Gina Alsdorf

Yeah this is a what does the document say question.

One would think. I don't disagree with you. I just have not seen that happen.

Just from a provider perspective not sure I hit all your points but, I tried. So this is FINCEN related, broker dealers have to have Customer Identification Programs (CIP) and do Customer Due Diligence (CDD)programs under the financial crimes regulations. There are carve outs for employee benefit plans from these rules, so technically individual participants don't need to be put through those programs, unless it happens to be a SEP or other IRA program. I assume the rationale is employer sponsored retirement plans have a lower incidence of Money Laundering and fraud? The BD would still need to do CIP and CDD for the entity setting up the plan. In my own experience no participant account can be established without enough information for tax-reporting. So essentials for that would be name, address, birthdate, and social security number. Without that an account couldn't be set up. An employer usually has this readily available and could establish accounts on behalf of the participants. Typically SDBA participants have a separate sign-in to validate an account for SDBA i.e. they have to go in and accept terms in order to trade on the platform. These are all e-signatures now, they don't do paper. There is always a money market or other cash equivalent account tied to an SDBA, they have to transfer from in order to trade. I think cash accounts are built in to SDBA programs. At least this is how Schwab and TRowe worked. Also I would note that if an account is created with bad information, and say a duplicate SSN is found and it is discovered, any funds in that account will usually be sent back to plan sponsor f/b/o the participant because the account information for account opening was not in good order. Good order is a condition precedent for opening an account in most contracts I have seen. One of the reasons recordkeepers and B/Ds don't want to open accounts without information is because, they (or their related entities) are often the "payor" for the purposes of the IRC and can be fined if they don't have enough information to withhold and report. The fines can be substantial. In sum, yes, the employer would have all the required information to open the account, and be able to initiate the opening, however, if a participant hasn't validated their account they would not be able to trade on the platform and funds would be held in a cash until they did and that could be forever in some cases.

I have only ever seen fees to the QTA, I would not recommend a bankruptcy trustee be paid out of plan assets. Especially if they have an alternative way of being paid.

There is an FAQ that talks about the right ways to file. It should answer your question. I think EFAST is the normal option. - https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/dfvcp.pdf

Second vote for FTWilliams

I don't know how the companies are set up or related and it matters for your analysis. That being said it sounds like there could possibly be a non-exempt prohibited transaction in there? A lot depends on your specific facts and circumstances. Here are some thoughts: Generally, paying fees to any service provider is a prohibited transaction under ERISA section 404(a)(1). However, there is an exemption 408(b)(2) for reasonable and necessary services for establishment and operation of a plan, so long as no more than reasonable compensation is paid. Reasonable compensation has a specific definition and requires disclosures. If there is certain types of common ownership between the LLC and LLP, there may be an issue with even just hiring the affiliated provider and paying a fee. Regardless of that no fiduciary should be able to exercise discretionary authority to hire itself or increase its own compensation unilaterally. ERISA section 406(b) prevents self-dealing by a fiduciary. You should see an ERISA attorney so your actual facts and circumstances can be considered in light of the rules.

My favorite answer to most questions, read the plan document.

Unless it is a self-directed plan, then quarterly is required.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-notices See Individual Benefits Statements

They do enforce some of these as criminal charges, the problem is proving that the employer knew they shouldn't do it. You need to show scienter. I've seen it successfully done a few times. In all the cases the DOL had already had an investigation of the plan, told the employer not to do it in writing and the employer did it again. There was also a DOL Contributory Plans Criminal Project back in the 10s. They had a lot of indictments and convictions that year.

If you find a clear answer to this please post a follow up. I am interested in knowing what you find!

I am just going to put out there that this is one of the silliest parts of secure 2.0. That and making the mandatory Roth catch-up highly paid individuals not the same as the HCE number. It makes so little sense, and creates needless complication.

QDROphile I agree with you completely and yet...

I am actually not sure. I was never involved at the signing stage. I think a couple of the larger document providers put it in their mass submitter documents. I want to say ASC and Relius (or whatever name you know them by) both have it. It was because of the change in the law none of the Custodian's wanted that duty at all.

There is a PLR out there where someone does something like this using a VEBA. Found it! Here is the PLR. It's not really the same... Been a while since I read it, but you may find helpful. https://www.irs.gov/pub/irs-wd/201625005.pdf

Interestingly some of the custodians require you to name a special trustee for this purpose. Small market it's almost 100% just the employer.

In my experience where a bank is involved, it is usually acting as a directed trustee/custodian. They limit their fiduciary duties substantially by having a contract that directs them to perform certain activities and specifies exactly how they are to be performed. The plan sponsor is usually the named administrator and trustee. The same is true for 3(16) Plan Administrators. Most have contracts and processes and procedures that limit what services they are performing and how they will be performed. I have very rarely seen a 3(16) named in the plan document, taking on the whole enchilada. I will say, the larger the plan the more likely they will have more fiduciaries in the mix.

My first thoughts, you don't really specify what the benefit is. These are my thoughts generally speaking, the Department of Labor (DOL) considers healthcare premiums that are withheld from employee pay to be plan assets (29 CFR § 2510.3-102(a)(1)). This would be true, even if they are not segregated from employer assets (AO 92-24A). In general those assets should be held in trust, additionally VEBA assets cannot be used for anyone other than participants and beneficiaries for permitted benefits. You can mess up your tax exemption by breaking the "no inurement rule." I hear possible fiduciary problems and possible exempt status problems in what you are saying. That's all my thoughts. Good Luck.

Super interesting. Makes sense, but it is nothing I have ever thought about.

This is the kind of question that truly needs legal advice from someone who knows the case well. Someone should go back to their divorce attorney to ask this question. To the extent the IRA will be split, it would be smart to proactively get the requirements from the IRA provider for splitting the account, some of them require an order with specific format/language like a QDRO to split even though it isn't technically a qualified plan.

Having been through the ringer once to convince the DOL that a plan was not subject to filing because it was governmental, I would say prospectively notify them, maybe amend the last filing to include an attachment explains why they are no longer filing? If they request a filing, and you are exempt, you may still have to submit a reason.

If you know the recordkeeper at the time, you can ask them, sometimes data is kept longer than the required period. I just would not hold my breath on this one. Most have a six year plus current year data retention schedule.

Tuition, related educational fees and room and board expenses for the next 12 months of postsecondary education for the employee or the employee’s spouse, children, dependents or beneficiary. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-hardship-distributions

I don't know that the "warranty" is the reason people pay out but I have seen various settlements over the years that pay out what would have been warrantied. It seems to be that customer service issues and strategic relationships drive outcomes more than the promises made.