What about Research?

My last post I looked into how he tools a Judy Diamond Associates is able to help with your back office support. Specifically, we looked at how Retirement Plan Prospector is able to help with the marketing side of your work. From prewritten dynamic marketing letters to adaptive graphics and presentation-ready plan reports, RPP is able to up your marketing game.

But we all know that preparing for a sale is more than just squaring away your marketing and graphics. You need to know all you can about your lead. Not only that, you need to know how your lead compares to the client you prefer to work with. Moreso, which of the nearly 800,000 plans that are filed every year provide the best ROI of your valuable time?

Advisor Scorecard

Analysis is not just something that looks outward. It also can be turned inward on your own book of business. The Advisor Scorecard helps you to determine and track the plans you currently have under management

After adding their plans in your book of business into your My Plans files, Prospector focuses its analytic tools to help. At the high-level view, you can maintain the general summary of your book of business (Number of Plans, Total Participants, and Assets Under Management). Additionally, you can see the breakdown of the plans under your management by Plan Size and Plan Score.

Plan scores look at the relative strength of a plan. By collecting the plan scores of all the plans in your book of business, you can come up with an average plan score for your clients. Comparing a lead’s low plan score to your “book of business score” is a great use of plan scores. Such a comparison is a data-driven reason for the sponsor to consider having you perform the same great work you did for your other clients.

In my last blog post, I wrote about the importance of preparing for a trade show. I had a chance to put my own advice into practice shortly thereafter when I attended the truly excellent Excel 401(K) show in Dallas. Because trade-show ROI can notoriously difficult to quantify, it is often one of the first things to go when belts and budgets need to be tightened. 

As an exhibitor, I’m usually paying anywhere from $4,000 to $10,000 for my booth space, plus another $1,000 shipping, $500 (minimum) in booth furnishings, and $1,000 in personal travel expenses…and these are only the dollar costs. The opportunity cost for my time out of office is often equally pricey, especially if I’m sending multiple people to a show. 

Let’s dive into the Top Four Considerations which make a show a “must attend” as opposed to a “could lose it if I had to”… How do we evaluate which shows to keep and which are destined for the chopping block? I generally look at four key metrics; New Business, Existing Business, Competitors, and Referrals.

New Business

This is the number one driver for an exhibitor like me. Do I think that I’ll make enough new connections at this show to fill my pipeline, and then convert them into clients, to pay off the show? Evaluating potential new business generation from a trade show is a combination of two functions: The number of attendees at the show, and the quality of these attendees.

Number of attendees

You’ve got to have a critical mass of people. 100 people aren’t going to cut it. 300 is about the absolute minimum I’ll even consider, and even then, the exhibiting price had better be pretty low. 700-1,000 attendees is where I like shows to be.

Quality of attendees

This critical component is often overlooked. Are the people I can expect to meet with at the show capable of buying my products? I’ve found that when I’m considering a new show I can often request a list of the attendees from the previous year’s conference. Even if you can’t get names, at least get a combination of company+title. What I’m looking for here are people with purchasing authority, or who may be senior influencers with my buyer.

Since I often sell to exhibitors, I include them in this category. One of the items that make a show a slam dunk for me, specifically, is when someone who actually signed one of my contracts is going to be at the show in person. Not only does that mean we can grab some coffee and strengthen our relationship, but also means that there may be others like that person in attendance.

Existing Business

A subscription-based business like mine grows on new sales but survives on renewals of the existing book of business. When considering a trade show, I will always look at the list of exhibitors from previous years (and, as noted earlier, the list of attendees) and do some quick math. Any show which has high-level representatives from 1/3rd or more of my existing client base is a must-attend.

Competitors

Sometimes, you can get lucky and just let your competitors do the homework for you! Any show that is hosting two direct competitors is something I’ve got to be at too. If there’s only one competitor, I’ll give it a good look, but there are definitely shows with a single competitor that I’ve taken a pass on.

Exhibiting at a show where one of your competitors is not only allows you to take advantage of their homework, but also lets you be on hand to answer that important question; “how are you different from X”. Some attendees might not know that there is another option out there, and others may be interested in seeing your different approach to solving the same problem. Be sure to be able to clearly articulate your value proposition and what makes you different.

Referrals

Of the 100+ shows I’ve exhibited at over the last 16 years, every single one has had some downtime when the exhibitors could mix and mingle with each other. When that happens, we almost always talk shop, and three questions consistently come up:

1. How has your foot traffic been this show?
2. Are you guys coming back next year?
3. Where else do you guys exhibit?

Some of the best shows I’ve found are the ones that were recommended to me by my fellow exhibitors. New shows are always popping up, and as we discussed earlier, there is a significant expense associated with exhibiting. Getting the “seal of approval” from other exhibitors who are trying to reach the same audience I am is a big green flag that a new show is worth my time.

Trade shows are a critical part of the sales process for both individual subscribers and enterprise-level accounts. Making sure that you can select the right show to attend and that you maximize your time there (https://www.judydiamond.com/blog/making-the-most-out-of-trade-shows/) is essential  for every sales manager.

Here at Judy Diamond, we often find our retail level clients face unique challenges. Frequently these users are the members of small teams, if not the only person at their office responsible for bringing in new business to their firm. Perhaps they are members of a larger firm with dedicated support teams, but others are vying for the resource. Many clients are new to the business. They come to us looking to learn how to sell in this space as quickly as they can.

In the end, each of these groups come to us because they need some “back office support” to meet their sales goals in the most efficient and straightforward path possible. 

What is this “Back Office Support”?

A big challenge for these clients is how to do all the activities required to bring in new business while maintaining their current book of business. Tasks such as:

• Benchmarking analysis
• Determining what plans in a market are weaker than others and explaining these weaknesses to plan holders
• Writing marketing letters for direct or email campaigns
• Creation of presentation-ready reports and graphics
• Dig up information on businesses current plans

I like to call these tasks “Back Office Support”. These are support tasks often provided by knowledgeable staff focused on helping you win over your client. Larger firms often have dedicated departments of experts devoted to these support tasks. However, at smaller firms, these support roles are usually rolled up into the hands of the same person responsible for bringing in the new business. 

With so many tasks falling onto one person, organization and efficiency become even more critical.

Judy Diamond listened to the needs of these clients. We spent two years building Retirement Plan Prospector Plus (RPP+) to do just that: Act as your marketing, graphics, and research departments so that you can walk into your next meeting with everything you need to move along your sales cycle. 

In this series of posts, we will look at how to take advantage of the edge RPP+ gives you. Let’s first look at how RPP+ can support your marketing and graphic design needs.

Marketing Letters

After you know who you want to reach out to, your next step is to decide on messaging. What do you want to say to these leads? How can you get your value proposition across effectively?  When starting a new business campaign, larger firms may bring in assistance from their marketing department. The marketing team often provides two essential tasks to help the salesperson. 

• Make sure the copy, or text, conveys the message the salesperson wishes to send out using the best tone and voice possible. 
• Layout the text in an attractive and easy to read format

While having a whole team of marketers helping craft your messaging is the best way to go, RPP+ can help those whose firm does not have a dedicated marketing team. It can also act as a stand-in for those firms whose marketing teams are unavailable.  

Those who do not have access to a dedicated marketing department can turn to the RPP+ module for support. This add-on module grants users access to professionally written marketing ready for you to use! These letters are not only crafted by our knowledgable team, they are also tied into our powerful RPP+ data. This means the letters pull in plan details specific to the business you are reaching out to. They are also easily downloaded so that you can make any adjustments to the letter (if you wish). 

In no time at all, you have copy ready to be included in your next email or direct mail campaign!

Presentation-ready Reports and Graphics

Often when you are putting together your materials for a meeting with a potential client, it’s a good idea to include graphics. Graphics are a great way to take complex material and make it more easily understandable. Additionally, graphics help pull in clients who are more visual learners. 

However, not everyone has the time or inclination to learn how to create graphics packages of their own. If you work for a large firm, the marketing department might be able to build some charts or format a few graphs for you…if they have time. But even then, you have to worry about collecting the data you need, give it to the graphics expert, explain to them what the data means and how you would want it shown. This would likely take several emails back and forth, plus the additional call or two, to sort it out. 

Our RPP+ module reduces the need for all this hassle by providing attractive and easy to understand charts and graphs ready for our clients to use. If you were want to show your client how Microsoft compares to other software publishers, you can! By accessing RPP+’s Benchmarking tools, you can quickly build a peer group containing software publishers. Then, which a couple 

of clicks, you can generate a graph comparing Microsoft’s Plan Score against over 2,000 other companies in the same market. 

No worrying about collecting data, now worrying about if the graph correctly represents the data. In under a minute, you have a graphic ready for you to drop into your report.

Let’s say you need a heat map showing what states or counties have Software Publishers. Once again, in a few seconds, you can have a graphic pulling on that same data pool of over 2,000 different sponsors. 

But RPP+ goes even further. Not only are we able to provide these single graphics for you, but we also provide each RPP+ client with our presentation-ready plan reports. These adjustable reports pull all the data that you receive with your RPP+ account into a multipage PDF. You get to select what information you want to include in the report. You get to choose

What about Research?

But we all know that preparing for a sale is more than just squaring away your marketing and graphics. You need to know all you can about your lead. Not only that, you need to know how your lead compares to the client you prefer to work with. Moreso, which of the nearly 800,000 plans that are filed every year provide the best ROI of your valuable time?

In my next blog, we will go into how RPP+ can act as your back office Research team providing you with the data you need.

Trade shows are an essential part of the Employee Benefits industry. They function as meeting places where brokers, carriers, and other players in the space can interact. As I am freshly returned from Source Media’s “Benefits Forum & Expo”, I thought it might be useful to dive into what goes on at these shows and how to get the most value out of the experience.

In my 16 years with Judy Diamond, I’ve attended about a half dozen shows per year, on average, giving me roughly 100 shows under my belt. For someone in my position, there are two distinct and very separate show elements; the exhibit hall and the content sessions.

The exhibit hall is a big open ballroom where various vendors (usually anywhere from 40 to 150, depending on the size of the show) buy booth space and set up shop, putting up booths with fancy graphics, giveaways, and literature about their offerings. The goal of the exhibitor, generally, is to interact with the attendees (though some exhibitors are just as eager to interact with other exhibitors).

The content sessions are held in smaller rooms and are often hyper-focused on a single topic. Some examples from the Benefits Forum and Expo include “What the future of value-based care means for employers”, “HRAs: a new wave of opportunity”, or “Understanding mergers and acquisitions in retirement plans”. The sessions are most often populated by a panel of industry experts and moderated by someone from one of the Sponsoring/exhibiting companies.

With the basics out of the way, let’s dive into how to get the most bang for your buck out of a show.

Preparation

Most shows will provide the exhibitors and sponsors with a list of attendees before the show. Such a list usually contains name, title, and company but no contact info like a phone number or email address. Shows also make their list of exhibitors public, so you know who is going to be there. Step one for every show is looking over those lists and identifying the people and companies you want to connect with. You have to go into these shows with a plan… you can’t just show up and hope that you’ll get those meetings you want. Reaching out ahead of time on LinkedIn or even through company directories/websites can mean the difference between a productive show and a waste of time.

Making the most out of the Exhibit Hall

When I go to one of these shows representing Judy Diamond, I am most often there as an exhibitor in a booth. While it’s true that the attendees at the show are good prospects for JDA tools and data, our best source of potential clients are the other exhibitors. Here are some do’s and don’ts I’ve picked up along the way.

• DO be respectful of the exhibitor’s time. If they are engaged in a conversation with a potential client, keep your distance. In that same vein
• DO step away when an attendee comes up to their booth, and let them conduct their business
• DON’T drop your card into their bowl to try to win a prize if you are not a potential client.
• DON’T rely on your memory. When you get someone’s card, flip it over and jot down a note or two on the conversation, especially if it’s a good lead or you have a follow-up action.

Content Sessions

If you’re interested (as I often am) in the content sessions, it also helps to map out where you want to be and when. The full agenda of a show is usually available many weeks before the event itself, and there are usually multiple sessions available at every timeslot. Figuring out what you want to see will help ensure that you arrive early enough to get a seat. I can tell you that there is nothing more annoying than having to stand along the back wall for an hour because you got to the Keynote session 2 minutes after it started.

Trade shows can have a tremendous impact on your business, and when you execute a show well it can be one of the strongest marketing investments you’ll make. But if you take one thing from this post, let it be that simply showing up is not enough. You can’t just hide behind your table all day and hope that good leads simply walk up to you. Do the homework, set up the meetings, attend the sessions, and you will leave that show with a fat pipeline and a better understanding of your market.

My favorite part of the Form 5500 is the Schedule A. Here’s where we find the meat of health and welfare plans, the insurance contract disclosure and any brokers that sold the policy. Retirement plans will fill out this Schedule as well if they have an annuity contract. But for the purpose of this article, we’ll focus entirely on how to interpret a Schedule A on welfare plans. This article is an introduction, and you can check out its follow-up for building more nuanced searches.

Given how integral it is to either developing broker relationships or assessing competition, there’s a brevity of fields on the Schedule A. Never fear! Judy Diamond Associates has spent years supplementing the data and making connections so that you can work more efficiently and effectively. Below is a list of the most commonly requested data points.

Carrier Name

This is the carrier who is assuming the risk for the benefits selected on the Schedule A. You’ll only see one carrier per Schedule A. Fun fact, sometimes a sponsor name will show up in this field. I take this to mean they’re self-insuring the benefits.

Renewal Date

This usually is identical to the plan year beginning and end date. However, I like to point it out because sometimes you see a policy that ends mid-plan year abruptly. Always worth investigating!

Carrier Benefit Codes

This list of health and welfare benefits was determined by the DOL and has only 13 codes that run through the letters A – M. This is isn’t to be confused with the Form 5500s main page’s Plan Types descriptions (Section II, Field 8a) where a sponsor identifies what they’re offering to their participants. These codes are only for the policy in question and may provide a bit more detail than the Play Types. For example, in addition to the option to select Health a carrier could use HMO or select Health and PPO as a qualifier.

You might have noticed that JDA has 26 codes in their tools. That’s thanks to the next item, “Other” text entries.

The “Other” Text

When a carrier marks code M for “Other” they need to fill out a brief description of what that “Other” benefit includes. That text is searchable in The American Directory of Group Insurance, but we realized early on that it was going to be like hunting for a bent needle in a haystack. That’s because there are no guidelines on how to report benefits. So we created a process to identify the most frequently filed write-ins and created an additional 13 categories just for them. That way you’re not struggling to figure out if Accidental Death & Dismemberment was disclosed as AD&D, AccD&D, Accidental Death & portDismemeberment (that typo is intentional in this article but probably not on the policy), or any other variation you can imagine!

Lives Covered

The number of individuals covered by the policy. Caution, there’s potential for confusion here. The DOL’s instructions indicate on the Form 5500 that participants should be either current or former employees or members of the sponsor. The Schedule A’s instructions say to disclose who is covered by the policy. Some carriers interpret this as spouses, dependents, and participants because their lives covered count exceeds the Total Participants field.

Broker Name

In the fourteen years Managing Director Eric Ryles has been with Judy Diamond Associates, he’s never had a good night’s sleep. Why? Because the DOL has some fuzzy disclosure requirements on brokers. And it’s all thanks to this simple sentence:

What we see on 5500s is that there’s a broad interpretation of how to report that information. Maybe they list the individual but not the firm. Or perhaps it’s the firm, and no individual is registered (particularly common with the larger brokerages). But rarely do filers provide both an agent and the firm they work for.

Fortunately for you, Eric’s restlessness has become JDA’s restlessness. Our dedicated team identifies connections between a broker and a firm and cleaning up data, so your prospect lists and market reports are representative of your search. That’s the core of our BCMS database.

Premiums

This is the value of the contract for the benefits and lives covered. It’s a single-line field with no ability to clarify if the premiums were voluntary or determine how much each benefit on a multi-line policy earned. And yes, you guessed correctly, JDA has identified workarounds to that! Voluntary benefits are typically found on policies with write-in text, and as I mentioned above, that’s searchable. As for multi-line policies, we introduced our Modeled Premiums in late 2018 and continue to build out that model in both Group Insurance and BCMS.

One of the main features that separates Retirement Plan Prospector and the American Directory of Group Insurance from basic 5500 lookup tools like FreeERISA and DOL’s E-FAST is the ability to create lists and export them to an Excel spreadsheet/ CSV format. This article will show you how to use the various features of the export feature in order to create spreadsheets for Mail Merge campaigns, Salesforce exports and more.

Setting Up Your Export

First, you’ll need to set up your export by performing a search to narrow down your results. If you don’t have any search filters set up and you go to export, you’ll be prompted to return to the Advanced Search page and set up filters before you can advance. The export limit for each account is 10,000 records per export, so make sure to limit your list to get under that 10,000 record limit. If your search has over 10,000 records, you can try adding more filters to get your list under 10,000. Some examples of filters you can add are: searching by a more restrictive geographic area like a smaller zip code radius, searching by specific plan types, or searching by plans with a range of participants.

Choosing Which Export to Use

After you’ve set up your search to capture the data you want to use, it’s time to pick your export format. We have a number of different options available for you to choose from, including Mailing List, Salesforce Friendly and Complete Dataset formats. Which export you’ll want to use depends on your use case. If you’re looking to set up a mailing campaign, you’ll probably want to use the Mailing List export to get all the information like address and contact information you’ll need to set up the campaign. If you’re looking to save new leads to your CRM, we have the Salesforce Friendly export that is automatically formatted to work perfectly with Salesforce.com and can be configured to work with other CRM as well.

Custom Exports

Don’t see the right format in our prepared list of export formats? You can create your own custom export based on the information you want to see in your export. You can use one of our premade export formats as a base to get started or you can just choose the fields you want to include in your custom export one by one from a list. Once you’ve chosen those fields you want to export, you’ll save your export under a specific name so you can reuse it whenever you want. Your custom export will show up under the Standard Layout section on the Export page and you can run your custom export from there.

Running The Export

Once you’ve created your list and chosen your export layout, you’ll need to pick the file format. For our Standard Layouts, you’re able to export by Excel or CSV file format, and you can export by unique sponsors (shows one plan per sponsor) or every plan that shows up in your inital search. Once you’ve picked the format, click the link and your export will start. You can look at the bottom of the page for updates on the progress of the export. You’ll be notified of a completed export in two ways: you should see an exclamation point pop up on the Export tab in the database itself, and you’ll receive an email notifying you of your export’s completion.

Now that you have learned a little bit about what an API is, here are some ways companies have put APIs to work for them!

While the limit of how the API can be implemented is constrained only by your imagination and developers, there are some general uses many in the Retirement market are drawn. These use cases include:

FILL IN THE WHITE SPACE OF CRMS

One frequent use of an API is to fill in the white space found in many CRMs. Through hard work, many businesses have built impressive lists of leads and clients. However, even the most diligent data collection team could use the help.

• Fill in basic company information such as business name, address, phone numbers, even their federal Employer Identification Number (EIN).
• Load essential details about a company’s retirement plan, such as what type of plans they have and the number of participants in those plans.

In the future, JDA may even begin providing contacts for the companies such as the CFO, or heads of their Benefits and HR departments.

WEBFORM VERIFICATION

Many businesses, especially those in the small business market, seek a basic level of authentication of a potential client’s identity to qualify them as a lead. A great way to automate this basic level of qualification is through a web form.
The web form requests the client to provide some necessary information about themselves, frequently including the business name and EIN. A web form
connected to the JDA API can then instantaneously verify this data. As the API data includes confidence scores relating to a company’s name, EIN, and address,
you will get a clear picture of the lead.
This automatic first tier qualification will save you time chasing down poor leads and lower the chance for fraudulent clients.

KYC COMPLIANCE

Since the implementation in 2012 of FINRA Rule 2090 and Rule 2111, it’s become extremely important for brokers to obtain and maintain some basic facts of each  Customer they work with. Manually creating these profiles can be a daunting task. This is where the automation allowed by an API can save time and money while lessening the change for error introduced by manual input.
By connecting the JDA API into your KYC process, you gain the ability not only to verify the information you have but collect data you don’t have on your client list. You no longer have to spend the effort chasing down a client’s name, EIN, or address. Our API can be used to provide data automatically. Even periodically re-verify the data to make sure it is still accurate.

FORM CREATION SUPPORT

Often a broker may want to send correspondence to a potential client, perhaps a  proposal. Marketing departments also like to reach out to multiple leads at
the same time using a marketing template populated with text specific to the lead they are reaching out.
The API is a perfect way to bring specific data related to the target of the correspondence into the documentation process.

• Quote generation: By pinging our API, you can pull in data such as the number of participants and plan types a sponsor currently has. This data will allow you to build tools to provide you with general quotes for a client without having to manually look up a plan or ask the client for details.
• The Proposal: A proposal or contract template can now include information such as the types of plans a sponsor currently has, these plans’ renewal dates, and general business information such as address and phone number.

What is an API?

An API (or Automated Program Interface) is a set of tools, protocols, and definitions developers use to allow automated communication between different systems. Chances are you interact with APIs and are not even aware of it. Data requests transfer information between systems. This integration supports a company’s internal or web applications without the need for manual input. It is a seamless way your data team can provide solutions to the departments they support!

APIs are limited only by your team’s ability to integrate the data the API supplies. An API is a way of transferring requested data, therefore, your development team is not limited in how and where to use the information.

What do all these terms mean?

There are many different ways to approach building an API.  Judy Diamond Associates designed their API with a developers ease of use foremost in mind.  Novices to the world of API find it useful to understand the following when discussing APIs with developers.

Authentication

Authentication is typically a key, password, or token included within a Send Request (see below). The token tells the receiving system that the request is valid and a response should be generated.

JSON

Also known as JavaScript Object Notation, is an open-standard file format. It uses text that is easily read and understood by humans to transmit data. It’s a great choice for APIs, especially those that are cloud-based.

RESTful

RESTful (often shortened to REST) APIs refer to APIs or web services which are based in REST technology. REST is a web services development architectural style commonly used by developers. Its design makes it able to handle load changes and, therefore, easily scalable. It’s a great choice for APIs, especially cloud-based ones.

Return Response

A return response generated and sent back to to the system that made the request. Typically the response will include a status code and data.

Send Request

The term describing a system reaching out to an outside database through an API. The term “call” sometimes replaces “request”.

How can I use an API?

For those in the group insurance or retirement markets, there are some amazing use cases for a well-curated API. In fact, any business plan in the B2B or small business market can increase efficiency and decrease error by incorporating an API into their workflow.  This is a big topic, and there are almost infinite ways to use an API. Check back to the next in this series where we will look into specific ways you can make an API work for you!

Using 5500 Data for Offensive and Defense Business Development (Part 4): Planning the First Meeting

Meeting with a potential lead is the first big step in winning their business. While personal preference determines the style of your pitch, it is always a good idea to back your pitch with data. Additionally, being able to tailor your pitch to each lead, quickly, is invaluable.

It is also a good idea to present your pitch using multiple modes of communication. While you are going to be speaking your potential clients, remember that not everybody learns or retains information the sale way. For instance, while listening to a speaker may help some, others are more visual learners and react better to charts and graphs. Still others prefer to read the material to listening to a speaker.

It’s a good idea to plan on presenting your pitch to a lead using multiple modes of communication. That way,

PLAN REPORTS

When discussing the future of a lead’s retirement plan, it is often helpful to be able to talk confidently and clearly about the plan’s past. Building a detailed history of a plan will help you show negative trends to a client; trends that you would be able to avoid.

CHARTS AND GRAPHS

Some people learn by reading the material, others, by hearing it. Still, other people best consume data by seeing it. It is important
to provide your lead with the same data in multiple ways. This increases the impact of your presentation and makes complex information more easily understood by your potential clients.

THE VERBAL PITCH

Sometimes even the most seasoned salesperson may forget the importance of their verbal pitch. And there are times that new financial advisors may need a little guidance or inspiration in how to start a pitch. While your verbal pitch should reinforce the visuals of your graphs and the data-heavy details of your reports, it should not be a recitation of these facts. This is where an advisor can reveal how they are able to solve the challenges unique to the sponsor.

THE JDA ADVANTAGE: Our tools are designed to help make your presentation shine. Our Dynamic Plan reports consolidate all our research on a plan into one modular, presentation-ready document. Have all the specific details about a lead’s current plan neatly organized and right at your fingertips.
The performance-based Benchmarking tool in our Prospector Plus creates downloadable professional-looking graphs and charts. By inserting these into your sales deck or pitchbook, you will be able to walk your clients through all the reasons why they would be better off working with you.Need some inspiration? Prospector Plus’s talking points help walk you through a plan’s weak spots. They also suggest different approaches to help your leads understand the challenges their plan contains.

If you are new to the market and the 5500, there are likely to be a ton of terms that you may be unfamiliar. Before you dig too deep into your 5500 research, review the below ten terms. Whether you are in the retirement or group insurance market, studying the below terms will help you prepare for prospecting.

1. ERISA

The Employee Retirement Income Security Act of 1974. This law sets minimum standards for most voluntary health and retirement plans offered in the private sector. Yearly completion of the Form 5500 is one part of this law.

2. Sponsor

A Sponsor is a company that provides a retirement plan to their employees

3. Provider

A provider is a company or agent who services a retirement plan for the sponsor. These services can be anything from investment management, to recordkeeping, to third-party administration. You can view the providers for a plan on the Schedule C of the 5500, where you’ll find information on the company, services provided, and the compensation they’re required to disclose.

4. Participant

An employee of a plan who is part of a plan. They may be active or retired.

5. Plan Number

Each ERISA qualified plan is assigned a three-digit plan number. Together with an Employer Identification Number (EIN) and Plan Year, a specific plan may be identified. Plan numbers from 001 to 500 are Retirement plans. Plan numbers from 501 and 999 are Health and Welfare plans. A Plan number provides no other additional data.

6. Plan Year

This is the year of which the plan covers. For instance is a plan’s term runs from January 1, 2017, to December 31, 2017, the Plan Year is 2017. Much like an individual’s income tax filings, these forms are submitted yearly for the previous year. As a sponsor has 201 days to file a 5500, and they may apply for a two-month extension, a 5500 may be made available to the public up to 10 months after the plan renews.

7. Plan Type

Plan types on the 5500 are indicated by a code consisting of a number and a letter and denote the features of a plan. This could cover anything from whether a plan is a defined benefit or defined contribution plan, whether a plan is a 401(k) plan, 403(b) plan, etc., and other features of the plan like having automatic enrollment and allowing participant directed accounts. It is not uncommon for retirement plans to have several of these plan type codes listed, and understanding them is key to understanding the structure of a retirement plan.

8. Defined Benefit

A defined benefit plan are employer-sponsored retirement plans where the retirement Benefits owed are calculated using a variety of factors such as length of employment and compensation history. They more commonly referred to as pension plans. The company invests in a pension fund and pays the retirees their benefits out of that fund. Defined benefit plans used to be the more popular type of retirement plan, but 401(k)s and other defined contribution plans have swiftly become the preferred choice for retirement plan sponsors.

9. Defined Contribution

A defined contribution plan is a retirement plan paid for in contributions directly from the employee’s pay, instead of the employer. These contributions are typically tax-deferred and employers generally choose to match varying percentages of employee contributions. While the benefit from a pension plan is precalculated, and the employer is on the hook for that amount no matter what, defined contribution plan benefits ultimately depend on the level of employee contributions and the rate of return on the investments made by the plan.

10. Corrective Distribution

Every year a plan’s participant may contribute up to $18,500 into their 401(k) plan. Contributions above this amount are not allowed by the IRS. When a participant, often a Highly Compensated Employee (HCE) contributes over this amount, this overage must be corrected.

THE JUDY DIAMOND ADVANTAGE

Now that you are more familiar with these foundational terms, put them to use looking at some 5500s. You can find 5500s either of Judy Diamond Associate’s sites, FreeERISA and Retirement Plan Prospector.