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Frozen MPP plan....adding new investments.


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an advisor for a small MPP plan is considering adding new annuity investment options to the plan. The document currently allows for annuities and there is an old one being used as an investment. Assets are currently trustee directed and advisor wants to provide more flexibility and options to some participants who are getting older by introducing newer annuity products. Is there anything that would preclude a frozen plan from doing so? The plan may need to be amended to self direct?

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The other thing you want to look at is currently the rules regarding fiduciary liability and insurance products seems strict. It has been a about 2 years since I last helped a plan add an annuity option but I recall the plan fiduciaries not only had to make sure the option was a good investment but they had to take some care to make sure the insurance company that was offering it was solild. One has reason to believe that if a participant took that company's produce it would be around to pay the for the person's whole life.

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If I understand you correctly, the advisor is suggesting a change from trustee-directed to participant-directed investment options. This will trigger the need to comply with 404a5 disclosures on an annual basis. Is the advisor going to handle this? What is the additional cost to the sponsor and/or participants. This is not a trivial exercise and I've not seen any individual annuity products that present their performance and fee data in a manner that would make it easy to drop it into a 404a5 format.

I carry stuff uphill for others who get all the glory.

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