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5500 Proposed Revisions


austin3515
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WE have a ton of plans on Fidelity's small non-prototype platform. But guess what? There is nowhere for them to go. Well, that is other than an insurance product with expenses of 2%+. Or I'm sure the employer would be happy to spend the $750 out of pocket for RK Direct (a sweet platform of course, but out of pocket is bad...).

Yep that is my issue with this as well. We have plenty of those plans and most of my plans like that will want to stay participant directed, which will mean that they will probably go to a more expensive insurance product and get ridiculed by John Oliver...

This will probably mean an increase in audits for those plans since many of them don't have a ICC or an investment manager the participant contact.

I guess this is what Borzi had in mind when they reluctantly revised FAB 2012-02 to include Q39.

Q39: A plan offers an investment platform that includes a brokerage window, self-directed brokerage account, or similar plan arrangement. The fiduciary did not designate any of the funds on the platform or available through the brokerage window, self-directed brokerage account, or similar plan arrangement as "designated investment alternatives" under the plan. Is the platform or the brokerage window, self-directed brokerage account, or similar plan arrangement a designated investment alternative for purposes of the regulation?

A39. No. Whether an investment alternative is a "designated investment alternative" (DIA) for purposes of the regulation depends on whether it is specifically identified as available under the plan. The regulation does not require that a plan have a particular number of DIAs, and nothing in this Bulletin prohibits the use of a platform or a brokerage window, self-directed brokerage account, or similar plan arrangement in an individual account plan. The Bulletin also does not change the 404© regulation or the requirements for relief from fiduciary liability under section 404© of ERISA or address the application of ERISA's general fiduciary requirements to SEPs or SIMPLE IRA plans. Nonetheless, in the case of a 401(k) or other individual account plan covered under the regulation, a plan fiduciary's failure to designate investment alternatives, for example, to avoid investment disclosures under the regulation, raises questions under ERISA section 404(a)'s general statutory fiduciary duties of prudence and loyalty. Also, fiduciaries of such plans with platforms or brokerage windows, self-directed brokerage accounts, or similar plan arrangements that enable participants and beneficiaries to select investments beyond those designated by the plan are still bound by ERISA section 404(a)'s statutory duties of prudence and loyalty to participants and beneficiaries who use the platform or the brokerage window, self-directed brokerage account, or similar plan arrangement, including taking into account the nature and quality of services provided in connection with the platform or the brokerage window, self-directed brokerage account, or similar plan arrangement.

 

 

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  • 3 months later...

Reviving this topic to add some comments from ASPPA Annual

- Judging by comments made in several sessions, the new 5500 will not be ready for 2019

- Current estimates indicate that software providers will need at least 2 years to develop, code, and test the systems for the new 5500. This would mean that they would need to have guidance early 2017 to be functional for 2019. This does not seem to be even remotely likely

- DOL funding is an issue. No funding, no guidance, no new 5500

- Don’t expect any big changes until a few years into the next decade

- IRS only changes could come sooner but were once again delayed

The best way to avoid dealing with major changes to 5500 reporting? Retire J (at least that was the closing argument made by Janice Wegesin)

 

 

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