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With some recent threads regarding the fiduciary rule (is X a fiduciary under the new rule?), I wanted to revisit how people are handling their 408b-2 notices. Is the fact that the fiduciary rule is now in effect changing your approach to your 408b-2 disclosures (or lack of 408b-2 disclosures)? Or do you do 408b-2 disclosures for all clients regardless of covered service provider status?

Just be careful that it is in fact an offset and not a "deemed distribution." A simple "deemed distribution" doesn't satisfy the RMD requirement. Sounds like you have an offset situation, so should be ok. Q-9. Which amounts distributed from an individual account are taken into account in determining whether section 401(a)(9) is satisfied and which amounts are not taken into account in determining whether section 401(a)(9) is satisfied? A-9. (a) General rule. Except as provided in paragraph (b), all amounts distributed from an individual account are distributions that are taken into account in determining whether section 401(a)(9) is satisfied, regardless of whether the amount is includible in income. Thus, for example, amounts that are excluded from income as recovery of investment in the contract under section 72 are taken into account for purposes of determining whether section 401(a)(9) is satisfied for a distribution calendar year. Similarly, amounts excluded from income as net unrealized appreciation on employer securities also are amounts distributed for purposes of determining if section 401(a)(9) is satisfied. (b) Exceptions. The following amounts are not taken into account in determining whether the required minimum amount has been distributed for a calendar year: (1) Elective deferrals (as defined in section 402(g)(3)) and employee contributions that, pursuant to rules prescribed by the Commissioner in revenue rulings, notices, or other guidance published in the Internal Revenue Bulletin (see § 601.601(d)(2) of this chapter), are returned to the employee (together with the income allocable thereto) in order to comply with the section 415 limitations. (2) Corrective distributions of excess deferrals as described in § 1.402(g)-1(e)(3), together with the income allocable to these distributions. (3) Corrective distributions of excess contributions under a qualified cash or deferred arrangement under section 401(k)(8) and excess aggregate contributions under section 401(m)(6), together with the income allocable to these distributions. (4) Loans that are treated as deemed distributions pursuant to section 72(p). (5) Dividends described in section 404(k) that are paid on employer securities. (Amounts paid to the plan that, pursuant to section 404(k)(2)(A)(iii)(II), are included in the account balance and subsequently distributed from the account lose their character as dividends.) (6) The costs of life insurance coverage (P.S. 58 costs). (7) Similar items designated by the Commissioner in revenue rulings, notices, and other guidance published in the Internal Revenue Bulletin. See § 601.601(d)(2)(ii)(b) of this chapter. [T.D. 8987, 67 FR 18994, Apr. 17, 2002, as amended by T.D. 9130, 69 FR 33293, June 15, 2004; T.D. 9319, 72 FR 16894, Apr. 5, 2007]

RestAssured As you set out the facts there isn't much to read. This does NOT fall under the late deposit rules. If the assets were segregated from the employer's asseets timely then the deposits were not late per the DOL rules. That does not mean there isn't a problem. If the fiduciaries can't figure out how to get the brokerage to do its job right then they are doing a breach of fiduciary duties. (One could make a case this is worse as I believe they can be held personally liable for such a breach.) So if there is anything to read it would be on fiduciary breaches but you won't find this specific example spelled out any place. The duty is the Prudent Man Rule and Due Care Rule (I think that is the correct name.) To me you nailed the correction. The trustee of the plan ought to ask the brokerage to make up for any lost earnings based on the actual investments. They should also get a written commitment on how they aren't going to allow this happen again. If they can't get this corrected a very strong case can be made they simply have to get a new brokerage firm.