austin3515

Where would one get the information necessary for preparing a 404a5 notice? We have Mornginstar for Rates of Return, and expense ratios, but where would we get things like returns for benchmarks, what the appropriate benchmark is, as well as a trading restrictions/fees? The recordkeepers must be getting the data from somewehre, but where? Is it obtainable on a smaller scale?

Consider the source She's just incorrect about the "once a year" piece of it. It clearly needs to be delivered once every 12 months. I think she read the regs correctly, but she must not have read the "amended regulations" set forth in the FAB that RPG pointed out.

It was extremely helpful. So the DOL essentially amended the regs through it's FAB. Classic federal government stuff. Reminds me of something from the IRS's play book of late. We'll get them next year. Presumably, the vendors will have incorporated this into their systems next year...

Somoene needs to tell me where in the regs this ANNUAL disclosure is required. I don't see it anywhere. I see lots and lots of required annual disclosures, and I see a requirement to disclose the actual charge (with an adequate description) on the quarterly statement. But that is all I see. A customer service rep at John Hancock is not authoritative. I note again that their template downloadable at this very minute does NOT request an dollar amount or a percntage next to recordkeeper.

What would those be? I just looked at the download the other day (Friday) and saw no reference to plan level fees in terms of dollars. What am I missing??

Different plans need only pass coverage. If you're passing coverae without aggregationg then yoiu run separate ACP tests for each plan and you can ignore the fact that the formulas are different. If you have one Plan, but different matches for different groups, now you have to test Benefits Rights and Features under (a)(4). Essentially you run a coverage test for each match formula and only you use the nondiscriminatory classification threshholds, instead of 70%. Of course, one Plan = 1 ACP Test, always (not counting otherwise excludable options).

The EOB has a section in here that says the following paragraph means something surprising: © Definition of matching rate. For purposes of this paragraph (a)(5)(ii), the matching rate for an employee generally is the matching contributions made for such employee divided by the employee's elective deferrals for the year. If the matching rate is not the same for all levels of elective deferrals for an employee, the employee's matching rate is determined assuming that an employee's elective deferrals are equal to 6 percent of compensation. The EOB is saying this means that if a plan disregards 401k over __% of pay for purposes of calculating the match, that the employee would be receviing a different rate of match for different levels of deferrals (one match rate for contributions below ___% of pay and then a 0% match for contributions above ___% of pay). The implication from the above is that you would basically always be assuming that an employee contributed 6% of pay (i.e., because most plans will disregard at least some 401(k). That outcome seems to be a little too ridiculous to be applied in practice. Anyone agree?

Can you clarify that you are referring to the participant initiated transaction charges and not the plan level/recordkeeping charges?

Edited big time. I realized I just copied and pasted the same thing from John Hancock's notice that somoene else did. The confusion above is that the template from JH does NOT include dollars gins in the list of types of services. I'm not sure why you have dollar signs above. As I said before the only dollar amounts disclosed in the annual notice (excluding investment related expenses, such as the expense ratio of the funds) is participant initated transactions. And the mention about how some are expressing the expenses incurred on $1,000, that is a required disclosure regarding the investment expense ratio of the fund. Executive Summary Admin Expense Disclosure (recordkeeping, legal TPA) Annually - disclose their existence, and how they would be allocated IF they are incurred at all Quarterly - disclose the actual dollar amounts of the expenses charged that quarter, and specifically identify what the charge is for (i.e., Recordkeeping: $175, or TPA Fees: $325) Investment Expense Disclosure Annually - the expense ratio and other things (lots of other things) Quarterly - None.

The only amounts we had to fill in were for participantinitiated transactions. I recently did a training in our office wherein to prepare Iwnet through the regs in detail. For plan level expenses, the only time amountcomes into play is in the quarterly statement. The annual notice only needs todisclose the possiblity of the plan paying certain types of expenses. HEre'sthe reg: http://ecfr.gpoaccess.gov/cgi/t/text/text-...0.8&idno=29 (2) Administrative expenses. (i)(A) On or before the date onwhich a participant or beneficiary can first direct his or her investments andat least annually thereafter, an explanation of any fees and expenses forgeneral plan administrative services (e.g., legal, accounting, recordkeeping),which may be charged against the individual accounts of participants andbeneficiaries and are not reflected in the total annual operating expenses ofany designated investment alternative, as well as the basis on which such chargeswill be allocated (e.g., pro rata, per capita) to, or affect the balance of,each individual account. (B) If there is a change to the information described inparagraph ©(2)(i)(A) of this section, each participant and beneficiary mustbe furnished a description of such change at least 30 days, but not more than90 days, in advance of the effective date of such change, unless the inabilityto provide such advance notice is due to events that were unforeseeable orcircumstances beyond the control of the plan administrator, in which casenotice of such change must be furnished as soon as reasonably practicable. (ii) At least quarterly, a statement that includes: (A) The dollar amount of the fees and expenses described inparagraph ©(2)(i)(A) of this section that are actually charged (whether byliquidating shares or deducting dollars) during the preceding quarter to theparticipant's or beneficiary's account for such services; (B) A description of the services to which the chargesrelate (e.g., plan administration, including recordkeeping, legal, accountingservices); and © If applicable, an explanation that, in addition to thefees and expenses disclosed pursuant to paragraph ©(2)(ii) of this section,some of the plan's administrative expenses for the preceding quarter were paidfrom the total annual operating expenses of one or more of the plan'sdesignated investment alternatives (e.g., through revenue sharing arrangements,Rule 12b–1 fees, sub-transfer agent fees).

"Your Plan incurs certain administrative and operating expenses each year. These expenses are for the following services: • Recordkeeping fee $ • Auditor Fee $ • Third Party Administration Fee$ Our version of thje jhj notice did not have dollar amounts in this seciton, it just listed the types of expenses.

1) You're aware that the recordkeepers are preparing these (American Funds, Hancock, they all have one)? Or are you a recordkeeper just starting them now? 2) 3(38) advisors are extremely rare, at least in the small business world. I'm sure they're out there, but not that IO have seen. 3(38) means you assume complete responsiblity for the investmetns which most advisors don't like.

1) You're aware that the recordkeepers are preparing these (American Funds, Hancock, they all have one)? Or are you a recordkeeper just starting them now? 2) 3(38) advisors are extremely rare, at least in the small business world. I'm sure they're out there, but not that IO have seen. 3(38) means you assume complete responsiblity for the investmetns which most advisors don't like.

Yes, this was a mistake (in my opinion). The obvious issue is amendments for which American Fuinds was not kept in the loop. If it's not required, why include it???? I believe you only have to indicate that the plan will pay recordkeeping fees and those fees will be allocated pro rata in the annual notice. The new rule requires that the AMOUNT of the fees (not a formula) be included in the quarterly statements. That's different than the expense ratios of the funds, which would have to be disclosed on the [edit: Annual] notice.

Could you elaborate? I'm not sure how your comments answer the question. Would sick pay be considered a fringe benefit?

Another case written up by CCH. Again, a costly lawsuit that would have been AVOIDED had they never tried to use the QDIA... Where are the lawsuits about leaving money in the money market?? I implore you to share with me!! http://hr.cch.com/news/pension/080312a.asp

Anyone who is familiar with this document which defines fringe benefits... IRM 4.23.5.11 (11-03-2009) I had been referring to this document as a good listing of what exactly a fringe benefit would be. Imagine my surprise when there at the end of the list was "Sick Pay." Certainly no one would sugges that a plan that excludes fringe benefits would exclude sick pay from the plan's definitio of compensation??

Tom, so true, and so foolish. I'm lucky though because in my case the eligiblity is 1 YOS already...

For an ADP Test where the refunds were not done before year-end. Is there any way at all to limit the list of people entitled to an allocation of this ridiculously small QNEC? I know we can exclude people who terminated through the date of correction, but is it possible to exclude people with no balances. If I cannot, we're talking about less than $10 for most people.

OK, we talked a lot about how far forward you can go with expenses. How far BACK can you go to reimburse the employer for forfeitures paid? 6 months? a year?? DOes there need to be intent for the employer to pay initially in order to allow reimbursement?

Yes (you actually were not confused at all!)

5500-EZ, but I was wrong. You have to have one 100% owner of a corporation to be an owner only plan. If you were a partnerhsip, different answer - you can have any number of partners. But for a corp. you're only allowed one owner. See " Who Must File Form 5500-EZ" in here: http://www.irs.gov/pub/irs-pdf/i5500ez.pdf

I think it is an ERISA plan. Corporations are "owner only" plans if they cover only employees who own more than 50%. Anyway, check the fine print. Does it say "at least 50%" or "more than 50%." I don't remember, but I know you're right on the line.

Accoridng Fidelity's web-site (for small business Non-Prototype FBO product--NOT their real platform) they are still evaluating what their response to 404a-5 will be. I still think there is a big problem with these, since the Plan Sponsor needs to provide an explanation of how the arrangement works, and how the participant can provide investment directions, and a listing of the account maintenance charges, etc.. I just think that the brokerage houses need to come up with something, and it just seems to me that it would not be very difficult for thm to do so. The disclosures for the DIA's, of course that would have been out of the question. But telling participants the 800 number for investment trades and what the annual maintenance charges would be, there's just no excuse. It should fit on half a page what is required. [i'm sure there legal counsel will make it 10 pages, but it should be the same for every single plan, so let's go Fidelity! Get it done!!].

http://www.dol.gov/ebsa/regs/fab2012-2R.html From Today's Benefits Link. And just after I talked about this for half an hour in a training, and just after I finished my paragrpah in my cover-letters explaning how this was a big problem. From BL: The DOL has withdrawn Q&A-30 from Field Assistance Bulletin 2012-02, replacing the FAB with another bulletin that contains new Q&A-39, which does not include the former Q&A-30's requirement that the plan provide disclosure of costs for investments through brokerage windows that were not designated as "designated investment alternatives" but that were chosen in fact by specified minimum numbers of participants. Here is the text of new Q&A-39: "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."