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As expected, I think. As I finish out my last day as an employee and plan administrator, I think it would be cool if elected officials had fiduciary responsibilities ... like that would ever happen. (Probably should have put that comment in humor.)

Thank you to everyone for the useful and informative information you have provided on these boards. I have learned much more than I expected to when I signed up. And thanks to Dave and Lois. Today is my last day as an employee (and plan administrator). I'll be looking in from time to time, because there are some interesting subjects to be discussed and questioned in the coming years, and because so many of the posters on this board provide informed, accurate answers. Thanks again. GMK ... out.

Like so many rules in this field is there a need to work on fees and so forth? Ok, you can get me to agree to that idea. On the other hand all the other regulations on this topic have either done no good or hurt things in my opinion. I mean we have notice after notice about fees now being mandated. Who reads all that silly stuff as it tends to be too long. It is like prospectuses when buying a mutual fund. Great idea until you get a several hundred page book stuffed with language only a lawyer would care for and I think I know plenty of lawyers who would deny they care of it. Can anyone explain to me how anyone has benefited from the new Sch C disclosures and all the "how many angels can dance on the head of a pin" discussions of direct vs indirect fees/income? As far as I can tell all this had done is drive up people's cost to send out notices and prepare Form 5500s and has shed no light at all on fees. Either people knew about them already or they now have vague discussion of indirect fees in notices. Although when those rules first came out it was a boon for people who sell CE classes to TPAs as people tried to explain that mess to people. It really did seem to me these rules could have hurt the middle class by simply making the risk of giving advice to anyone without a large balance not worth it. You couldn't generate enough fees to cover the related risk. The government is terrible at making rules that balance cost/benefit.

K2 I believe the the question had to do with being able to sign for benefits, like waiving something or starting to collect benefits etc. Also worth noting that that at least one panelist (Rob Richter with FIS I believe) disagreed with the IRS panelist and maintained that under Florida law a POA could be narrowly drafted to do just that.

So who will watch out for the innumerate and uninformed investors (oh, all those 401(k) participants!)? Don't they deserve protection from the wolves? But in the grand scheme of things (such as removal of limitations on dumping industrial waste into streams and rivers), aren't there bigger things to worry about?

Yep, plenty of those type of TPA's out there. I am the polar opposite, I want every terminated employee out of my plans because I don't want to retain the liability (or client's liability). Every terminee that stays in the plan is one more opportunity to miss a notice, disclosure, have an improper investment alternative, etc. But then again I come from the "how do I have the least exposure" side rather than the "how do I squeeze every last cent out of plan" side. Maybe that is why I drive a Hyundai and not a corvette

well, I figured my 6000th post might as well be as bad as I can think of, so here goes... Our story concerns a retirement plan, and the union and all that nasty stuff that could go along when you get those folks involved. It involves one of the Fortune 500 Companies, the union approached management and insisted that they put in a plan everyone could be happy with – sort of like Obamacare, but dealing with retirement and not medical or something like that. This is after all a website dedicated to retirement. Just simply some plan that everyone would voluntarily sign up for, 100% of all employees because then the union would know it was great. Of course if but just one person dissented they would go on strike. So management sat down, worked out a great proposal and presented it to the union bosses. They looked it over, it looked fantastic. At retirement there would be annuities or installments or lump sums. There were even a variety of early lump sum window provisions. Along with a bunch of other great stuff. The document was clear, the SPD easily understood, wouldn’t cost the employees a cent. Initial sign was going great; this was so good looked like it was only going to take days to get everyone to sign up into the plan. Then, in stepped “Fred”. I won’t use the actual name simply to avoid offending anyone’s nationality. Perhaps being from ‘the old country’ he had gotten burned on similar ‘good deals’. But he refused to sign. And you’d think if only 1 out of over 100,000 employees didn’t sign that would be ok, but the union figured if they back down on this they would look weak, and who knows what else would happen. They tried hard – they sat down with Fred, went through the document, the SPD and other handouts, explaining everything to him. It simply was a good deal at no cost to him. Even fellow employees encouraged him to sign. Still he refused to sign. Finally, what must have been the 415th attempt at this they gave up. Even they had reached their limit. So despite not wanting to, it looked like there was a chance of a strike. Everyone was worried, no one wanted this. Finally the boss called Fred up to the office. Fred entered executive headquarters, walked past a fantastic fountain in the lobby. Popped into the elevator, the operator rode him up to the top floor. Fred walked out, past huge plate glass windows offering a fantastic and scenic view of the countryside. Down the hallway, thick lush carpeting. The secretary- couldn’t have been over 25, young, attractive, admitted Fred to the boss’s office and shut the door behind him, leaving him alone with the boss. On the table was the document, the SPD and everything else, including the last remaining unsigned signature card. The boss asked “Is there something you don’t understand about this?” and “Is there something wrong with it?, what can we possibly do to make it better?” And Fred responded, “I think I understand it clearly. Others have explained it to me, but I’m simply not going to sign” At this, the boss lost his temper. “Fred”, he began, “I didn’t get to be who I am today by letting people push me around. Now either you sign up or I am going to take you and throw you through the window. And then I am not going to be happy because I will have to have the window repaired, in addition to whatever lump of you remains below!” Fred walked over and looked out the window. He looked at the table with the material. He looked out the window again. Then he signed the card. As he was leaving, the boss asked him, “Now that wasn’t so bad. But why didn’t you sign before and we could have avoided all this.” And Fred responded “No one mentioned or described to me how the pension lump-sum window provision worked the way you did.”

None, for the very reason you listed.

Even plans subject to ERISA have some flexibility in designing a lump sum window, especially if the plan does not otherwise offer lump sums. Non-electing church plans may include language about spousal consent, may specify actuarial equivalence factors in line with Section 417(e), etc. If the plan in question has those sorts of provisions, some coordination of the plan amendment governing the lump sum window with the plan provisions already in place may be a good idea. Even a church plan ought to adopt an amendment concerning a lump sum window, and the amendment should say how to carry it out. To the best of my knowledge and understanding, even ERISA plans do not need to include the present value of a QPSA in lump sums to be paid, so I don't see how that sort of thing could come into play for a church plan. I would anticipate that, barring provisions that may already be in the church plan to the contrary, you do not need to use 417(e) rates for the lump sum window, you do not need to offer immediate annuities in lieu of the participant choosing between a lump sum or leaving the benefit in the plan to be paid as an annuity when it would otherwise have been due, and it is not clear to me that spousal consent would even be required. Those things are all necessary if the plan is subject to Section 417(e) but not otherwise. You certainly do not need to jump through any funded percentage hoops to pay out the lump sums (but if the plan is already poorly funded, amending in a lump sum window may be a bad idea).

"Should" is not a word that Paychex or ADP or any other mega-payroll co cares about. We have had all sorts of problems with these companies lately. I even had ADP pretend they didn't know what a safe harbor basic match was the other day & they made the client submit a spreadsheet of example calcs--Really? After all that, they could not get their system to match the Roth deferrals in the same manner as the pre-tax. I'll never understand the appeal of these payroll giants.

forgot an example from the quote:

File this under things I learned today. A partiicpant can voluntarily assign benefits to a 3rd party. From our friends at the EOB:

I've discussed this issue with a sponsoring church (also non-electing), although not yet implemented. We concluded "the document rules": Use the A.E. definition(s) in the plan; J&S election required only if the plan includes that language. (If spousal signoff is not required, but you want to include it anyway, get legal counsel signoff on that procedure, since you might be faced with a situation that contradicts the plan document if spouse says NO.) I doubt you need to include the immediate annuity option; it may seem harmless to include it anyway, as a comparison tool for the participant. However, it may backfire, especially if the EE is close to retirement age. Cautions: (1) watch out for generic language that might incorporate 417 by reference. (2) anticipate the possibility of someone electing the annuity, especially if the person is close to early or normal eligibility.

Can you make a check payable to someone other then the participant and not violate the anti-alienation rules? I am thinking of a time I had a bank client and a teller embezzled funds. She agreed to reimburse the bank using her ESOP account's funds as part of her plea agreement. All the lawyers agreed the ESOP distribution check couldn't be written to the bank. It has to be written to the former teller. She then had to deposit the check into an account at the bank of her own free will. She then had to sign the bank account over to the bank of her own free will. The "stick" that was used to make sure she did this was the judged refused to sentence her until she had complied with this condition. Everyone agreed the reason you had to go through those steps was the anti-alienation rules. The stick in this case did not negate the idea she used her own free will to turn the funds over to the bank. You can't make payments from the plan to a creditor even with the participant's permission has always been my understanding. I am willing to be told I am wrong here but I have never seen a hardship distribution or loan made payable to a college for tuition for example. It was always sent to the participant and payable to the participant who had to take cash the check and then pay the college to pay tuition.

First, neither of our document (major modifier Relius, off-the-shelf ASC) have any provisions for POAs. In fact, I've never seen such a provision in a document. Second, an appropriately drafted POA puts the agent in the shoes of the grantor of the power (participant), and so the agent may act consistent with the powers granted - which is a STATE LAW issue - and I'm not aware of anything in ERISA or other federal law that would allow a plan fiduciary to ignore a "properly drafted" POA. Third, we get POAs all the time, and we do review them (as a courtesy to our clients) and specifically look for a specific grant of authority to manage plan assets. Sometimes that is difficult to ascertain. We prefer a POA that specifically mentions retirement plan assets and authorities listed in dealing with it (some may allow investment selection - as in the case of a financial advisor with a POA, and some with respect to a distribution or other actions). We are cautious with respect to things like distributions - and seek to verify specific authority to do so (not just a "general" power to do anything the grantor/participant could do). We provide our analysis to the sponsor who makes a final determination (usually consistent with our analysis). Just as an aside, we recently got one from Germany - written in German along with a provided English translation. It was unique to say the least, and we actually had to find someone to verify the English translation was accurate - and then still rejected it because it didn't contain sufficient specificity. We got an earful from the German lawyer - apparently the POA would have been more than sufficient under German law to allow the agent to do anything they darn well pleased. We didn't see it that way.

Sorry, but I disagree. The money spent in configuring a compliance mechanism is money that needed to be spent. If the industry had self-policed, the burden wouldn't have been so great, and would have been incremental over time instead of all at once - but it is money that needed to be spent. The White House report pegged the losses to participants at $17 BILLION, ANNUALLY. The costs are a pittance - even if halve or even quarter that number.

Thanks, that is very helpful. Yes it is a top-hat plan sponsored by a tax-exempt entity which is neither governmental nor a church. It is unfunded but the underlying assets are being moved from an insurance company to a mutual fund company. In restating the document the employer is inquiring whether amending the forms of benefit is permissible. Our function is to advise the employer about ERISA and the Code, however the entity's attorney is involved to advise on other legal aspects. Good points about the contractual obligations and possible existing annuities. We will have them review those issues.

If the plan you're thinking of is neither a governmental plan nor a church plan, is unfunded, and is restricted to a select group of top executives, such a plan (if it is not an excess-benefit plan) is governed by Parts 1 and 5 of Subtitle B of Title I of ERISA, but is not governed by Parts 2, 3, and 4. The non-application of Part 2 means that ERISA's anti-cutback rule does not apply. A non-governmental employer's 457(b)-eligible plan need not meet Internal Revenue Code section 401(a) conditions, and so need not meet section 411's anti-cutback rule. Even if you're ready to advise your client that neither ERISA nor the Internal Revenue Code restrains the amendment of payout forms, consider other laws, including the law of contracts. (When I represent an executive, we might seek provisions that disable the employer's power to amend the plan without the executive's assent.) If the employer holds an annuity contract as a way to help the employer meet its obligation, consider that removing the plan's annuity payout forms might make further annuity purchases unsuitable under insurance and securities regulators' rules, including FINRA rules.