401(k) Plans



401(k) Plans

What Sets Us Apart? Commerce National Bank’s Philosophy

At Commerce National Bank we pride ourselves on always acting in the client’s best interest and putting foremost the pursuit of your financial goals. As your appointed Trustee, Commerce National Bank takes seriously our role as fiduciary – someone who is managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility. A fiduciary is required by law to always act in the best interests of their client.

We draw on the years of professional experience of our team to deliver customized professional retirement plan solutions. The hardest work related to a retirement plan conversion occurs before a single sheet of paper is signed – when the plan is being designed. If your plan design is well crafted, implementation will progress smoothly. Our retirement plan experts will spend considerable time in consultation with you, perfecting the design.

We operate in an open architecture environment. That means we maintain a completely independent investment philosophy – no proprietary investments. In selecting your plan investment alternatives, we zero in on performance and sound fundamentals.

An important aspect of retirement plans is the administrative function. Our administrators are experienced, and you will benefit from a consistent contact person. An education specialist is at-the-ready to go on-site to clearly explain your plan to your employees.

As Trustee, we offer regular consultative reviews, looking for ways to improve the plan for you and your employees. We maintain strict adherence to operational and compliance procedures and perform compliance testing required by the Department of Labor and the IRS. Throughout all of our activities, we maintain a high level of integrity. If this is what you are looking for in a Retirement Plan provider, with Commerce National Bank, you can count on it.

We offer you a partnership in securing your financial future – focusing more on what makes you different than what makes us different. We operate with a team of experts, each an experienced professional who applies his or her particular expertise to the task at hand. In every decision we make at Commerce National, we think and act as fiduciaries, ensuring an objective dedication to your best financial interests.

CORE PRINCIPLES

Retirement Plan Services - Deliverables

Custom Plan Design
Our consultative approach focuses on the uniqueness of your business and employee base. Your plan will be form-fit for you and your employees, optimizing benefits.

Trustee Responsibility
As opposed to an individual trustee, we serve as corporate trustee for your plan, providing ongoing adherence to strict operational and compliance procedures.

Investment Flexibility
Retirement plans are a critical employee recruitment and retention tool. Our open architecture approach offers a wide range of high quality investment alternatives.

Employee Education
We will clearly explain the details of your plan to your employees in understandable terms at your location.

Competitive Fee Structure
For the multiple services we provide, and the fiduciary liability we assume on your behalf, you will be hard-pressed to find a more affordable fee structure.

Administrative Partnership
Through our partnerships with industry experts and best-in-class service providers, we are able to combine the technical expertise of customized plan design and compliance services with dependable delivery of transaction processing and reporting. A highly unique key advantage in the industry is that all core services are provided under one roof (administration, compliance testing, plan document work, plan consulting, mutual fund clearing, asset custody and reporting services). This ensures consistency, accountability and cost-effectiveness, while giving clients the latest features and technology demanded in today's marketplace.

  Retirement Calculators

Frequently Asked Questions - Employer

The Internal Revenue Service provides helpful publications and tools to assist employers with establishing and maintaining a retirement plan. Here are a few sites you may find useful:

The Department of Labor also provides helpful information and services to employers on a variety of topics including retirement benefits. Follow this shortcut to see what they have to offer: DOL Resources

Who is a plan Trustee?

A person or entity (e.g., bank, trust company, or other organization) that is responsible for the holding and safekeeping of plan assets. A trustee may also have other duties such as investment management. A trustee that is a “directed trustee” is responsible for the safekeeping of trust assets but has no discretionary investment management duties or authority over the assets.

How do I know what type of plan is right for my company?

It’s best to sit down with a retirement plan specialist to discuss your objectives, both as an employer and an employee, to determine what plan design best fits your needs. To set up an initial consultation with Commerce National Bank’s Trust Department, please call 806-761-4115.

What is a participant directed account?

The employee decides how to invest their account balance. It is the employer’s responsibility to offer a variety of prudent investment options so that the employee can make investments according to his or her long term goals and risk tolerance.

Who is a plan fiduciary?

A person who is responsible for managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility.

What is compliance testing?

The IRS mandates tests that compare contribution levels and actual amounts made by different classifications of plan participants. The four most common tests that must be passed by 401(k) plans are the Actual Deferral Percentage (ADP), Actual Contribution Percentage (ACP), Minimum Coverage Test, and Top-Heavy Test.

What types of contributions are allowed within a plan?

Retirement plans can provide four types of contributions: employee contributions (salary deferrals or 401(k) contributions); employer matching contributions based on employee contributions; employer profit sharing contributions; and rollover contributions. The plan design will define the type of contributions available within a specific plan.

What is the difference between traditional and daily recordkeeping?

Traditional recordkeeping, also known as Balance Forward, typically uses accrual accounting to report plan activity after the period (annual, semi-annual, quarterly, or monthly) has ended. Depending on contribution timing, account values may be reported several months following the end of the period. Daily recordkeeping typically uses cash accounting, reporting plan activity as it occurs, making current account values available to plan participants on a daily basis.

Why should my company offer a 401(k) plan?

A 401(k) plan can help you attract and retain quality employees allowing them to save for retirement. It also provides tax benefits to reduce your current taxable income. Not to mention that it helps you secure your own retirement.

What is a 401(k) Plan?

You may be surprised to learn that a 401(k) plan is not a plan at all. It is an add-on feature of a profit sharing plan, allowing a participant to make contributions through payroll deduction. The creation of this feature is found in section 401(k) of the Internal Revenue Code, hence the name given to this provision.

What is a qualified plan?

A qualified plan is a private retirement plan that meets the rules and regulations of the Internal Revenue Code. Contributions to such a plan are generally tax-deductible.

Frequently Asked Questions - Employee

What is an internal management fee?

A fee charged by a mutual fund company to investor to pay the professional fund manager of the investment. These fees can vary depending on the type of fund and fund manager and are deducted automatically from investors’ accounts. Higher management fees do not assure superior fund performance.

What is an index?

A statistical measure of the changes in a portfolio representing a market. The Standard & Poor’s 500 (S&P 500) is the most well-known index, which measures the overall change in the value of the 500 stocks of the largest firms in the U.S.

What is an asset allocation?

A portfolio made up of a wide variety of investments, including domestic and foreign stocks and bonds, government securities, real estate stocks, and money market funds.

What is an equity?

Investments in which the investors obtain a portion of ownership. Real estate and common stock are examples of equities (another word for stock).

What is a money market fund?

A fund investing in safe, highly liquid securities, including bank CDs, commercial paper, U.S. government securities, and repurchase agreements.

What does vesting mean?

Vesting is the earned right to keep the employer-funded accounts. Typically vesting is earned with each year of service credited. For example a plan may have a 6 year vesting schedule for match and profit sharing contributions. This would mean that you would need 6 years of credited service to receive a 100% benefit of those balances. Any less than that you would only receive the applicable vested portion upon separation of service. Employee contributions and the earnings received on such contributions are always 100% yours when distributed.

When can I withdraw money out of the plan’s account?

The types of distributions and timing of such distributions are determined on a plan-by-plan basis. Some plans will allow withdrawals while still employed with the company, while other plans will only allow withdrawals upon termination or retirement. The IRS may also mandate withdrawals under certain conditions.

Can I borrow from my plan?

Loans are an available but not required option within a plan; therefore, not all employers adopt the loan provision into their plan.

How much will my employer contribute?

There are a couple types of employer contributions: matching contributions (which are dependent on employee deferrals) and profit sharing contributions. Your employer’s plan document will define the contribution types available within the plan. Generally the amounts are left to the discretion of the employer and may be limited due to IRS imposed limitations and regulatory testing.

How much can I contribute to my plan?

The Internal Revenue sets contribution limits each year; please see the annual contribution chart on the Resources page. Besides the IRS limits, a plan may impose a more stringent limit that must be followed.

When am I eligible to participate?

Once you meet your plan’s eligibility requirements you would enter the plan on the plan’s established entry dates. Requirements are usually based on your age and years of service but can vary by plan. Entry dates can also vary anywhere from annual entry to immediate admission.

Is my 401(k) account guaranteed?

No, there is no protection against any investment losses you may suffer. However, the plan fiduciaries do supervise and are legally obligated to operate and administer the plan in the best interests of the plan participants and beneficiaries. Their responsibilities include choosing and monitoring reputable and competent service providers.

What is a 401(k) Plan?

You may be surprised to learn that a 401(k) plan is not a plan at all. It is an add-on feature of a profit sharing plan, allowing a participant to make contributions through payroll deduction. The creation of this feature is found in section 401(k) of the Internal Revenue Code, hence the name given to this provision.

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