan must comply with applicable Internal Revenue codes and the Department of Labor's Employee Retirement Income Security Act of 1974 (ERISA), which is the federal law that sets minimum standards for operating most voluntarily established tax qualified retirement plans to provide protection for individuals who participate in the plans.
- Typical number of employees in the plan: Unlimited number of eligible employees
- Features: The employer (plan sponsor) decides to contribute a set amount to the money purchase plan. The set amount is then allocated to the eligible employees' (plan participants') accounts using a contribution formula specified in the Plan Document. A money purchase plan can result in larger account balances compared to other arrangements. The plan must be tested to ensure that benefits do not discriminate in favor of the highly compensated employees (HCEs). An excise tax will be due if the employer's minimum contribution is not satisfied. Contribution limits are subject to cost of living adjustments (COLAs) established by the Department of Labor (DOL). A money purchase plan can be combined with other retirement plans.
For more information, contact Tom Ackmann at (260) 969-2677 or use our Contact Us form to e-mail your inquiry.