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Nondiscretionary TRustee


austin3515

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Looking at a 401k plan on Corbel's PPD format, and the only trustee listed is a nondiscretionary trustee. I thought that only a trust company could serve in this capacity. Can a 401k plan have a nondiscretionary trustee as the sole trustee? If so, it seems to me that I would have set all my plans up that way... I looked in the basic plan document and was not able to find anything that explicity prohibited this scenario.

Austin Powers, CPA, QPA, ERPA

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Looking at a 401k plan on Corbel's PPD format, and the only trustee listed is a nondiscretionary trustee. I thought that only a trust company could serve in this capacity. Can a 401k plan have a nondiscretionary trustee as the sole trustee? If so, it seems to me that I would have set all my plans up that way... I looked in the basic plan document and was not able to find anything that explicity prohibited this scenario.

I dont understand you question. A financial institution can serve as the trustee for assets which means trustee has legal title without providing advice on plan investments which is the responsibility of a fiduciary. ERISA 403(a)(1) expressly provides for a trustee of a plan to be subject to direction of a named fiduciary who is not a trustee in which case the trustee shall be subject to the proper directions of such fiduciary made in accordance with the terms of the plan and which are not contrary to ERISA or the authority to manage, acquire or dispose of such assets is delegated to one or more investment managers.

mjb

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Ask SunGard, they can explain.

Here's what I think the answer is, but I may be wrong. I think the main difference in the PPD basic document is that it requires the fiduciary to give written instructions to the non-discretionary trustee in order for them to take action, but a discretionary trustee does not need such written instruction. If you have a small business where the owner is also the trustee, then naming them as a non-discretionary trustee requires extra paperwork, which may be a burden - they have to write themselves a note permitting their own action. FWIW.

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