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Would this satisfy 404a5?

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I have a small investment group (5 people) looking to start a new 401k plan.  They will want individual brokerage accounts for each participants.  In general, would they receive a 404a5 notice from the brokerage account company?  For example Schwab or Fidelity?  If not, would the prospectus' they receive as well as the contract information that details what their account fees are be enough to satisfy the content requirements of 404a5?

Thank you

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In my experience, brokerage account statements are unlikely to include any of the disclosures required by ERISA. However you may want to ask the brokerage firm directly. Maybe they can provide you with a sample statement for your review.

If no plan-related expenses are actually charged against the participants' accounts, then the expense-related disclosures of 404a-5 would not apply. The disclosures relating to direction of investments, plus the disclosures relating to diversification required under sec. 105(a) would still need to be provided somehow.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.

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Are all five people partners of the partnership (or members of the limited-liability company)?

If so, and if there is no employee, consider whether ERISA’s title I governs the plan.

29 C.F.R.§ 2510.3-3 https://ecfr.federalregister.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-B/part-2510/section-2510.3-3

If ERISA governs the plan, the employer/administrator likely should want a good service provider to take fiduciary responsibility for, or provide services for, 404a-5, 404c-1, and other disclosures.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



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