austin3515

The participants election should be on a pay-period level not a plan year level. So if the participant says "I want to do 16500 this year" the plan sponsor needs to say "I need more information--how much do you want to do every pay-period." This is not something one should make assumptions about. Assuming incorrectly would make an... welll, you know the rest...

If it's a payperiod match calculation, then you can't look at plan year figures. You must look at each pay-period individually. You can only deposit the shortfall if the match was miscalculated. Perhaps the participant didn't start deferring until February, or perhaps no deferrals were taken out on a bonus. In those situations, there would be comp that was [edit: CORRECTLY] not matched.

If an eligible participant works more than 1,000 hours, they must receive the match unless they are excluded. And thou shalt not exclude based on a classification of part-time. Now, if you were able to exclude "paralegals" and this covered most of your bases, that is fine, unless you can't pass coverage with that exclusion. I think this is pretty basic pension law. With respect to your DB question, I do know that you can test together and aggregate, but the finer points are beyond me!

"sigh of relief"

Let's say that a medical practice performs an income statement for each owner as part of its internal accounting. So each Owner Doc's total gross receipts, less an allocation of the practice's expenses equals his/her net income for the year. The Doc may or may not receive an allocation of the profit sharing contribution (at the discretion of the plan sponsor) . If they do receive their own PS, this reduces their own net income and their own take home pay. Now, I've chosen my words carefully, in particular the bolded language. Does the intenral accounting itself (a practice which I believe is extremely common) cast an overwhelming shadow of doubt on the suggestion that the sponsor determined the allocation, thus suggesting (at least to the IRS) that a CODA exists?

Why was this attached? Was my question addressed somewhere?

There was intention to deliver the disclosures electronically, Right, because a) everyone has an email address and b) every employer knows every employee's email address. I'm sure the DOL has a wonderful email system. John Doe Fast Chain - not so much.

Sample welcome letter. Bill, congratuluations! You are now eligible for the We Won't Waste Paper 401(k) Plan! Here is your enrollment kit with ALL of the ifnormation you could ever hope for on all of the investments we have to offer. Questions? Please ask! Don't want to sign up right now? No problem! Just call me when you're ready to contribute and I'll get you all this information a secodn time. But until then, each year, you'll only receiving from me the Safe HArbor Notice and the Summary Annual Report each year. I'm not going to give you the 20 page notice each year with all of the fund information, because I can't imagine what use that would be to you since you decided not to contribute, and more likely than not will never contribute. Of course if you do have even $100 in the Plan, I will gladly send you the 20 page notice, so your children can make paper airplanes out of it. Sincerely, Director of Conservation

How are people handling the DOL's blatantly incorrect interpretation that these disclosures go to everyone eligible, without regard to whether or not they have a balance in the Plan? Is anyone going to say "although contrary to the DOL's interpretation, one reasonable interpreation of the rule is that individuals without an account balance have no right to make investment elections." How is that not a reasonable interpretation?? I'm thinking of one plan with 200 eliglbes and 40 with account balances, adn wondering how I tell them with a straight face that by law they are required to send this to the 160 non-contributors?

I don;t think my clients will read it, personally. Maybe ours (a TPA) they can understand, but "Major Fund Company's" - no shot in you know where. It's incomprehensible even to me, and I have at least an exposure to what the they're talking about. OK, the $100MM plan will look closely - $3MM south, and forget it. Waste of paper. The real positive fee affect will of course be that competitors who want to steal your business will be able to use the information, and presumably will provide the same service for less - certainly a realistic possibility considering many over-charge. Or perhaps they'll just "spin" their pricing differently and make it look cheaper (i.e., include higher revenue sharing funds, but lower than the hard-dollar costs).

Well, one outcome might be participant complaints about high fees. Some platforms might have what will appear to be high fees. Whether they truly are high or not will of course depend, but if you see expense ratios north of 2% I think that will give participants a legitimate gripe. So perhaps for the outliers it will have some positive impact.

We did indicate in our "Manner of receipt" section the fees can be paid by the employer, from plan assets (and allocated to participant accounts) or from forfeitures. Then all the bases are covered. But regardless, the most important thing is to disclose the fees. If you don't disclose the fees, and then you pay from forfeitures, now there is a PT.

No. You're not meeting any of the exceptions. You need to disclose the nature of the arrangement at a minimum (i.e., 5bps yada yada yada), assuming ALL other direct expenses are paid directly by the empoloyer. If you think there might ever come a day when participant distribution fees or any other fees might be paid from forfeitures, then you should disclose everything you charge. I struggle when people say "all my fees are always paid by the employer" because, what do you when they are not doing employer contributions, and there are forfeitures? Forcing them to reallocate the forfeitures? I just don't see how the option to pay fees with forfeitures can be universally be taken off the table for all of your clients.

When contracts are combined for reporting purposes by TIAA-CREF, they also combine the Schedule A reporting. I actually think this applies to a few of my plans; where the reporting was always combined (i.e., since pre-2009),it has never been reported separately so it's been treated as though there was only one contract. Has anyone had to deal with this issue before?

If the client later wanted to pay their bill using the forfeiture account would it still be a PT if we provided a 408b2 disclosure prior to the bill being paid from the forfeiture account? My understanding is yes, because the initial disclosures for existing clients are due 7/1. You only get a second chance if ther eis a change in the contract. At any rate, this is a gray area at best.

1. For the plans we provide TPA services for where the Plan Sponsor pays our fees directly with no fees being paid from plan assets, we have no required 408b2 disclosures to make. Correct, though even if they paid from plan assets you still are not receiving indirect comp, and therefore are not a covered service provider and therefore have no disclosures to make. 2. For the plans we receive revenue sharing payments on, we will only be required to disclose the revenue sharing payment information since all other fees are paid directly by the Plan Sponsor. I think this is a bad idea, because if your client ever comes back to you and says I want to pay a bill from the forfeituire account, that becomes a prohibited transaction. Also, you should be disclosing any distribution fees paid by the Plan, otherwise, you have a PT.

I'm just telling you that in my experience the folks who answer the phone have the same questions that we do (as I think your conversation supports). i.e., don;t rely on what they tell you too much.

That;s contrary to everything I have ready. I had heard it was "over the life iof the contract." If the contract renews each year, than it's one year. If it's an evergreen, it's the life of the contract. Believe me, it SHOULD be an annual limit, but there is nothing to support that interpretation in the regs.

(a) that you are a platform recordkeeper with regard to the disclosure requirements, IF I'm the TPA and JH is the recordkeeper, what is the argument to suggest that I am platform recordkeeper? Everything I've read says the penalty tax is based on the total fees collected for which you didn't meet the requirement.

. Depending upon what interpretation you prefer. What is the other interpretation? I'm scratching my head trying to come up with any other interpretation?

"Austin - as an example, let's say the investments are on a Hancock platform, but you do normal third-party TPA work with quarterly valuations, etc." I'm not sure what you mean by this?

"The issue of whether a TPA falls under the category 2 "platform recordkeeper" for example, can sometimes be murky at best. And I wouldn't count on the DOL giving the benefit of the doubt." Where would it get murky? FBO Accounts? Except for the DOL's recent shoot-from-the-hip commentary regarding FBO's including DIA's when many participants use the same funds, I thought it was pretty well agreed upon that FBO accounts by definition do not have DIA's (and therefore could not be recordkeeping). I was thinking of sending the disclosures to everyone for exactly the reason you mentioned. EVeryone and the mother is emailing all their clients to tell them to make sure they get their disclosures. Just not sure if we're going to do it before 7/1, but I think we probably will eventually. Might include it as an attachment to our year-end letter or something.

Here here!! (or is it hear hear??). Regardless, I AGREE!!!

That's what I thought too, but you are wrong. Which I think is good news, because we can probably send out a lot fewer notices... http://www.asppa.org/Document-Vault/PDFs/T...2011-408b2.aspx I'm curious to know if others are still sending to everyone regardless of whether or not they receive direct or indirect.

Bird, I think we are saying almost the exact same thing. The improtant thing I guess is that we're making disclosures. I came across something else that I was totally shocked by. Am I correct that if we get NO indirect compensation as the TPA, then we have NO disclosure requirements, even if some of our fees are paid from plan assets? Take for example an FBO account plan.