What are Homestead Advisers’ and Homestead Funds’ roles in deferred compensation accounts?
With deferred compensation accounts established for a nonqualified plan, the cooperative is the account owner and plan administrator. This means the cooperative is responsible for plan management tasks such as:
- Designing and adopting a plan
- Determining participant eligibility
- Enrolling and educating participants
- Monitoring annual contribution limits and vesting dates (as applicable)
- Maintaining beneficiary designations
- Maintaining plan distribution elections
- Initiating and monitoring account distributions
Homestead Advisers consultants work with you on plan-related questions such as:
- What type of plan would work for my co-op?
- Who is eligible to contribute to a deferred compensation account?
- What is the contribution limit this year?
- Does a participant need to take a Required Minimum Distribution (RMD) from the account?
Homestead Funds provides the investment vehicles: a series of professionally managed mutual funds. When a cooperative chooses to invest plan assets in Homestead Funds, cooperative plan administrators and plan participants can count on us for help with account questions. Additionally, (assuming the plan document allows it) the underlying participant in the plan can use our online asset allocation tools or call and receive asset allocation guidance at no cost to the cooperative or the participant.
Neither asset allocation nor diversification guarantees a profit or protects against a loss in a declining market. They are methods used to help manage investment risk.