Colorado CU trust firm debuts 401ks to SEGs

<p>DENVER – In a novel approach to soliciting SEG business, Members Trust Co., the state’s credit union-owned trust company, is introducing next month a 401k product with diversified options and is piloting the product offering with Public Service Credit Union of Denver. “We are offering this unique product to help credit unions reach business SEGs of all sizes, from those small SEGs with one participant plan, to those with over $1 million in assets,” explained Vickie Wilson, vice president of retirement services for Members Trust, a cooperative that made headlines a year ago as the first U.S. trust venture involving a group of CUs. Public Service, a charter member of the CUSO trust firm, is planning to market the new 401k called “iFlex401k” to 600-700 of its largest SEGS starting “the first week in June,” said Wilson. Under “iFlex401k,” said Wilson, a CU’s own money market account can be added to a list of 120 different mutual fund investment alternatives. In addition to Members Trust and Public Service, also part of the 401k venture is First Trust Corp. of Denver, one of the nation’s largest administrators of self-directed retirement plans holding more than $17 billion of assets under management. First Trust, a business unit of Fiserv, the Brookfield, Wis. information technology firm, will be handling backroom technology and recordkeeping services for participating CUs, according to Members Trust marketing literature. The First Trust linkup “ensures that your iFlex plan” stays in compliance with current laws and regulations, said Members Trust. Members Trust was chartered in August, 2001 by six Colorado credit unions and the Colorado Credit Union League with capital of $2.7 million to provide personal trust services to CU members with assets in the $100,000-$150,000 range. This is an area that Members Trust claimed that commercial banks were ignoring and that Members Trust could provide to CU members at reasonable fees. Members Trust, with headquarters in Greenwood Village, a Denver suburb, said its 401k product is “very valuable” to CUs and their SEGs because of the money market fund option. “Using the sponsoring credit union’s money market fund as one of the options is a way for the investment portfolio to stay with the credit union,” explained Tim Kenczewicz, the former Colorado bank and MetLife executive hired as president and CEO of Members Trust. Kenczewicz said the 401k product was suggested by David Maus, president/CEO of Public Service Credit Union and immediate past CUNA chairman. The “iFlex401k” product, said Kenczewicz, will “provide access to the smallest of SEGs even taking advantage of recent changes in regulations which now allow a sole proprietor to open a 401k.” The product will also have 24-hour phone and Internet access. In marketing material, Members Trust said the 401k product is being offered in a variety of packages. It is being offered for self-employed individuals covering a one person business and lets business owners make a maximum deductible contribution of up to 25% of compensation. It will also provide making additional salary deferral contributions that are not counted toward the 25% limit. There is also “iFlexSelect” broken down into “iFlexSelect Safe Harbor” and “iFlex Select Simplified Choice.” The “Safe Harbor” option features 100% immediate vesting and a choice of non-elective or matching contributions. “iFlexSelect Simplified” features a choice of 100% immediate vesting or five-year vesting. “The employer can also choose between non-elective contributions, matching contributions or no employer contributions,” said Members Trust. The plan with the “lowest fee schedule” is “iFlexPlus” designed for employers with a minimum of $1 million in plan assets. Wilson, the Members Trust vice president, said Public Service plans to target its 600-700 SEGs with more than 50 employees for the service. It will be handled in a phased approach. “We expect to do about 100 a week,” she said in describing the marketing effort. [email protected]</p>