Schedule of Reportable Transactions (Line 4j on Sched H)

[BG5150]

The instructions for this item read:

[quote[special rule for certain participant-directed transactions.
Transactions under an individual account plan that a participant
or beneficiary directed with respect to assets allocated to his or
her account (including a negative election authorized under the
terms of the plan) should not be treated for purposes of line 4j
as reportable transactions. The current value of all assets of the
plan, including these participant-directed transactions, should be
included in determining the 5% figure for all other transactions.

I take this to mean you ignore the transaction if it is merely more than 5% than the participant's own account balance.

But what if a single transaction is greater than 5% of the plan assets as a whole?

For example, an owner with 70% of the assets of the plan, all invested in one fund. Then he transfers 50% of his stake in that one fund to another fund. That is obviously more than 5% of plan assets. Does that get reported?

Or, does the above mean that you ignore ALL transaction in participant directed accounts, but you include their assets to see if any transaction in a pooled portion of the plan is more than 5% in total?

For example, plan has 50% of funds in participant directed deferral accounts and 50% in ER directed PS account. A transaction would have to be more than 5% of the combined assets in order to be reportable?

[Mike Preston]

Isn't this the auditor's domain?

[Belgarath]

In my humble opinion, aside from the audit point that Mike raises:

I take this to mean you ignore the transaction if it is merely more than 5% than the participant's own account balance.

I agree.



But what if a single transaction is greater than 5% of the plan assets as a whole?



For example, an owner with 70% of the assets of the plan, all invested in one fund. Then he transfers 50% of his stake in that one fund to another fund. That is obviously more than 5% of plan assets. Does that get reported?

No.



Or, does the above mean that you ignore ALL transaction in participant directed accounts, but you include their assets to see if any transaction in a pooled portion of the plan is more than 5% in total?

I'm a bit hesitant to say "all" - as perhaps there are questions/scenarios that might be envisioned where the fiduciary exercises their judgment to move everything out of 1 fund into another, in an emergency situation, for example. While the answer might ultimately be "all" I'd feel more comfortable with some wiggle room, like "generally."

For example, plan has 50% of funds in participant directed deferral accounts and 50% in ER directed PS account. A transaction would have to be more than 5% of the combined assets in order to be reportable?

Yes.

[Peter Gulia]

Don't we think the instruction draws a line between participant-directed transactions and fiduciary-decided transactions, limiting a reportable transaction to one that was a fiduciary-decided transaction?

[Belgarath]

What about this one: Plan was part of an Affiliated Service Group. Participating Employer "B" withdraws - the assets are merely transferred - reregistered - from Plan A to Plan B. There is no sale, exchange, or purchase. It seems to me like this isn't reportable on Line 4j, under the definition of a "transaction" in 2520.103-6.

Am I off base on this?

[Yesrod5]

Belgarath,

After poring through Section 103 and Reg. Section 2520.103-6, and finding many definitions (including a definition of "reportable transaction") but no definition of "transaction," I came to the same conclusion you did (my situation involves a merger of plan assets) that this was a mere re-titling of  assets, not a sale, exchange or other "transaction" to which the "reportable transaction" requirements would apply.