Proposed Rule Would Require TPAs and Recordkeepers Doing Business in Nevada to Be Licensed Trust Companies; ASPPA Responding

(December 9) - A Nevada state agency has proposed to require retirement plan TPAs (third-party administrators) and recordkeepers to be licensed trust companies in order to do business in that state. "In other words, under the proposal if you have a retirement plan client located in the State of Nevada this proposal would apply to you," according to Brian Graff, the executive director of ASPPA, the American Society of Pension Professionals & Actuaries.

ASPPA has written to Nevada Deputy Commissioner Steven Kondrup, Department of Business and Industry, Financial Institutions Division, in response to the proposed regulation, but ASPPA will file more expansive comments, Graff said.

ASPPA is inviting all Nevada TPAs and recordkeepers to help; Teresa Bloom of ASPPA at tbloom@asppa.org is the contact. (Provide the name of name of your firm and the individual ASPPA should work with.) A TPA or recordkeeper need not be an ASPPA member to support the effort.

One of the trade association's stated purposes is the "preservation and enhancement of the private pension system." It maintains a Government Affairs department that monitors proposed laws and regulations affecting private retirement plans; members receive several publications about ASPPA's positions, including fax alerts and emails. Membership is open to all types of pension professionals, including administrators.

The full text of Graff's December 4 message to ASPPA members is reprinted with permission below, including links to the proposed regulation and ASPPA's initial comment letter.

ASPPA Members:

On Tuesday, December 2 we learned that the Nevada Commissioner of Financial Institutions has proposed a regulation that would require retirement plan administrators and recordkeepers doing business in the State of Nevada to be a licensed trust company. This would appear to apply regardless of whether you as a service provider have an office in Nevada. In other words, under the proposal if you have a retirement plan client located in the State of Nevada this proposal would apply to you.

Attached is a copy of the proposed regulation ( http://www.asppa.org/pdf_files/Nevada.Proposed.Regulation.pdf) and relevant Nevada Trust Company statute (http://www.asppa.org/pdf_files/Nevada.Trust.Company.Statute.pdf). The proposed regulation defines "administrator" (Section 7) to include "servicers of trust accounts and qualified retirement accounts, where the administrator holds or maintains an ownership in the servicing rights of such accounts." Read with the statute, this proposed regulation arguably would subject retirement plan administrators and recordkeepers to the trust company requirement even though they are not the custodian of plan assets or acting as a fiduciary. We verbally confirmed that interpretation directly with the Commissioner's office.

Importantly, this proposed regulation would apply to a retirement plan administrators and recordkeepers even though there is another entity involved with the plan appropriately licensed acting as custodian and/or trustee. Thus, if the retirement plan administrator or recordkeeper were performing "back office" operations for a bank or trust company, the proposed rule would still seem to apply.

The regulation was proposed this past August and unfortunately the official comment period closed this past Monday before we learned about it. However, the Commissioner's office indicated that it was likely to be re-proposed in the next 30 days with a new public hearing and comment period.

ASPPA sent the attached letter (http://www.asppa.org/pdf_files/ASPPA.Nevada.Trust.Proposal.Response.pdf) on Thursday, December 4 to Nevada Deputy Commissioner Steven Kondrup, Department of Business and Industry, Financial Institutions Division, in response to the proposed regulation. ASPPA fully intends to file more expansive comments when the new filing period opens, but due to suggestions made to us by folks with experience dealing with Nevada, we quickly sent something in for the record just in case.

This is obviously a very serious matter. Not only is this relevant for those doing business in Nevada, but I am also concerned if this is enacted in Nevada, other states may quickly follow. Consequently, we need to respond to this vigorously.

Initially, we are going to compile a list of firms (and individual contacts at the firms) doing business in Nevada who want to assist us with this effort. Please contact Teresa Bloom (tbloom@asppa.org), with the name of your firm and the individual who we can stay in touch with. Your contribution will be critical to our success.

Thanks in advance.

Brian H. Graff, Esq. APM
Executive Director/CEO