BG5150 Posted July 11, 2016 Share Posted July 11, 2016 The instructions for this item read: [quote[special rule for certain participant-directed transactions.Transactions under an individual account plan that a participantor beneficiary directed with respect to assets allocated to his orher account (including a negative election authorized under theterms of the plan) should not be treated for purposes of line 4jas reportable transactions. The current value of all assets of theplan, including these participant-directed transactions, should beincluded 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? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
Mike Preston Posted July 11, 2016 Share Posted July 11, 2016 Isn't this the auditor's domain? Link to comment Share on other sites More sharing options...
Belgarath Posted July 11, 2016 Share Posted July 11, 2016 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. Link to comment Share on other sites More sharing options...
Peter Gulia Posted July 12, 2016 Share Posted July 12, 2016 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? Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com Link to comment Share on other sites More sharing options...
Belgarath Posted September 2, 2016 Share Posted September 2, 2016 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? Link to comment Share on other sites More sharing options...
Yesrod5 Posted September 27, 2018 Share Posted September 27, 2018 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. Link to comment Share on other sites More sharing options...
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