austin3515

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."

I have around 100 and they are all over the place. Good luck to me.

So what are you advising your clients to do who invest in FBO accounts, where the provider has nothing to offer?

Are you suggesting that today there is a realistic means of complying? IF so, what is it, please tell me! Aside from a 404a5 blanket disclosure from the fund company, I just don't see how it is attainable. Has anyone seen anything??

Let's say sponsor does not comply with these rules, and they send out incomplete information, or they don't do anything. 1) Is this an explicit fiduciary breach subject to the 20% penalty?; or 2) Have they simply lost their safe harbor. I am looking through the brokerage window disclosure requirements, and I fear that "FBO, Inc." does not have these disclosures. Does anyone have a sense for whether or not participants will be receiving those disclosures from any of the FBO providers (i.e., fees, commissions, trading charges, account maintenance, etc), perhaps incorporated into the statements? Or perhaps a pdf document available for download?

To not ignore the FAB for "good faith compliance" would mean that Plans wherein the advisor is using the same funds for participants within FBO accounts would need to provide all the fund performance data. There simply does not exist an infrastructure set to accomplish that. It is impossible to comply with. So for example, let's say the advisor pushes a set of Target Date funds in the brokerage accounts. According to the FAB those funds would be DIA's and require all the disclosures. But there is no mechanism to generate these disclosures, as there is for John Hancock/American Funds. That's what I was referring to. What are your thoughts on that particular aspect of 404a5?

Let's ignore the DOL's last minute FAB for a moment. If there are no DIA's, what would go in the 404a5 disclosure besides fees related to participant initiated transactions and a general statement that certain other expenses might be paid from plan assets? I'm not answering a question with a question, I'm actually asking a question . Are you referring to any account maintenance fees? The RIA fees?

Sometimes I'm amazed when a question that should be very very simple ends up being very complicated. I think the most conservative approach would be to pay bonuses on a date other than pay-date if you don't want to include comp. Better make sure the participant signs an election though saying no 401k from bonus.

I disagree, because the documents usually refer to a "pay-period" as opposed to a particular "pay-check."

Unless the document excludes bonus, I would say that it is included in the calculation.

From EBIA's commentary on the case sited above (empahsis added by me): In any event, this case underscores the importance of adhering to prudent procedures—and documenting those procedures—when carrying out fiduciary functions. For more information, see EBIA’s 401(k) Plans manual at Section XXVI.J (“Protection for Default Investments”). Link to their article: http://www.ebia.com/WeeklyArchives/CourtCases/20952

Tom, you are outstanding... I knew I saw something!!

But then why would Sal's 2011 book still include that paragraph?